Legislature(2015 - 2016)SENATE FINANCE 532

04/29/2015 01:30 PM FINANCE

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Audio Topic
01:45:34 PM Start
01:45:51 PM SB1001
02:24:23 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB1001 Presentation: Overview FY17 Operating Budget TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                   FIRST SPECIAL SESSION                                                                                        
                      April 29, 2015                                                                                            
                         1:45 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:45:34 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Kelly called the Senate Finance Committee meeting                                                                      
to order at 1:45 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Peter Micciche, Vice-Chair                                                                                              
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator Berta Gardner; Senator Cathy Giessel; Senator Mia                                                                       
Costello; Pete Ecklund, Staff, Representative Mark Neuman.                                                                      
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 1001   APPROP: OPER. BUDGET/LOANS/FUNDS/AM APPRO                                                                             
                                                                                                                                
          SB 1001 was HEARD and HELD in committee for                                                                           
          further consideration.                                                                                                
                                                                                                                                
SENATE BILL NO. 1001                                                                                                          
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain    programs,    capitalizing   funds,    making                                                                    
     reappropriations,  making  capital appropriations,  and                                                                    
     making  appropriations  under   art.  IX,  sec.  17(c),                                                                    
     Constitution of the State of Alaska, from the                                                                              
     constitutional budget reserve fund; and providing for                                                                      
     an effective date."                                                                                                        
                                                                                                                                
1:45:51 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly discussed the agenda.                                                                                            
                                                                                                                                
PETE ECKLUND,  STAFF, REPRESENTATIVE MARK  NEUMAN, explained                                                                    
that the  House Finance  committee had  taken up  the mirror                                                                    
image  CS  to the  one  being  considered in  committee.  He                                                                    
explained that the CS contained  the differences between the                                                                    
governor's  introduced  budget   bill,  and  the  conference                                                                    
committee  bill   that  had  been  adopted   previously.  He                                                                    
referred to  the 2015 Legislature -  Operating Budget Agency                                                                    
Summary, which  reflected the $54,954.5  that was  above the                                                                    
conference committee bill previously  adopted. He also noted                                                                    
the  $39   million  in  non-additive  fund   transfers  were                                                                    
reflected on the page.                                                                                                          
                                                                                                                                
1:47:52 PM                                                                                                                    
                                                                                                                                
Mr. Ecklund walked  through the sections of  the work draft.                                                                    
He said that Section  1 contained various appropriations for                                                                    
different items that  the governor wanted to  see funded. He                                                                    
noted  that the  items  were familiar.  He  pointed out  the                                                                    
appropriation on Page 3, which was  to fund the FY 2016 cost                                                                    
of living adjustment (COLA).                                                                                                    
                                                                                                                                
1:49:13 PM                                                                                                                    
                                                                                                                                
Senator Bishop requested clarification on the page numbers.                                                                     
                                                                                                                                
1:49:56 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:50:10 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Mr. Ecklund directed attention to  page 4 of the work draft,                                                                    
which  reflected  the  State-Wide   All  Employees  COLA  of                                                                    
$56,386,100, this covered both  the union and non-union CLOA                                                                    
for FY 16.                                                                                                                      
                                                                                                                                
1:50:42 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly understood that in  the governor's budget the                                                                    
union  employees would  receive  the COLA  increase and  the                                                                    
non-union employees would not.                                                                                                  
                                                                                                                                
Mr. Ecklund replied in the affirmative.                                                                                         
                                                                                                                                
1:51:06 PM                                                                                                                    
                                                                                                                                
Mr. Ecklund  referred to Pages  5 through 11 as  fund "roll-                                                                    
ups" or  the different fund  sources that funded  Section 1.                                                                    
He referred to  Page 12, section 4, which listed  all of the                                                                    
appropriations related to Medicaid expansion.                                                                                   
                                                                                                                                
1:52:12 PM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly wondered  whether the  section eliminated  a                                                                    
public policy discussion on Medicaid expansion.                                                                                 
                                                                                                                                
Mr. Ecklund  clarified that if  the legislature  adopted the                                                                    
section, Medicaid expansion would  be authorized through the                                                                    
budget.                                                                                                                         
                                                                                                                                
Co-Chair Kelly  noted that the  budget before  the committee                                                                    
split state  employees between union and  non-union and then                                                                    
took  away  any  public policy  debate  concerning  Medicaid                                                                    
expansion.                                                                                                                      
                                                                                                                                
1:53:09 PM                                                                                                                    
                                                                                                                                
Mr. Ecklund referred Section 7.  He said that the bill would                                                                    
amend the  appropriation of $157  million from  the In-state                                                                    
Natural Gas Pipeline fund to  the Education fund. He relayed                                                                    
that  the appropriation  would be  $118 million  transferred                                                                    
from the  In-State Natural Gas  Pipeline fund to  the Public                                                                    
Education  fund.  He  shared that  $1,006,027,900  would  be                                                                    
appropriated from the general  funds to the public education                                                                    
fund. He  stated that the net  effect of Section 7  would be                                                                    
to fund the FY16 statutory  base student allocation (BSA) of                                                                    
$58.80, at 100 percent.                                                                                                         
                                                                                                                                
1:54:30 PM                                                                                                                    
                                                                                                                                
Mr. Ecklund  addressed Section  8 of  the work  draft, which                                                                    
would fund the union contracts for FY16.                                                                                        
                                                                                                                                
1:54:50 PM                                                                                                                    
                                                                                                                                
Senator  Dunleavy asked  whether there  was any  funding for                                                                    
non-union positions in the bill.                                                                                                
                                                                                                                                
Mr. Ecklund replied no. He  added that the bill specifically                                                                    
took away any funding for non-union COLA increases.                                                                             
                                                                                                                                
1:55:12 PM                                                                                                                    
                                                                                                                                
Mr.  Ecklund  referred to  Section  9,  which contained  the                                                                    
constitutional budget  reserve (CBR)  language for  FY15 and                                                                    
FY16,  and  was the  same  language  that  had been  in  the                                                                    
conference  committee report,  as  well as  the language  in                                                                    
Section 10.                                                                                                                     
                                                                                                                                
1:56:04 PM                                                                                                                    
                                                                                                                                
Co-Chair   Kelly    expressed   disappointment    with   the                                                                    
administration.                                                                                                                 
                                                                                                                                
1:58:41 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:58:59 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Kelly stressed that the  budget that the senate had                                                                    
passed in the legislative session  had been fully funded. He                                                                    
expressed  frustration with  the administration.  He thought                                                                    
that it  was unfair for  non-union employees to be  left out                                                                    
of  the COLA  increases. He  contended that  the legislature                                                                    
had  planned  to  bring  in   experts  to  discuss  Medicaid                                                                    
expansion, but that  not the governor was  forcing the issue                                                                    
through the budget.                                                                                                             
                                                                                                                                
1:59:33 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy  whether the committee would  hear from the                                                                    
Governor's Office.                                                                                                              
                                                                                                                                
Co-Chair Kelly  replied that  he did not  want to  hear from                                                                    
the  Governor's Office  at this  time. He  thought that  the                                                                    
policy objectives in SB 1001 were clear.                                                                                        
                                                                                                                                
1:59:44 PM                                                                                                                    
                                                                                                                                
Vice-Chair Micciche  found it interesting that  the governor                                                                    
felt he could  "wave a wand" and  approve Medicaid expansion                                                                    
without legislative approval. He  felt that the governor was                                                                    
using  the  three-quarter  vote  as  a  tool  to  force  the                                                                    
expansion. He expressed discomfort  with major policy issues                                                                    
being passed within a budget and without public discussion.                                                                     
                                                                                                                                
2:01:35 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly  stated that the legislature  had been headed                                                                    
toward  a  discussion of  Medicaid  expansion.  He spoke  of                                                                    
former Commissioner  Struer's renewed contract to  guide the                                                                    
committee through  the issue. He  said that  the legislature                                                                    
had asked if the discussion  could happen in Anchorage where                                                                    
there  were computers  and files  available. He  opined that                                                                    
the   construction  that   would  soon   begin  would   make                                                                    
conducting legislative work on  the issue difficult. He felt                                                                    
that the governor was "stamping  his feet" and that that was                                                                    
not  the  way to  get  things  done.  He asserted  that  the                                                                    
governor had  a willing group  of people in  the legislature                                                                    
that wanted  to take up the  issue, but now it  was too late                                                                    
because  of  the  impending   construction  on  the  Capitol                                                                    
Building.                                                                                                                       
                                                                                                                                
2:03:18 PM                                                                                                                    
                                                                                                                                
Senator  Dunleavy queried  the  total increase  in SB  1001,                                                                    
versus what the legislature had passed.                                                                                         
                                                                                                                                
Mr.  Ecklund  replied  that  the  total  fund  increase  was                                                                    
$217,660.0,   the  unrestricted   general  fund   (UGF)  was                                                                    
approximately $55 million. He said  that in addition to that                                                                    
there was  $39 million in  fund transfers of UGF  that would                                                                    
go  to the  public education  fund.  He offered  a total  of                                                                    
approximately $94 million.                                                                                                      
                                                                                                                                
2:04:22 PM                                                                                                                    
                                                                                                                                
Senator  Dunleavy  expressed  frustration with  the  state's                                                                    
fiscal situation.                                                                                                               
                                                                                                                                
2:06:00 PM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly   said  that  special  sessions   that  were                                                                    
concentrated on  the budget  usually came  down to  a debate                                                                    
between people who wanted to spend, and people who did not.                                                                     
                                                                                                                                
2:08:07 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon worried  that the  budget took  one-time                                                                    
money that might not be available in FY17.                                                                                      
                                                                                                                                
2:08:41 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy stated  that SB 1001 appeared to  be a road                                                                    
map to higher taxes.                                                                                                            
                                                                                                                                
2:09:44 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly  asked if Vice-Chair Micciche  would walk the                                                                    
committee through tax credits for  oil companies and why the                                                                    
minority's argument against paying them was bunk.                                                                               
                                                                                                                                
2:10:07 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:10:13 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  MacKinnon wondered  whether there  needed to  be a                                                                    
discussion   about   the   constitutional  rights   of   the                                                                    
legislature to pass the budget.                                                                                                 
                                                                                                                                
Co-Chair Kelly stated that the  words "legislature" and "the                                                                    
people" were synonymous.                                                                                                        
                                                                                                                                
2:10:42 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:13:46 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Kelly  stated  that  people  frequently  used  the                                                                    
argument  that reduction  of oil  company tax  credits could                                                                    
help the state's  financial picture. He said  that emails he                                                                    
received  from the  public stating  that the  state received                                                                    
less money under  SB 21 was absurd. He stated  that the fact                                                                    
that  the state  received more  money  under SB  21 was  not                                                                    
debatable.                                                                                                                      
                                                                                                                                
2:14:47 PM                                                                                                                    
                                                                                                                                
Vice-Chair Micciche  prefaced his discussion by  saying that                                                                    
oil taxes should be living  documents and that people should                                                                    
be open to  adjustments. He said that there  was no negative                                                                    
impact from  SB 21; the  positive earnings from all  oil and                                                                    
gas  production   related  revenue   in  FY15  and   16  was                                                                    
approximately  $1.6 billion  in production  taxes alone.  He                                                                    
said that  people often attributed  tax credit issues  to SB                                                                    
21,  but the  credits  were  not the  result  of  SB 21.  He                                                                    
asserted that the credits were  more of a result of Alaska's                                                                    
Clear and Equitable Share (ACES)  or the Cook Inlet Recovery                                                                    
Act of 2010. He added  that the minority had supported those                                                                    
bills.  He  said  that there  was  not  causal  relationship                                                                    
between Alaska's deficit  and oil tax credits.  He said that                                                                    
SB 21 earned $400 million more  in FY15 than what would have                                                                    
been earned  under ACES, and  $550 million more in  FY16. He                                                                    
continued  to  expound   on  the  merits  of   oil  and  gas                                                                    
production to  the state and  why SB 21 was  beneficial over                                                                    
ACES.                                                                                                                           
                                                                                                                                
2:17:42 PM                                                                                                                    
                                                                                                                                
Vice-Chair Micciche argued that the  senate had made cuts to                                                                    
the budget with an absence of  politics. He said that he had                                                                    
prioritized  by what  was most  important to  the state.  He                                                                    
said  that the  increased budget  presented by  the governor                                                                    
offered  no middle  ground and  reflected largely  political                                                                    
changes. He  said that the  SBR three-quarter vote  had been                                                                    
designed to be  very prudent with the  state's reserves, but                                                                    
was now being used by the  governor as leverage to spend $94                                                                    
million.                                                                                                                        
                                                                                                                                
2:19:45 PM                                                                                                                    
                                                                                                                                
Senator  Bishop asserted  that the  Commissioner of  Revenue                                                                    
had stated that SB 21 was working.                                                                                              
                                                                                                                                
2:20:48 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon  asked  for  a  brief  at-ease  for  the                                                                    
committee to consider a press release from the Governor.                                                                        
                                                                                                                                
2:20:55 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:21:38 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Kelly  criticized the governor's press  release and                                                                    
congratulated  the  committee  on   the  work  done  in  the                                                                    
previous  94  days.  He characterized  the  current  special                                                                    
session as a debate between those who wanted to spend more                                                                      
and those who wanted to spend less.                                                                                             
                                                                                                                                
2:22:59 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy stated that he wanted to work with the                                                                         
governor, but that the legislature did not work for the                                                                         
governor.                                                                                                                       
                                                                                                                                
2:23:43 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:24:05 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
SB 1001 was HEARD and HELD in committee for further                                                                             
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
2:24:23 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:24 p.m.                                                                                          
                                                                                                                                
                                                                                                                                

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