Legislature(2025 - 2026)GRUENBERG 120
05/08/2025 09:00 AM House RULES
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| Audio | Topic |
|---|---|
| Start | |
| SB183 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 183 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE RULES STANDING COMMITTEE
May 8, 2025
9:06 a.m.
MEMBERS PRESENT
Representative Louise Stutes, Chair
Representative Chuck Kopp, Vice Chair
Representative Bryce Edgmon
Representative Calvin Schrage
Representative Mia Costello
Representative Cathy Tilton
Representative Sarah Vance
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Senator James Kaufman
COMMITTEE CALENDAR
SENATE BILL NO. 183
"An Act relating to hindering the Legislative Budget and Audit
Committee; relating to the powers of the Legislative Budget and
Audit Committee and the legislative audit division; and
providing for an effective date."
- MOVED SB 183 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 183
SHORT TITLE: POWERS: LB&A COMMITTEE; LEGISLATIVE AUDIT
SPONSOR(s): RULES
04/23/25 (S) READ THE FIRST TIME - REFERRALS
04/23/25 (S) RLS
04/30/25 (S) RLS AT 12:30 AM BUTROVICH 205
04/30/25 (S) Moved SB 183 Out of Committee
04/30/25 (S) MINUTE(RLS)
05/02/25 (S) RLS RPT 5DP
05/02/25 (S) DP: WIELECHOWSKI, HOFFMAN, STEDMAN,
STEVENS, SHOWER
05/05/25 (S) TRANSMITTED TO (H)
05/05/25 (S) VERSION: SB 183
05/07/25 (H) READ THE FIRST TIME - REFERRALS
05/07/25 (H) RLS
05/08/25 (H) RLS AT 9:00 AM GRUENBERG 120
WITNESS REGISTER
SENATOR ELVI GRAY-JACKSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented SB 183.
KRIS CURTIS, Legislative Auditor
Legislative Audit Division
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Responded to questions during the hearing
on SB 183.
DESTIN GREELEY, Oil and Gas Production Tax Audit Supervisor
Tax Division
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Responded to questions during the hearing
on SB 183.
EMILY NAUMAN, Director
Legislative Legal Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on SB
183.
ACTION NARRATIVE
9:06:17 AM
CHAIR LOUISE STUTES called the House Rules Standing Committee
meeting to order at 9:06 a.m. Representatives Edgmon, Costello,
Vance, Tilton, Schrage, Kopp, and Stutes were present at the
call to order. Also present was Senator James Kaufman.
SB 183-POWERS: LB&A COMMITTEE; LEGISLATIVE AUDIT
9:07:07 AM
CHAIR STUTES announced that the only order of business would be
SENATE BILL NO. 183, "An Act relating to hindering the
Legislative Budget and Audit Committee; relating to the powers
of the Legislative Budget and Audit Committee and the
legislative audit division; and providing for an effective
date."
CHAIR STUTES noted the committee would begin by hearing from the
bill sponsor and invited testifiers.
9:08:19 AM
SENATOR ELVI GRAY-JACKSON, as prime sponsor of SB 183 and chair
of the Legislative Budget and Audit Committee, described why SB
183 is needed. She stated that she met with Kris Curtis,
Legislative Auditor, in January 2025, to discuss Legislative
Budget and Audit Committee priorities. One of the most pressing
concerns Ms. Curtis raised was the recent difficulty her office
was experiencing in obtaining information from those entities
being audited, including "challenges that were preventing
completion of a special audit of the Department of Revenue's Tax
Division that was requested and authorized by the Legislative
Budget and Audit Committee in 2020." Senator Gray-Jackson that
in the past, the Department of Revenue (DOR) provided the
legislature with an organized summary showing the total amount
of additional tax, interest, and penalties assessed for each
annual tax cycle.
SENATOR GRAY-JACKSON, in example, drew attention to the
spreadsheet included in the committee file. She continued as
follows:
However, the department now claims that it is only
required to provide access to raw data, not to compile
or categorize the information in the usual format as
it had done previously.
Recognizing both the seriousness of this program and
the amount of money at stake, I included an update on
the special audit, entitled, "Oil and Gas Production
Tax Credit Process" on the agenda for the [Legislative
Budget and Audit Committee] meeting that we had on
February 26, [2025], so that the committee could
discuss the troubling development and consider what
our next steps would be.
Following our executive session that included
testimony by Ms. Curtis, the committee authorized me
to send a letter to the administration requesting full
cooperation in assembling, furnishing, and providing
to the legislative auditor the information related to
the special audit. In that letter, ... which is
included in SB 183 support documents, I respectfully
urged the administration to fully cooperate with the
legislative ... auditor, emphasizing that the
integrity of ... Alaska's oil and gas tax audit
process is essential to the state's financial well-
being.
We sent that letter with the expectation of good faith
cooperation, hoping that the department would fulfill
its obligation to ensure that the audit would be able
to move forward and [be] completed. Unfortunately,
the issue remains unresolved, and the auditor still
cannot complete this important audit, which concerns
the oversight of billions of dollars in state oil and
gas revenue.
Madam chair, both the state legislative auditor and
the Legislative Budget and Audit Committee ...
appealed to the Department of Revenue for cooperation
but those requests have been repeatedly denied.
Therefore, the legislature must now assert its
constitutional and statutory oversight authority and
fulfill our obligation to the people that we serve.
The bill clarifies what should have been clear all
along, that state agencies are required to fully
cooperate with the legislative auditor and the
Legislative Budget and Audit Committee and that full
cooperation means providing information not just in
substance but also in the form and format requested.
This might seem like a technical distinction, but in
auditing, the ability to request information in a
useable form is absolutely critical. If the executive
branch agencies can pick and choose what information
to provide or in what format, they can - intentionally
or not - obstruct the legislature's ability to perform
independent oversight on behalf of the public,
effectively hiding billions of dollars from the public
view.
This bill shouldn't be necessary, but here we are
today. Either the Department of Revenue has already
compiled the information requested for the special
audit for its own use and is deliberately withholding
it from the legislative auditor or it has failed to do
that basic work of calculating the tax interest and
penalties assessed for each audit cycle. Frankly, I'm
not sure which of those scenarios would be more
troubling. The legislature needs to pass this bill so
that we and the public can finally get the answers.
9:13:18 AM
REPRESENTATIVE EDGMON asked when underlying statutes were
drafted.
9:13:40 AM
KRIS CURTIS, Legislative Auditor, Legislative Audit Division,
Legislative Affairs Agency, responded by offering her
understanding that the underlying statutes existed as far back
as statehood and that even the territorial legislature had an
audit function.
MS. CURTIS presented that all state agencies must fully
cooperate with the Legislative Budget and Audit Committee and
the Legislative Audit Division in "furnishing, assembling,
generating information in the form and format requested." She
explained that the division has not been able to complete an
audit requested by the legislature. She said the Legislative
Budget and Audit Committee directed the division to audit DOR's
oil and gas production tax audit group, which lives within the
Tax Division and is responsible for auditing the oil and gas tax
returns to ensure the State of Alaska receives all revenue due.
Ms. Curtis explained that when this audit group detects an
underpayment, it sends a letter to the tax payer identifying the
amount of tax due; this letter is referred to as a tax
assessment. The group also assesses interest.
MS. CURTIS pointed to the audit request in the committee file
and explained that objectives 6 and 7 address the reporting of
this tax assessment information. She said the Legislative Audit
Division was directed to assess the additional tax, interest,
and penalties assessed for each of the Tax Division's annual
audit cycles, as well as to update any tax assessment
information that had been provided to the legislature
previously.
MS. CURTIS next pointed to tax assessment information compiled
by the Tax Division in 2018 and presented to the Senate Finance
Committee [during the Thirtieth Alaska State Legislature]. The
2020 audit request asks the Legislative Audit Division to update
the information from 2018 in a similar format to that which was
done in 2018, which includes not just the tax, interest, and
penalties but also [the status of] the appeal process. She
described the data as "material," pointing to table 1, which
summarizes the total tax and interest assessed for each of the
tax years listed: 2006-2011. The sum of the columns is $1.3
billion. Also included in the committee file are the minutes
from the Legislative Budget and Audit Committee meeting of
12/10/20, which provide historical context regarding legislative
concern that existed at the time that the audit was approved.
Ms. Curtis continued as follows:
It was testified that the Department of Revenue would
publish a memo summarizing the total tax interest
assessed after they completed an audit cycle, and they
would make that memo available to the legislature
routinely. They stopped doing this in 2019, and when
the legislature asked them for this assessment
information they were told it's confidential, yet it
had been routinely provided in previous years.
Committee members were concerned about the lack of
transparency and accountability over this executive
branch audit function, and so this audit was approved
to ensure adequate legislative oversight. While it
was authorized by the committee in 2020, December, we
didn't begin the audit until the beginning of 2024,
and as the audit progressed, it became apparent that
the Department of Revenue was not going to be
providing this information. They stated that they are
not required by law to do so.
MS. CURTIS stated that DOR's interpretation and, presumably, the
interpretation of the Department of Law (DOL) was that state
agencies are required to provide access only to raw data and are
not allowed to compile data into any type of format like is
shown on the aforementioned tables. She said that
interpretation overturned longstanding precedent and limits the
oversight of the legislature. She stated, "The fear is that an
agency from here on out will refuse to provide or compile data
in any type of format for future legislative audits." She
concluded that the proposed legislation would clarify the
legislature's oversight authority.
9:19:01 AM
REPRESENTATIVE EDGMON remarked that it is conceivable that
settlements could have occurred that Ms. Curtis, as a tax
auditor, would not be able to ascertain. Further, he observed
that Ms. Curtis, as legislative auditor, is subservient to
statute, as well as professional accounting standards. He
ascertained from Ms. Curtis that the Legislative Audit Division
gets audited; therefore, the division's standards are high.
MS. CURTIS responded that there are many types of audits for the
revenues that come in; the division does not do "a deep dive"
into settlements except to determine the nature of the
settlement to determine whether it is going into the capital
budget reserve (CBR) or the general fund (GF). She clarified
that the audit in question is a performance audit. Each type of
audit has different standards to which must be complied. She
added:
The degree with which we get settlement information is
very high level, and we do look at that as part of the
financial audit; the degree to which we could use that
information to produce these tables is not detailed
enough for us to be able to produce the information
being asked for as part of the special audit.
REPRESENTATIVE EDGMON proffered that there could be settlements
- money that actually goes into the CBR - that the division is
not able to track in terms of how and when they occurred.
MS. CURTIS replied that the division can and does look at an
overall settlement memo just for that fiscal year but does not
have all the information regarding settlements that occur.
9:22:30 AM
REPRESENTATIVE COSTELLO asked Ms. Curtis whether the division
received information from DOR and the problem is that the
division is not able to extract the necessary information from
that to be able "to fill out this chart" or whether Ms. Curtis
feels that there is missing information.
MS. CURTIS answered that the division "has access to the tax
system" and when it provided the template, it was able to get
information such as the total tax assessed. She indicated that
[DOR] was asked to "take ownership of it and make sure it's
right" to ensure it is reliable information to include in the
audit. She said the division did the best it could; it
populated the template and gave it to [DOR]. She explained that
the division does not have the expertise required to be able to
fill out the tables fully, which is why it asked the department
to supply the information.
MS. CURTIS, in response to a follow-up question from
Representative Costello, responded that the division conducted a
2014 audit "of this tax group," and in that audit, there was a
table that had the tax assessment information: table 1, column
C. Regarding the information from 2018, she said there seems to
be confusion on the part of DOR as to the role of the
Legislative Audit Division. She stated, "We did not compile
that information; we had nothing to do with that information
except to help craft the template that was then sent over on
behalf of the chair of [the Legislative Budget and Audit
Committee]. She indicated that the template was then sent to
the Tax Division within DOR, and the Tax Division added columns
to the template and populated the entire template; the
Legislative Audit Division had nothing to do [with the
template]. She stated, "Although I've clarified that with them
multiple times, they still seem to be confused that we had some
type of role back in 2018 with that data; we did not."
REPRESENTATIVE COSTELLO asked if there is any type of ongoing
communication between the Legislative Audit Division and the
Legislative Budget and Audit Committee once the committee has
tasked the division with an audit request.
MS. CURTIS emphasized that once the audit is assigned, the
division does not contact the committee or include legislators
in the process. She explained that auditing standards require
the division to maintain its independence "in fact and in
appearance." It is a nonpartisan, independent process, which
follows professional auditing standards for performance audits.
9:26:34 AM
CHAIR STUTES pointed out that DOR had been invited but chose not
to attend the House Rules Standing Committee meeting today and,
instead, sent a letter [included in the committee packet], which
was received approximately one hour prior to the scheduled
meeting start time.
9:27:01 AM
REPRESENTATIVE KOPP asked Ms. Curtis how she would characterize
this particular audit in terms of its significance in
understanding the accuracy of money paid into state accounts.
MS. CURTIS answered that it is "super significant." In response
to a follow-up question regarding the importance of formatting,
she emphasized, "Formatting makes data meaningful." She said
DOR has expressed that compiling the data is onerous, and the
Legislative Audit Division concurs and knows it takes time to
produce the information. She added that the division believes
that the information is worthy of the time it takes to produce
it. She said, "We have always worked collaboratively." She
noted that SB 183 would not change how the division does its
job; hopefully, it would result in the division being able to
finish an audit. She added, "This is the only department we've
had a problem with." She further remarked, "It seems fairly
unnecessary that we have to be here just to be able to finish an
audit." She said the division would continue to work with the
agency to shoulder the burden and work on its priorities to fit
[the audit] into its workload but the division cannot do the
audit if the agency does not produce the data.
9:30:58 AM
REPRESENTATIVE TILTON observed that in the aforementioned
letter, DOR remarked that it has spent hundreds of hours
providing information [to the Legislative Audit Division] and
asked Ms. Curtis how much time the department has invested.
MS. CURTIS responded that she does not know. She highlighted
page 2 of the letter, on which was indicated the number of hours
DOR spent in 2024 going over information with its auditors. She
said that does not specify whether that has to do with the
financial statement audit or performance audit. She estimated
that the Legislative Audit Division spends up to 600 hours on
the financial audit but reiterated that she does not have the
data to answer how much time DOR has spent with the Legislative
Audit Division.
REPRESENTATIVE TILTON made observations regarding the 5/8/25
letter from DOR. She said it indicates that in 2014,
"Legislative Audit" created and filled in the table; in 2017 and
2018, there was the same process and the Legislative Budget and
Audit Committee filled in the information; in 2018 and 2019, the
Tax Division tried to fill in the table but this is not an easy
task under the Tax Division's system. Further, Representative
Tilton read remarks in the letter that there are likely more
efficient ways to report the data "that reflect the reality of
how the information is tracked and maintained" and that "the
report was not only duplicate but overly burdensome to compile
the data in the form and format requested" by "Legislative
Audit"; and producing those tables on a regular basis would mean
the department would not be able to maintain tax payer
confidentiality. She asked Ms. Curtis to respond.
MS. CURTIS replied that the 2014 audit had one column of
assessment information, which she said is not equivalent to the
tables the committee can view in the file packet. She pointed
to the 2017/18 information presented by the Tax Division,
reiterating that the Legislative Audit Division had nothing to
do with that except for having created the template that the
chair of the Legislative Budget and Audit Committee sent to the
Tax Division. She said, "If you look at that information ...,
it's information that you would want to effectively manage your
division." She said it includes: tax assessment data; amounts
paid under protest; amounts paid after settlement; not yet
resolved; amounts that have been informally appealed; whether
appeals have been upheld; weather appeals have been made to the
Office of Administrative Hearing; and the outcome. She
emphasized the importance of this information. She observed
statements about reports given and the onerous nature of pulling
reports and said she finds those statements conflicting.
REPRESENTATIVE TILTON noted that the department is expressing
that it has been cooperative, and she asked Ms. Curtis to
explain the difference of opinion.
MS. CURTIS specified, "They are not producing those tables."
9:36:30 AM
REPRESENTATIVE VANCE, regarding the issue of privileged
information, asked whether SB 183 would address the issue of
confidentiality and whether there is a memorandum from
Legislative Legal and Research Services on this subject.
MS. CURTIS answered that the two pages from [the department] do
not address privilege, and the 5/12/20 letter that the
department attached, titled "Provision of Documents to
Legislative Audit for Financial Audit," is about financial
auditing, which is different from performance auditing and
therefore "totally irrelevant." She continued, "This was
written in response to our inability to obtain information that
is in their settlement files. It's a totally different issue."
She clarified that "the information they reference is
confidential, which is different than privileged," and the
statutes under which the Legislative Audit Division operates
provide the legislative auditor access to confidential
information. She added that whether she can publish that
information in public report is a separate issue, and she has
communicated with [DOR] that she will work with the department
to establish what is confidential and cannot be made public.
MS. CURTIS, in response to a follow-up question, spoke about the
aforementioned 2020 Legislative Budget and Audit Committee
meeting and the effort then to figure out whether DOR was using
tax credits to offset its settlements, which she acknowledged is
illegal. She explained, "Those monies have to be deposited in
the CBR, and you cannot offset tax credits against it." She
continued:
So, we were seeing indications that was happening, and
we were trying to get in and review information, and
we were being told, "You cannot look at that because
it's privileged." And the two privileges they're
enacting ... [are] attorney/client privilege and due
process privilege." So, ... that's what we talked
about in 2020, which there are other objectives on
that audit request that deal with that specific topic.
REPRESENTATIVE VANCE noted that she was looking at the 12/10/20
minutes where Senator Stedman spoke about documents being "in
proper form." She noted that the changes [proposed under SB
183] would make information be in the form requested by Ms.
Curtis. She offered her understanding that amending that
statute would amend the legislative auditor's authority "for all
of these audits."
MS. CURTIS responded that's right. She read the excerpt from
those minutes, which read as follows:
SENATOR STEDMAN stated his concern that "there's
nobody watching the hen house" and billions of dollars
are involved. He said the public and the legislature
need to have assurance that the transactions are
documented, justified, in proper form, and reported
within "our financial statements" so that the
legislature, as policy makers, can understand the
benefits and possible pitfalls in any policy pursued.
MS. CURTIS interpreted that as meaning "in the proper accounts
in the financial statement." She said [the proposed
legislation] would not change what has been done in the past or
expand the division's authority; it would simply clarify [that
authority].
REPRESENTATIVE VANCE noted that also in the committee file were
responses from DOL and the attorney general as to "their reasons
to not give you what you're asking for." She asked if
[Legislative Legal Services] had provided memorandums to the
Legislative Budget and Audit Committee in response.
MS. CURTIS replied that she had rebutted this in detail and is
disappointed that DOR and the attorney general would release
this without her rebuttal, in which she had cited "pages and
pages of audit standards to clarify what ... CPAs have to do in
completing the audit." She said she had encouraged DOR and DOL
to cite the exact standard when referencing audit standards
instead of making general comments about "what they interpret
auditing standards to say."
9:44:16 AM
CHAIR STUTES noted that there was now available online an oil
and gas tax audit supervisor from the Tax Division in DOR.
9:44:37 AM
REPRESENTATIVE EDGMON upon receiving confirmation from Ms.
Curtis that these performance audits occur as needed but not
regularly, questioned why the legislature would not want to
codify the [standards] under which the legislative auditor has
already been operating. He said this is data that agencies
already have "in hat" and which Ms. Curtis needs in order to do
her job. Regarding the indeterminate fiscal note, he posed,
"What is the cost of good government?" He opined that it is
unfortunate that the head of DOR is not present as he should be
to answer questions. He talked about efficiency and
accountability. He read from DOR's letter that SB 183 would
give Legislative Budget and Audit Committee permission to force
other state agencies to create specific work products, and he
asked Ms. Curtis if that were true.
9:47:21 AM
MS. CURTIS responded that the Legislative Budget and Audit
Committee is asking her to make sure that a state agency is
fulfilling its statutory purpose and regulations, which means
the agency should already have work product there for the
Legislative Audit Division to evaluate. She acknowledged again
that this would require work of the agency, and she reiterated
that the division would work collaboratively with the
department, as it always does.
REPRESENTATIVE EDGMON cited [Article IX, Section 13] of the
Constitution of the State of Alaska, which read as follows:
§ 14. Legislative Post-Audit The legislature shall
appoint an auditor to serve at its pleasure. He shall
be a certified public accountant. The auditor shall
conduct post-audits as prescribed by law and shall
report to the legislature and to the governor.
REPRESENTATIVE EDGMON emphasized the use of the word "shall" and
asked Ms. Curtis to confirm that her work is required not only
by accounting standards and statute, but also by the
constitution.
MS. CURTIS replied, "Absolutely, in my position as a
constitutional officer."
9:48:53 AM
REPRESENTATIVE COSTELLO said she would like to hear from the
department as to how the information can be provided in a way
that aligns with how the department keeps the data.
9:49:35 AM
DESTIN GREELEY, Oil and Gas Production Tax Audit Supervisor, Tax
Division, Department of Revenue, provided that although the
tables that are requested do not mechanically align with the
DOR's tax system information, [the department] does have other
variations in order to provide "the same information," and she
indicated that the Tax Division has done so.
REPRESENTATIVE COSTELLO asked Ms. Greeley to confirm what she
said was that DOR has provided the requested information, just
in another format.
MS. GREELEY responded:
I guess it depends on the information we're talking
about. We have provided a list of every assessment;
the dollar amount of every assessment; the total
interest that's been provided. ... The tax system
that we have has interest calculated but it doesn't
have interest associated with a specific thing. Like,
for example, when we issue an audit, we have interest
associated with that audit, but it kind of calculates
it as a total. So, it looks at the total tax due and
the total interest for that tax, and the tax due could
include what the tax payer files; what they amend;
what we've assessed in an audit; what's been assessed
in (indisc.). So, it's kind of a running calculation
of interest.
MS. GREELEY said in the past auditors compiled the tables by
using DOR's assessment letters. In response to Chair Stutes,
she said she has worked with the Tax Division for 20 years.
9:51:52 AM
MS. CURTIS reiterated that in the 2014 audit, there was a table
of audit assessments; that is "one column on all of these
tables." She said the division can obtain that information and
has already populated that information when it sent the
templates. She stated that it is "the other information that we
need them to produce."
CHAIR STUTES asked Ms. Curtis if she could be specific.
MS. CURTIS prefaced her response by noting that she wished she
had her staff with her. Notwithstanding that, she offered her
recollection that the Legislative Audit Division was able to
fill in table 1, tax revenue filed by all tax payers, and tax
revenue audit, and tax assessed. She indicated that what is
still needed is "all of table 2."
CHAIR STUTES interpreted Ms. Curtis to have said that she has no
idea what taxes have actually been assessed.
MS. CURTIS interjected, "and appealed, and where they're at in
the appeal process."
CHAIR STUTES surmised that that could be critical and involve "a
lot of dough."
9:53:31 AM
REPRESENTATIVE KOPP surmised that Ms. Curtis is seeking
information with context, because without context it is
meaningless.
MS. CURTIS confirmed that is correct and added that once the
Legislative Audit Division has that information, then it [can]
start asking questions about it.
9:54:20 AM
CHAIR STUTES asked Ms. Greeley what seems to be the issue in
providing the auditor with the information regarding the amount
of money that's been collected and from where it has been
collected.
MS. GREELEY answered that she believes that has been provided,
because the Tax Division provided a transaction summary of all
payments, audits - "everything in an Excel spreadsheet." She
said she thinks the "missing part" is that the division provides
the Legislative Audit Division a list of all the appeals but
"there is not a dollar that's associated with our audit." She
talked about assuming that when there is an appeal, it is an
appeal for 100 percent of an audit. She noted that "that
correlation hasn't been done" but she thinks "all of the numbers
that we have, have been provided."
CHAIR STUTES asked Ms. Curtis if she has received an accounting
of all the revenue that has come in to DOR for oil and gas.
9:55:39 AM
MS. CURTIS responded that for the financial audit the division
looks at all of the tax revenue; for this specific table, the
division needs the expertise of DOR to put the information in
the right columns, to have "the ability to populate the table."
CHAIR STUTES asked Ms. Greeley what seems to be the problem with
that.
MS. GREELEY answered that it is "the work hours that go into it"
and that it is a new work product - not something that the Tax
Division can run. She reiterated that the Tax Division has
provided the Legislative Audit Division with the raw data. She
said, "The two reports that I believe were issued to the
legislature, but prior to that, [the] Legislative Audit
[Division] always compiles the information."
CHAIR STUTES said she does not mean to be combative, but it
seems it has been only since 2018 that the auditor has had these
difficulties. She noted that Ms. Greeley has been there 20
years, and she said she is having difficulty understanding why
Ms. Greeley cannot provide the information that has been
provided historically in order for the auditor to complete these
audits.
MS. GREELEY responded that the information that is being
requested is not something captured in the Tax Division's system
"right now" and, thus, is not something that is maintained. She
reiterated that the division has supplied the Legislative Audit
Division with all its tax assessment letters and said the
auditor has "complete access to everything." She added, "The
auditor that we worked with has never had any issue with us
providing information." She said the creation of the new work
product is time consuming and "kind of like putting a square peg
in a round hole."
CHAIR STUTES stated that she is not buying Ms. Greeley's story
and remarked that "this is a huge red flag." She said she is
having difficulty understanding why there have been no problems
in years past and now it is problematic because that kind of
information is not compiled. She emphasized that this issue
involves hundreds of millions of dollars, and she is worried.
9:58:39 AM
MS. CURTIS gave the sectional analysis [included in the
committee packet], which read as follows [original punctuation
provided]:
Section 1 AS 11.56.845(a): Hindering the Legislative
Budget and Audit Committee
Amends the criminal statute governing obstruction of
the Legislative Budget and Audit (LB&A) Committee.
This is conforming language, so the statute is
consistent with Section 2 of the bill.
Section 2 AS 24.20.201(a): Powers of the Legislative
Budget and Audit Committee
Clarifies the committee's existing authority that
requires state officials and agencies to cooperate by
requiring requested information to be provided not
only in substance, but also in the form or format
requested by the committee or its staff.
Section 3 AS 24.20.271: Powers and Duties of the
Legislative Audit Division
Updates the legislative audit division's powers to
mirror those granted to the committee in Section 2.
This section clarifies the division may require
information in specific forms or formats as part of
its audit functions.
Section 4 AS 39.25.160(l): Grounds for Disciplinary
Action
Aligns personnel law with the criminal and statutory
provisions of the bill.
Section 5 Applicability
Amends uncodified law and applies the amendment to AS
11.56.845(a) (under Section 1) to offenses committed
on or after the effective date of the Act. This
provision ensures clarity regarding the prospective
application of the new criminal standard.
Section 6 Effective Date
Provides that the Act takes effect immediately.
9:59:56 AM
REPRESENTATIVE VANCE, regarding Section 1 of SB 183, and noting
that there were differing opinions, asked how this legislation
would be enforced.
MS. CURTIS replied that this has been there for a long time; the
legislature put this in place to provide "a hammer" to ensure
cooperation; however, it has been completely ineffective. She
pointed out that there is an "out" if a person reasonably
believes "that the action or failure to act was legally
justified." She said it reflects the changes made in Sections 2
and 3.
REPRESENTATIVE VANCE asked what would happen if SB 183 were
passed and there is "a standoff."
MS. CURTIS deferred to Emily Nauman.
10:02:16 AM
EMILY NAUMAN, Director, Legislative Legal Services, Legislative
Affairs Agency, responded that enforcement options for large
clashes between the executive branch and the legislature are
limited and often result in litigation.
REPRESENTATIVE VANCE asked Ms. Nauman whether she thinks the use
of "form" and "format" is sufficient or the legislature needs to
be more prescriptive.
MS. NAUMAN answered that this bill was drafted in response to
this issue, and she said it is her belief that it will resolve
the issue "if the department complies with the law." That said,
she noted that it is difficult to be descriptive in statute
without running the risk of discarding other desired outcomes
"by being so specific in one instance." She spoke of options
specific to "this information, this year" or "this information
produced every year" but offered her understanding that SB 183
was designed to solve a bigger problem regarding the resistance
that the legislative auditor has been getting from the
department "more wholistically."
REPRESENTATIVE VANCE asked about this statute in terms of the
issue of separation of powers.
MS. NAUMAN replied that it is conceivable that a court could
find that this statute goes too far in terms of the legislature
reaching into the executive branch and usurping the governor's
power to control their employees. That said, she pointed out
that the legislative auditor was created in the constitution to
help the legislature oversee the power of the executive branch,
which she described as an "additional twist." She said she
thinks a court would be convinced to give the legislative
auditor a little more authority to reach into the executive
branch and "require that that information be provided in a form
and format that's digestible to the legislature in its role as
an oversight function." She concluded that the legislative
auditor is not really asking for information that DOR does not
have but is asking for the information the department has to be
given in a form that is functional.
10:07:12 AM
REPRESENTATIVE EDGMON capsulated the issue as the legislative
auditor wanting to do that which they have been tasked to do but
they are being "stymied." He questioned DOR speaking for other
agencies. He commented on the absence of the executive
leadership during discussion of this important issue. He
observed that SB 183 is not only about precedence but also about
clarity. He talked about all the hoops that the auditor and
staff must [jump] to carry out their jobs. He surmised
regarding the age of the statute and commented on the benefit of
making it clearer. He said the powers are clear and the
legislature should be making sure that DOR is doing its job just
as much as the department is reporting back that it is.
Representative Edgmon said he thinks what the legislature and
the legislative auditor have done in the past would "weigh
heavily on any determination that then they might make."
10:10:39 AM
CHAIR STUTES opened public testimony on SB 183. After
ascertaining there was no one who wished to testify, she closed
public testimony.
10:11:12 AM
CHAIR STUTE announced the committee would entertain an
amendment.
10:11:21 AM
REPRESENTATIVE VANCE moved to adopt Amendment 1 to SB 183,
labeled 34-LS0932\A.2, Nauman, 5/7/25, which read as follows:
Page 3, line 24:
Delete "division"
Insert "Legislative Budget and Audit Committee"
CHAIR STUTES objected for the purpose of discussion.
REPRESENTATIVE VANCE spoke to Amendment 1. She said it would
affirm that the authority by which the legislative auditor is
making the request is by the Legislative Budget and Audit
Committee.
10:12:36 AM
REPRESENTATIVE KOPP said he thinks Amendment 1 is misplaced and
confuses duties with "authority to direct." He said there is a
host of duties that would apply only to an auditor with
considerable experience.
10:13:48 AM
REPRESENTATIVE EDGMON echoed the comments of Representative
Kopp. He said the bill would make more technical changes by
adding elements to what is already being done; whereas,
Amendment 1 would make a structural change, which he said he
thinks is beyond the scope of SB 183. He stated his opposition
to Amendment 1.
10:14:23 AM
REPRESENTATIVE COSTELLO recollected Ms. Curtis having said that
once she is given a directive by the Legislative Budget and
Audit Committee, she then has no further interaction with the
committee while conducting an audit. She asked Ms. Curtis to
state how Amendment 1 may create a professional challenge for
the auditor by creating a situation in which she would have to
go back to the committee to request a particular format.
10:15:08 AM
MS. CURTIS responded that [Amendment 1] would impair her
independence as auditor by requiring the Legislative Budget and
Audit Committee to request the information, whereby she would
have to explain what she was doing and "rope in legislators
during the audit process, which is a violation of professional
auditing standards."
10:15:37 AM
REPRESENTATIVE VANCE offered wrap up comments on Amendment 1.
She said she thinks "that's what's happening now" and [the
amendment] would create transparency. She pointed to language
about assembling information in a format requested by the
committee and said that is being amended and "is not just giving
this authority to the division with those specific words." She
said she wants to make it clear where the authority of the
auditor comes from to strengthen the legislature's position
should the issue go to the courts.
10:17:51 AM
CHAIR STUTES maintained her objection.
A roll call vote was taken. Representatives Vance, Costello,
and Tilton voted in favor of Amendment 1 to SB 183.
Representatives Edgmon, Schrage, Kopp, and Stutes voted against
it. Therefore, Amendment 1 failed to be adopted by a vote of 3-
4.
10:18:30 AM
REPRESENTATIVE KOPP said it's clear that SB 183 is fundamentally
about the public good and is tied to the Alaska Constitution.
He cited Article VIII of the Alaska Constitution, regarding
management of natural resources to the "maximum benefit" of
Alaskans. He stated, "There is no audit that is more material
to understanding that the maximum benefit to the people, when it
comes to collecting revenue for the finances of our state
treasury, is more significant than the one we're talking about
right now." He said he cannot imagine the courts not upholding
that. He concluded, "... We want to exercise our equal,
separate, but fundamental exercise of power under the
constitution, and we're serious about it."
10:20:33 AM
REPRESENTATIVE EDGMON stated that he views SB 183 as a clean-up
bill to codify precedented practices. He said Article 8 and
Section 9 of the Alaska Constitution address the specific powers
of the legislative post-audit. He talked about the inability of
fiscal notes to "capture what could happen if we don't do this
right." He said the state is facing deficits that will be
difficult to overcome, and the stakes are high regarding the
proposed legislation. He concluded that he strongly and
wholeheartedly supports SB 183.
10:21:51 AM
CHAIR STUTES emphasized the crucial nature of SB 183 and its
impact. She said it pertains to oil and gas money of Alaskans,
as well as "what supports the state." She emphasized that she
finds it "absolutely appalling" that the commissioner of DOR
"could not manage to be here." She stated, "It speaks loudly
and is very disconcerting."
10:22:38 AM
SENATOR GRAY-JACKSON gave wrap up comments to emphasize that the
bill would not give any additional authority to the legislative
auditor; it would clarify the authority the auditor already has.
She thanked the committee for hearing SB 183.
10:23:15 AM
REPRESENTATIVE KOPP moved to report SB 183 out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, SB 183 was reported out of the House
Rules Standing Committee.
10:23:43 AM
ADJOURNMENT
There being no further business before the committee, the House
Rules Standing Committee meeting was adjourned at 10:23 a.m.