Legislature(2019 - 2020)SENATE FINANCE 532

07/19/2019 11:00 AM FINANCE

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11:03:55 AM Start
11:04:46 AM SB2002
06:36:44 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB2002 APPROP: CAPITAL; SUPP; OTHER APPROP TELECONFERENCED
Moved CSSB2002(FIN) Out of Committee
                 SENATE FINANCE COMMITTEE                                                                                       
                       July 19, 2019                                                                                            
                        11:03 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
11:03:55 AM                                                                                                                   
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  von  Imhof  called the  Senate  Finance  Committee                                                                    
meeting to order at 11:03 a.m.                                                                                                  
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Natasha von Imhof, Co-Chair                                                                                             
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Click Bishop                                                                                                            
Senator Donny Olson                                                                                                             
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lyman Hoffman                                                                                                           
Senator Peter Micciche                                                                                                          
Senator Mike Shower                                                                                                             
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator  Cathy Giessel;  Senator  Chris  Birch; Senator  Mia                                                                    
Costello;  Senator  Shelley  Hughes;  Senator  Gray-Jackson;                                                                    
Senator Jesse  Kiehl; Senator Lora  Reinbold; Representative                                                                    
Andy   Josephson;  Representative   Tammie  Wilson;   Paloma                                                                    
Harbour, Budget  Director, Office of Management  and Budget;                                                                    
Donna  Arduin, Director,  Office of  Management and  Budget;                                                                    
Shelly  Wilhoite,  Capital  Budget  Coordinator,  Office  of                                                                    
Management  and Budget;  David  Teal, Director,  Legislative                                                                    
Finance  Division; Shareen  Crosby,  Staff, Senator  Natasha                                                                    
von  Imhof  Rob   Carpenter,  Analyst,  Legislative  Finance                                                                    
Division.                                                                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 2002   APPROP: CAPITAL; SUPP; OTHER APPROP                                                                                   
                                                                                                                                
          CSSB 2002(FIN) was REPORTED out of committee with                                                                     
          a "do pass" recommendation.                                                                                           
                                                                                                                                
Senator von Imhof reviewed the agenda for the meeting.                                                                          
                                                                                                                                
SENATE BILL NO. 2002                                                                                                          
                                                                                                                                
     "An  Act   making  appropriations,   including  capital                                                                    
     appropriations, supplemental  appropriations, and other                                                                    
     appropriations;   repealing    appropriations;   making                                                                    
     appropriations to  capitalize funds; and  providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
11:04:46 AM                                                                                                                   
                                                                                                                                
Co-Chair von Imhof commented that  SB 2002 was the only item                                                                    
on the agenda. It was  the governor's appropriation bill for                                                                    
capital,   supplemental,  and   other  appropriations.   She                                                                    
explained  that in  the previous  month  both bodies  passed                                                                    
SB 19,  the capital  budget. However,  the necessary  three-                                                                    
quarter  vote  for  funding  many of  these  items  was  not                                                                    
secured,  leaving large  gaps in  the state  capital budget,                                                                    
including  critical   appropriations  for   federal  highway                                                                    
match.                                                                                                                          
                                                                                                                                
Co-Chair  von  Imhof  added that  the  legislature  had  not                                                                    
addressed  the Constitutional  Budget Reserve  (CBR) reverse                                                                    
sweep',  which was  discussed at  length the  prior day.  It                                                                    
left further gaps  in the budget, including  funding for the                                                                    
crime bill.                                                                                                                     
                                                                                                                                
Co-Chair  von  Imhof  thanked  the  administration  and  the                                                                    
Office  of Management  and Budget  (OMB)  for providing  the                                                                    
capital bill to address the  gaps in the state's fiscal year                                                                    
2020  budget. She  continued  that  the appropriations  were                                                                    
critical, as Alaska  was large and spread  out. She asserted                                                                    
that  the state  needed to  maintain capital  infrastructure                                                                    
for its  roads, airports,  and ports,  so Alaskans  can stay                                                                    
connected to  their livelihoods,  natural resources,  and to                                                                    
each other.                                                                                                                     
                                                                                                                                
Co-Chair  von  Imhof  invited   Paloma  Harbour  and  Shelly                                                                    
Wilhoite from OMB  to present the bill.  She asked committee                                                                    
members to hold their questions to the end of each slide.                                                                       
                                                                                                                                
11:06:23 AM                                                                                                                   
                                                                                                                                
PALOMA HARBOUR,  BUDGET DIRECTOR,  OFFICE OF  MANAGEMENT AND                                                                    
BUDGET,  introduced herself  and thanked  the committee  for                                                                    
the opportunity to  present SB 2002. She  would be reviewing                                                                    
the budget  at a  high level, as  she thought  the committee                                                                    
was  familiar  with the  included  projects.  She began  the                                                                    
presentation,  "SB  2002  FY2020 Capital  Budget"  (copy  on                                                                    
file).                                                                                                                          
                                                                                                                                
Ms. Harbour showed slide 3,  "SB 2002 FY 2020 Capital Budget                                                                    
($Thousands).  The  bill  provided   over  $170  million  in                                                                    
unrestricted  general funds  (UGF)  that  were necessary  to                                                                    
meet  federal match  requirements, maximize  federal funding                                                                    
for project grants, and support  projects that were unfunded                                                                    
when  a  draw from  the  CBR  was  not approved  during  the                                                                    
passage of SB 19.                                                                                                               
                                                                                                                                
Ms.  Harbour turned  to slide  4, "SB  2002 FY  2020 Capital                                                                    
Budget  ($Thousands)," which  showed a  summary of  both the                                                                    
operating and  capital funding  in the  bill by  agency. She                                                                    
would walk through them in the presentation.                                                                                    
                                                                                                                                
Ms.  Harbour  displayed slide  5,  "SB  2002 FY2020  Capital                                                                    
Budget  ($ Thousands)"  which  addressed  the Department  of                                                                    
Commerce,   Community   and    Economic   Development,   the                                                                    
Department   of   Corrections,   and   the   Department   of                                                                    
Environmental Conservation:                                                                                                     
                                                                                                                                
   Department   of   Commerce,   Community,   and   Economic                                                                    
   Development                                                                                                                  
      Community Block Grants $60.0 UGF (matching $6,000.0                                                                    
        Fed)                                                                                                                    
     Alaska Travel Industry Association $7,420.0 UGF                                                                         
      Hope Community Resources, Inc. $85.0 UGF                                                                               
                                                                                                                                
   Department of Corrections                                                                                                    
      Mental Health: $2,540.0 UGF for Renovations Required                                                                   
        to Accommodate the Women's Mental Health Unit at                                                                        
        Hiland Mountain                                                                                                         
           This will match funds provided by the Alaska                                                                      
             Mental Health Trust appropriated in SB 19 of                                                                       
             $1,145.0   (Mental   Health   Trust   Authority                                                                    
             Receipts)                                                                                                          
                                                                                                                                
   Department of Environmental Conservation                                                                                     
      Village Safe Water and Wastewater Infrastructure                                                                       
        Projects $12,080.0 (matching $52,250.0 Fed)                                                                             
                                                                                                                                
Ms. Harbour  continued to slide  6, "SB 2002  FY2020 Capital                                                                    
Budget  ($ Thousands)"  which applied  to the  Department of                                                                    
Fish  and  Game,  the  Office   of  the  Governor,  and  the                                                                    
Department of Natural Resources:                                                                                                
                                                                                                                                
   Department of Fish and Game                                                                                                  
      Cook Inlet Stock Assessment $1,000.0 UGF                                                                               
                                                                                                                                
   Office of the Governor                                                                                                       
      Capital Costs Related to Executive Branch Office                                                                       
        Buildings, Facilities, and IT Systems $2,500.0 UGF                                                                      
                                                                                                                                
   Department of Natural Resources                                                                                              
      Critical Minerals Mapping $600.0 UGF (matching                                                                         
        $3,000.0 Fed)                                                                                                           
      Geological Mapping for Energy Development $300.0 UGF                                                                   
        (matching $300.0 Fed)                                                                                                   
      Arctic Strategic Transportation and Resources                                                                          
        (ASTAR) $2,500.0 UGF                                                                                                    
                                                                                                                                
11:09:39 AM                                                                                                                   
                                                                                                                                
Senator Olson asked  if there was more  detail pertaining to                                                                    
the  governor's request  for $2.5  million.  He queried  the                                                                    
detail. He wondered  if there was any  federal match finding                                                                    
associated with the appropriation.                                                                                              
                                                                                                                                
Ms.  Harbour stated  that  the money  was  not for  matching                                                                    
federal  funds. She  explained that  in the  approved SB  19                                                                    
there was a reappropriation of  unspent general funds at the                                                                    
end  of FY  19  to  be used  for  capital  projects for  the                                                                    
governor's office. The funding lapsed  and was swept as part                                                                    
of  the sweep.  There was  currently a  hole in  funding for                                                                    
capital projects,  renovations, and maintenance  that needed                                                                    
to  be  funded.  The  Information  Technology  (IT)  Systems                                                                    
funding  was related  to  the  Elections System  Replacement                                                                    
Project. The funding would go towards a number of projects.                                                                     
                                                                                                                                
Senator Olson  asked if  the funds would  be necessary  if a                                                                    
reverse sweep occurred. Ms. Harbour  stated that the funding                                                                    
was still necessary, as it  was and operating appropriation,                                                                    
regular general funds  1004, which were not  included in the                                                                    
traditional  reverse  sweep  language. The  funding  was  an                                                                    
appropriation that  lapsed and was returned  to the account.                                                                    
It was  not a special  fund where  there was a  balance, and                                                                    
the money was returned to the fund.                                                                                             
                                                                                                                                
Senator Bishop  asked about Arctic  Strategic Transportation                                                                    
and Resources  ASTAR funding. He  asked how far  the funding                                                                    
would take the  project. He indicated she could  get back to                                                                    
the committee with an answer.  Ms. Harbour would get back to                                                                    
the committee.                                                                                                                  
                                                                                                                                
Co-Chair  von Imhof  referenced  Senator Olson's  questions.                                                                    
She noted  in the previous  capital budget there  were about                                                                    
$7.5  million  of  reappropriations  that were  put  into  a                                                                    
parking  lot, so-to-speak,  for  future appropriations  that                                                                    
were vetoed by  the governor. The appropriations  were for a                                                                    
variety  of  things  including harbors  and  other  projects                                                                    
throughout the  state. It was  not limited to the  Office of                                                                    
the  Governor.   She  asked  if   any  of  the   items  were                                                                    
highlighted in the  new budget other than the  Office of the                                                                    
Governor.                                                                                                                       
                                                                                                                                
Ms. Harbour  stated there was  also an appropriation  to the                                                                    
legislature reflecting the same  issue where the legislature                                                                    
had  operating funds  that had  been reappropriated  for its                                                                    
capital costs.  The funding was  no longer available  due to                                                                    
the sweep.                                                                                                                      
                                                                                                                                
Co-Chair  von Imhof  indicated the  committee would  look at                                                                    
the issue further when it came up in the presentation.                                                                          
                                                                                                                                
11:12:48 AM                                                                                                                   
                                                                                                                                
Ms. Harbour  advanced to  slide 7,  "SB 2002  FY2020 Capital                                                                    
Budget  ($  Thousands)"  which  covered  the  Department  of                                                                    
Public  Safety  and  the   Department  of  Revenue's  Alaska                                                                    
Housing Finance Corporation:                                                                                                    
                                                                                                                                
   Department of Public Safety                                                                                                  
      Reappropriation       of        $1,059.0        for                                                                    
        Maintenance/Renovation of Rural Trooper Housing                                                                         
                                                                                                                                
   Department of Revenue        Alaska Housing Finance                                                                          
   Corporation (AHFC)                                                                                                           
      AHFC Competitive Grants for Public Housing $350.0                                                                      
        UGF (matching $750.0 Fed)                                                                                               
      AHFC Federal and Other Competitive Grants $1,500.0                                                                     
        UGF (matching $6,000.0 Fed)                                                                                             
      AHFC Housing and  Urban  Development  Federal  HOME                                                                    
        Grant $750.0 UGF (matching $4,000.0 Fed)                                                                                
      AHFC Rental Assistance  for  Victims  -  Empowering                                                                    
        Choice Housing Program (ECHP) $1,500.0 UGF                                                                              
      AHFC Senior Citizens  Housing  Development  Program                                                                    
        $1,750.0 UGF                                                                                                            
      AHFC Supplemental   Housing   Development   Program                                                                    
        $3,000.0 UGF                                                                                                            
                                                                                                                                
Ms. Harbour read slide 8,  "SB 2002 FY2020 Capital Budget ($                                                                    
Thousands)"    which    addressed    the    Department    of                                                                    
Transportation  and Public  Facilities,  the Judiciary,  and                                                                    
the Legislature:                                                                                                                
                                                                                                                                
   Department of Transportation and Public Facilities                                                                           
      Decommissioning and Remediation of Class V Injection                                                                   
        Wells $2,200.0 UGF                                                                                                      
      Alaska Marine Highway System Vessel Overhaul, Annual                                                                   
        Certification     and      Shoreside      Facilities                                                                    
        Rehabilitation $13,500.0 UGF                                                                                            
      Other Federal Program Match $1,300.0  UGF (matching                                                                    
        $10,000.0 Fed)                                                                                                          
      Federal-Aid Highway   State  Match   $60,000.0  UGF                                                                    
        (matching $690,000.0 Fed)                                                                                               
      Federal-Aid Aviation  State  Match   $12,000.0  UGF                                                                    
        (matching $187,200.0 Fed)                                                                                               
      Highway Safety Grants Program $238.3  UGF (matching                                                                    
        $8,000.0 Fed)                                                                                                           
                                                                                                                                
   Judiciary                                                                                                                    
      Cyber Security Courts $973.0 UGF                                                                                       
      Statewide Deferred Maintenance $1,500.0 UGF                                                                            
                                                                                                                                
   Legislature                                                                                                                  
      Capital Costs Related  to Legislature,  Legislative                                                                    
        Council, Council and Subcommittees for Renovation of                                                                    
        Legislative Buildings and Facilities $4,195.0 UGF                                                                       
                                                                                                                                
Ms. Harbour indicated that the  bill also included just over                                                                    
$14  million  in operating  funding  to  replace Power  Cost                                                                    
Equalization (PCE) funds that were  not available due to the                                                                    
CBR sweep.  She indicated that  slide 9 and slide  10 simply                                                                    
listed what the fund source changes were for.                                                                                   
                                                                                                                                
Co-Chair von  Imhof asked if  the changes mostly  applied to                                                                    
the  crime bill.  Ms. Harbour  responded, "That's  correct."                                                                    
Most of  them were  related to  the crime  legislation. They                                                                    
were  all fiscal  notes. There  were  multiple fiscal  notes                                                                    
reflecting a fund  source change from UGF to  PCE funds. The                                                                    
funds were being replaced.                                                                                                      
                                                                                                                                
Senator Olson asked  how the $14 million  total was derived.                                                                    
Ms. Harbour  responded that  it was the  addition of  all of                                                                    
the  different fiscal  notes that  were part  of legislation                                                                    
that passed but without funding behind them.                                                                                    
                                                                                                                                
Ms.  Harbour  reported that  OMB  separated  the crime  bill                                                                    
funding  to  the Department  of  Corrections  in a  separate                                                                    
slide,  slide 11,  for  HB 49  [Legislation  passed in  2019                                                                    
regarding  crimes, sentencing,  drugs,  theft, and  reports]                                                                    
specifically.                                                                                                                   
                                                                                                                                
11:16:20 AM                                                                                                                   
                                                                                                                                
Ms.  Harbour turned  to slide  12, "SB  2002 FY2020  Capital                                                                    
Budget - Section 8  Fund Transfers":                                                                                            
                                                                                                                                
     An amount equal to deposits  in the budget reserve fund                                                                    
     (art.  IX,  sec.  17,  Constitution  of  the  State  of                                                                    
     Alaska)  for   fiscal  year  2019  from   subfunds  and                                                                    
     accounts in  the general fund including  the power cost                                                                    
     equalization   endowment   fund   (AS   42.45.070)   by                                                                    
     operation of  article IX,  sec. 17(d),  Constitution of                                                                    
     the  State   of  Alaska,  not  to   exceed  the  amount                                                                    
     necessary  after  appropriations  and deposits  to  the                                                                    
     subfunds and  accounts from fiscal year  2020 revenues,                                                                    
     to   fund  appropriations   from  those   subfunds  and                                                                    
     accounts made  in ch. 1  -3, FSSLA 2019, and  any other                                                                    
     appropriation bills effective in  fiscal year 2020, the                                                                    
     general fund  to the subfunds  and accounts  from which                                                                    
     those  funds were  deposited  into  the budget  reserve                                                                    
     fund.                                                                                                                      
                                                                                                                                
Ms. Harbour reported  that the last substantive  part of the                                                                    
bill appropriated  funds from the  general fund  to subfunds                                                                    
and accounts  necessary to  cover appropriations  from those                                                                    
subfunds in  FY 20. The  funds would  be used to  fill holes                                                                    
resulting from the CBR sweep.                                                                                                   
                                                                                                                                
Co-Chair von  Imhof thought  the slide  was similar  to what                                                                    
was  discussed in  the previous  day  regarding the  reverse                                                                    
sweep gaps in funding.                                                                                                          
                                                                                                                                
Co-Chair   von  Imhof   observed  that   the  general   fund                                                                    
appropriation  for  capital  items   plus  the  crime  notes                                                                    
equaled approximately  $168 million. She noted  that OMB had                                                                    
estimated the previous  day that the funding  for the fiscal                                                                    
gaps due  to the reverse  sweep was about $115  million. The                                                                    
total combined  amount was about $282  million. She wondered                                                                    
if there was  sufficient money in the general  fund to cover                                                                    
all of the expenses.                                                                                                            
                                                                                                                                
Ms. Harbour indicated that Chair  von Imhof had asked for an                                                                    
accounting in terms of how  much money was available and how                                                                    
much was needed for each item.  She was still working on the                                                                    
calculations. She reported there  being some overlap between                                                                    
the  legislation,  the  holes being  filled,  and  the  $115                                                                    
million figure.                                                                                                                 
                                                                                                                                
Co-Chair von  Imhof noted that  David Teal, the  director of                                                                    
the  Legislative Finance  Division was  available to  assist                                                                    
the  committee. Based  on his  presentation in  the previous                                                                    
week,  there was  slightly  less than  $200  million in  the                                                                    
general  fund  after  all  of  the  governor's  vetoes.  She                                                                    
thought there was a small deficit.                                                                                              
                                                                                                                                
Co-Chair  Stedman  considered   the  current  cash  balances                                                                    
without the proposed  bill and with the vetoes  in place. He                                                                    
asked for  an estimate  of the cash  position of  the state.                                                                    
Ms.  Harbour assumed  that Co-Chair  Stedman was  asking for                                                                    
the balance to cover the holes.                                                                                                 
                                                                                                                                
Co-Chair  Stedman noted  there  was a  general fund  balance                                                                    
available for appropriations. He  recognized there was about                                                                    
$1  billion of  the  vetoed Earnings  Reserve Account  (ERA)                                                                    
draw. He  assumed the number  was possibly $200  million. He                                                                    
wanted to know OMB's position on the cash balance.                                                                              
                                                                                                                                
Ms. Harbour stated  that OMB also believed the  figure to be                                                                    
about $200  million. However,  she wanted  to make  sure she                                                                    
was providing the committee with a good number.                                                                                 
                                                                                                                                
Co-Chair  von Imhof  asked if  Ms. Harbour  could provide  a                                                                    
good number  by the following  day. Ms. Harbour  thought the                                                                    
request was  reasonable. Co-Chair von Imhof  thought that in                                                                    
consideration of the bill it  was important to know if there                                                                    
was enough funding for it.                                                                                                      
                                                                                                                                
11:20:04 AM                                                                                                                   
                                                                                                                                
Senator Wilson  wanted to  clarify the  only new  items were                                                                    
the  governor's  office,  the  legislature,  and  the  crime                                                                    
bills' reallocations restored.                                                                                                  
                                                                                                                                
Ms.  Harbour affirmed  that the  funding for  the governor's                                                                    
office  and  the  legislature  were   both  in  SB  19  [The                                                                    
appropriation, capital budget,  and supplemental legislation                                                                    
passed in 2019] that passed.  She indicated that because the                                                                    
three-quarter  vote   failed  the  funding  was   no  longer                                                                    
accessible.                                                                                                                     
                                                                                                                                
Co-Chair Stedman  referenced Section  8 of the  bill related                                                                    
to fund  transfers. He  was sure  there were  questions from                                                                    
the public and noted there  were new people in the audience.                                                                    
He thought it  was important to discuss the  bill section in                                                                    
order to be clear what was  and was not included in the fund                                                                    
transfer.                                                                                                                       
                                                                                                                                
Co-Chair von  Imhof indicated on  the previous day  Mr. Teal                                                                    
had discussed  the impacts of  the lack of a  reverse sweep.                                                                    
She reported that in a  high-level overview it was estimated                                                                    
to be  about $115 million  in total funding  gaps statewide.                                                                    
She asserted that one of the  well know gaps was $18 million                                                                    
for the  Alaska Performance  Scholarships, about  $3 million                                                                    
for  the Washington,  Wyoming,  Alaska,  Montana, and  Idaho                                                                    
(WWAMI) Program, and about $30  million for the PCE Program,                                                                    
among others. She invited Ms. Harbour to comment.                                                                               
                                                                                                                                
Ms.   Harbour  appreciated   the  opportunity   to  make   a                                                                    
clarification.  The  amount  simply  filled  the  holes  for                                                                    
FY 20. It  was not the same  as a reverse sweep  and did not                                                                    
put  all of  the funding  back in  the funds.  She suggested                                                                    
that  if there  were enough  funds in  the general  fund, it                                                                    
would  take a  majority  vote, rather  than a  three-quarter                                                                    
vote  required  to draw  from  the  CBR.  It would  help  to                                                                    
address immediate needs and  would ensure that unanticipated                                                                    
needs were  also covered. For  example, for a fund  that was                                                                    
not thoroughly analyzed yet, if it  were to run out of money                                                                    
in March  and $60,000 was  needed, the language  would cover                                                                    
it.                                                                                                                             
                                                                                                                                
11:23:27 AM                                                                                                                   
                                                                                                                                
Senator  Wielechowski  asked  about the  rationale  for  not                                                                    
including university scholarship funding  in the budget. Ms.                                                                    
Harbour did  not understand the Senator's  question. Senator                                                                    
Wielechowski clarified  that the  Higher Education  Fund was                                                                    
not listed like the PCE fund.  He was curious why it was the                                                                    
case.                                                                                                                           
                                                                                                                                
Ms. Harbour  stated that the only  items specifically listed                                                                    
in the bill to replace PCE  funds were where UGF should have                                                                    
been used to support the  programs like those resulting from                                                                    
the  crime   bill  and   regular  operating   programs.  She                                                                    
indicated in the  original fiscal notes the  funds were UGF.                                                                    
She indicated they should be  UGF rather than PCE funds. The                                                                    
solution  for PCE  and the  Higher Education  Fund could  be                                                                    
found in  Section 8 of the  bill along with the  rest of the                                                                    
funds. They were part of the $115 million being discussed.                                                                      
                                                                                                                                
Senator Wielechowski  noted that  there were  5,000 students                                                                    
who received  scholarships funds for the  university through                                                                    
the  Higher Education  Fund. He  asked  if the  scholarships                                                                    
were covered in Section 8  of the bill. Ms. Harbour answered                                                                    
in the affirmative.                                                                                                             
                                                                                                                                
Co-Chair von Imhof emphasized that  Ms. Harbour had iterated                                                                    
"If there was  enough in the general fund."  She wondered if                                                                    
the  scholarship was  awarded on  a first-come,  first-serve                                                                    
basis.  She wondered  what students  would  be covered.  She                                                                    
discouraged Ms. Harbour from answering her question.                                                                            
                                                                                                                                
Senator  Wielechowski  wanted  an  answer  to  Co-Chair  von                                                                    
Imhof's  questions.  He  asked about  the  determination  of                                                                    
recipients.                                                                                                                     
                                                                                                                                
Co-Chair  von  Imhof  added  that  it  was  not  necessarily                                                                    
student-wide but program-wide.                                                                                                  
                                                                                                                                
Senator Wilson requested an at-ease.                                                                                            
                                                                                                                                
11:25:44 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:27:56 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Stedman commented  that some of the  concern at the                                                                    
finance table had  to do with having an  accurate account of                                                                    
the  general  fund  balance. As  the  legislature  drew  the                                                                    
general fund  balance down, if there  were shortfalls, there                                                                    
might also be prorating. He  thought something would not get                                                                    
funded which  was what the  legislature wanted to  avoid. He                                                                    
referenced Section  8. He recalled  from the  previous day's                                                                    
meeting  that there  was approximately  $2 billion  that was                                                                    
added in  the cash  balances of numerous  accounts including                                                                    
PCE and  the Higher  Education Fund.  He thought  the policy                                                                    
discussion  was  pertinent  to   the  committee  as  to  the                                                                    
question of a reverse sweep.  He believed the language would                                                                    
backfill FY  20 appropriations. He  wanted to hear  from OMB                                                                    
about the  administration's position  on the  reverse sweep.                                                                    
Depending on the  administration's position, the legislature                                                                    
would have to  have certain discussions about  the assets of                                                                    
the state.                                                                                                                      
                                                                                                                                
11:30:33 AM                                                                                                                   
                                                                                                                                
DONNA  ARDUIN, DIRECTOR,  OFFICE OF  MANAGEMENT AND  BUDGET,                                                                    
responded    that   the    administration   supported    the                                                                    
constitution. In  the governor's budget proposal,  a reverse                                                                    
sweep  was not  proposed. Rather,  the programs  were funded                                                                    
with general funds.                                                                                                             
                                                                                                                                
Co-Chair  Stedman assumed  that the  administration did  not                                                                    
support  the  reverse  sweep  and  reconstituting  the  fund                                                                    
balances. He  suggested at some  point the  committee needed                                                                    
to have  a discussion  and a  thorough understanding  of the                                                                    
account balances.  The legislature needed to  talk about how                                                                    
to deal  with sinking funds  and other things such  as major                                                                    
renovations for  which the legislature  wanted to  set money                                                                    
aside. He wanted it to  avoid a misunderstanding of thinking                                                                    
money was set  aside when it was not. He  wanted everyone to                                                                    
be  on the  same page.  He asked  if the  administration had                                                                    
contemplated a discussion between  now and the following May                                                                    
as to  how the state  would operate going forward  without a                                                                    
reverse sweep. He noted that  it was an undisputed fact that                                                                    
in the constitution the sweep  was required. He wondered how                                                                    
the legislature should go forward  with not having a reverse                                                                    
sweep.                                                                                                                          
                                                                                                                                
11:33:26 AM                                                                                                                   
                                                                                                                                
Ms. Harbour  opined that  the bill  language was  perfect in                                                                    
that the state would have a  year to find out the true costs                                                                    
associated  with operating  the  programs.  The costs  could                                                                    
then be  built into  the budget  every year  moving forward.                                                                    
The costs could  also be reduced if needed.  She thought the                                                                    
language was very  similar to the CBR  headroom language and                                                                    
provided  an example.  She  concluded that  it  would be  an                                                                    
accounting exercise.                                                                                                            
                                                                                                                                
Ms.  Arduin clarified  that every  year revenues  could fall                                                                    
from  projections.  Every  year   that  revenues  fell  from                                                                    
projects  the  state  had  to   evaluate  the  general  fund                                                                    
situation.                                                                                                                      
                                                                                                                                
Co-Chair von  Imhof addressed  Ms. Harbour's  assertion that                                                                    
it  was  an accounting  exercise.  She  emphasized that  the                                                                    
vaccine  assessment fund  was  not  an accounting  exercise.                                                                    
Rather,  it was  an  emergency response.  She continued  the                                                                    
reason there  were millions of  dollars in the fund  was for                                                                    
the legislature to  be able to draw on  them for emergencies                                                                    
such as a measles outbreak.  She added to Co-Chair Stedman's                                                                    
comment.  She suggested  that rather  than making  a blanket                                                                    
statement about each of the  hundreds of funds that would be                                                                    
swept based  on the  administration's interpretation  of the                                                                    
Alaska Constitution, it would make  sense to look at some of                                                                    
the  funds and  make changes  to them  protecting them.  She                                                                    
returned to the example of  the vaccine fund where the state                                                                    
was a day short.                                                                                                                
                                                                                                                                
Senator Bishop  noted that the  state had its first  case of                                                                    
confirmed measles in  Kenai. He returned to the  notion of a                                                                    
different way  of accounting and  fund source  changes going                                                                    
forward.  He thought  a wholesale  change  of the  magnitude                                                                    
proposed in the  bill was not a wise move.  He believed that                                                                    
with  such   a  change,   the  committee  needed   to  fully                                                                    
understand it. He  did not want any  surprises and suggested                                                                    
the administration  needed to  be very  careful about  how a                                                                    
change was  rolled out. He  wondered if the bill  placed the                                                                    
Alaska Performance Scholarships back in the budget.                                                                             
                                                                                                                                
Ms. Arduin  stated that  the bill  language covered  all the                                                                    
programs  that would  have otherwise  been  funded with  the                                                                    
reverse sweep. The programs would be covered for the year.                                                                      
                                                                                                                                
Senator Bishop  wanted to confirm that  the recipients would                                                                    
be  funded.  Ms.  Harbour   responded  in  the  affirmative.                                                                    
Senator  Bishop   assumed  that  the  state   would  have  a                                                                    
university for students to attend.                                                                                              
                                                                                                                                
11:37:59 AM                                                                                                                   
                                                                                                                                
Senator  Olson commented  on the  uncertainty of  the budget                                                                    
and reflected  on deadlines  that were  creating significant                                                                    
consternation. His comments  were based on what  he had been                                                                    
hearing traveling throughout the state.                                                                                         
                                                                                                                                
Senator  Wielechowski  asked  what  was  being  repealed  in                                                                    
Section 9  of the bill. Ms.  Harbour thought it was  the PCE                                                                    
appropriation. She would  verify her answer and  get back to                                                                    
the committee.                                                                                                                  
                                                                                                                                
Co-Chair von Imhof  asked if it was  an accounting exercise.                                                                    
Ms. Harbour  responded that  there was  contingency language                                                                    
in SB 19  related to the funding of  the Palmer Correctional                                                                    
Center. Section  9 was  repealing the  contingency language.                                                                    
She  would  get  back  to   the  committee  with  additional                                                                    
information.                                                                                                                    
                                                                                                                                
11:40:01 AM                                                                                                                   
                                                                                                                                
SHELLY  WILHOITE,  CAPITAL  BUDGET  COORDINATOR,  OFFICE  OF                                                                    
MANAGEMENT AND  BUDGET, indicated that the  fiscal notes had                                                                    
contingency language based on  population. She could provide                                                                    
exact  numbers  to  the committee  later.  The  funding  was                                                                    
contingent  on having  a certain  population  at the  Palmer                                                                    
Correctional Center, which was repealed.                                                                                        
                                                                                                                                
Co-Chair  von Imhof  indicated the  committee  would take  a                                                                    
brief at-ease  before hearing from Director  David Teal from                                                                    
the Legislative  Finance Division  (LFD) who would  focus on                                                                    
answering additional  questions and review the  short fiscal                                                                    
summary he provided the committee.                                                                                              
                                                                                                                                
11:41:24 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:43:35 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair von  Imhof indicated Mr. Teal  with the Legislative                                                                    
Finance Division  (LFD) would be  reviewing the  balances of                                                                    
the general fund.                                                                                                               
                                                                                                                                
DAVID  TEAL, DIRECTOR,  LEGISLATIVE FINANCE  DIVISION, noted                                                                    
the committee had asked him  to extend a spreadsheet that he                                                                    
had  shared two  weeks previously  to include  SB 2002.  The                                                                    
spreadsheet  entitled  "FY20 Surplus/Deficit  under  Various                                                                    
Scenarios"   (copy   on   file)  currently   reflected   the                                                                    
inclusion.   He  reported   the   budget   adopted  by   the                                                                    
legislature  reflected spending  of  $4.4  billion and  $5.2                                                                    
billion in  revenue with  a surplus  of $800  million before                                                                    
dividends.  He continued  that with  the governor's  vetoes,                                                                    
the surplus was  reduced to $180 million.  With the addition                                                                    
of the governor's version of  SB 2002 to the enacted budget,                                                                    
total expenditures equaled $4.3 billion.                                                                                        
                                                                                                                                
Mr.  Teal continued  that the  additional expenditures  were                                                                    
the fiscal  notes related to  the crime bill  funded through                                                                    
PCE  and  being replaced  with  general  funds; the  capital                                                                    
budget of $131 million; and  $100 million of GF expenditures                                                                    
for the shortages in programs  that would be affected by the                                                                    
reverse  sweep. The  governor's bill  added $282  million in                                                                    
appropriations creating a deficit of $102 million.                                                                              
                                                                                                                                
Mr. Teal recalled that Governor  Walker had to veto a number                                                                    
of items  because he believed  it to be  unconstitutional to                                                                    
sign appropriation  bills that left  the state in  a deficit                                                                    
situation. His  point was  that if  the legislature  were to                                                                    
give the bill  back to the governor exactly  as he submitted                                                                    
it, he  could not sign  it with  a deficit. It  was possible                                                                    
that  if  the sweep  were  reversed,  the $115  million  [In                                                                    
transfers to address  the lack of a reverse  sweep] would go                                                                    
away. The  money would not be  swept or needed, and  the $35                                                                    
million in fiscal notes would  not be incurred. Essentially,                                                                    
the budget would switch from a  deficit of $102 million to a                                                                    
surplus of  $35 million  making it a  legal budget  to sign.                                                                    
However, he  pointed out that  there would not be  access to                                                                    
the CBR to handle any shortage in revenue in the year.                                                                          
                                                                                                                                
Mr. Teal  also brought  up the  fact that  if the  state met                                                                    
expectations in  revenue, there would  be no  headroom other                                                                    
than the $35  million surplus to spend  on fire suppression,                                                                    
which he  anticipated to  be a  sizable supplemental  in the                                                                    
current year  or for earthquakes.  The legislature  had only                                                                    
funded about  half or more  of what the  department believed                                                                    
it would  need for  earthquake response. He  mentioned other                                                                    
programs  that could  potentially need  supplemental funding                                                                    
such as Medicaid. The legislature  might have to get a super                                                                    
majority vote  to access money from  the CBR to pay  for the                                                                    
supplemental needs of the budget.                                                                                               
                                                                                                                                
11:48:18 AM                                                                                                                   
                                                                                                                                
Co-Chair  von   Imhof  commented   that  as  the   bill  was                                                                    
presented,  based on  Mr. Teals'  calculations, there  was a                                                                    
yield of  a $101  million deficit in  the general  fund. She                                                                    
asked  if  she  was   correct.  Mr.  Teal  replied,  "That's                                                                    
correct."                                                                                                                       
                                                                                                                                
Co-Chair von Imhof noted Mr.  Teal's comment previously that                                                                    
technically,  the governor  could  not sign  a  bill with  a                                                                    
known deficit  at the time of  signing a bill. She  asked if                                                                    
she  was  accurate.  Mr. Teal  concurred.  Additionally,  he                                                                    
offered that  he was  talking about  the sum  of all  of the                                                                    
bills rather than just SB  2002. Senate Bill 2002 itself was                                                                    
not a deficit bill. However, when  it was added to the bills                                                                    
that were already  enacted the state would be  thrown into a                                                                    
deficit situation.                                                                                                              
                                                                                                                                
Co-Chair  von  Imhof  noted Mr.  Teal's  remarks  about  the                                                                    
potential hardy  amount of additional funding  that might be                                                                    
needed   for  wildfire   suppression  in   the  form   of  a                                                                    
supplemental request  in the following year.  Currently, the                                                                    
legislature was  not leaving  much headroom  in anticipation                                                                    
of  that  need. She  asked  if  she  was correct.  Mr.  Teal                                                                    
responded, "Correct, Madam Chair."                                                                                              
                                                                                                                                
Co-Chair von  Imhof thought Mr.  Teal had indicated  that if                                                                    
the  legislature  obtained  a   three-quarter  vote  in  the                                                                    
future, it  would have to do  the accounting for all  of the                                                                    
funds for  6 months of detail  from July 1st to  the date of                                                                    
the three-quarter vote. She asked if she was correct.                                                                           
                                                                                                                                
Mr.  Teal thought  it was  a difficult  question for  him to                                                                    
answer, as  he was not  an accountant. He thought  there was                                                                    
confusion and  concern about retroactive dates  and when the                                                                    
actual date of  the reverse sweep would occur.  It was known                                                                    
when  the effective  date would  occur, June  30th. However,                                                                    
the accountants  would not  know what  the numbers  would be                                                                    
until  much later.  He added  that as  OMB testified  on the                                                                    
impact of Section 8 (the  governor's answer to not doing the                                                                    
reverse sweep), they  did not know what the  costs were. The                                                                    
estimate from  OMB was $115  million and LFD's  estimate was                                                                    
approximately $125  million, the difference of  which he did                                                                    
not think was  worth quibbling over. He  reiterated that OMB                                                                    
would not  know what  Section 8 would  cost until  1.5 years                                                                    
from the present day.                                                                                                           
                                                                                                                                
Senator  Bishop thought  Mr.  Teal had  made  his point.  He                                                                    
advocated   moving  cautiously,   as   the   state  was   in                                                                    
unchartered waters.                                                                                                             
                                                                                                                                
11:51:39 AM                                                                                                                   
                                                                                                                                
Senator Wielechowski referenced  an earlier discussion about                                                                    
the  applicability of  Section  8 and  the Higher  Education                                                                    
Fund. He questioned  how the funds would  be appropriated if                                                                    
there was not enough money in the general fund.                                                                                 
                                                                                                                                
Mr. Teal  did not know how  the funds would be  spent, since                                                                    
the state  had never been in  a situation where it  had been                                                                    
short-funded. It  was not merely  a matter of  Section 8, as                                                                    
it was  an appropriation just  like any other.  He explained                                                                    
that  the  funds were  all  GF  appropriations, without  one                                                                    
having priority over  another. He assumed it would  be up to                                                                    
the  governor to  restrict various  programs. He  recalled a                                                                    
court   case   which    Governor   Sheffield   chose   which                                                                    
expenditures  to reduce.  The court  case decision  required                                                                    
that the  legislature must be involved  in the determination                                                                    
of the appropriation of general funds.                                                                                          
                                                                                                                                
Mr. Teal continued that if Section  8 threw the state into a                                                                    
deficit  situation  might  require the  legislature  into  a                                                                    
special session. The legislature might  not know it was in a                                                                    
deficit situation  until regular  session. It  was difficult                                                                    
to determine timing and impacts on programs.                                                                                    
                                                                                                                                
Senator  Olson  was glad  Mr.  Teal  had mentioned  Governor                                                                    
Sheffield and  the massive  cuts incurred as  a result  of a                                                                    
drastic decrease  in the price  of oil per  barrel. However,                                                                    
at the  time things were  different. For example, a  CBR was                                                                    
not  in  place. Now  that  there  was  a  CBR in  place  the                                                                    
perspective was  different in  terms of  being able  to find                                                                    
answers if  the state budget  was short-funded. He  asked if                                                                    
what he stated was true.                                                                                                        
                                                                                                                                
Mr. Teal stated  that it was the reason the  CBR existed. He                                                                    
reminded members that the CBR did  not do the state any good                                                                    
if there was  no access to it. Access to  the CBR required a                                                                    
super  majority vote.  Acquiring a  super majority  vote had                                                                    
been  a problem.  If the  legislature had  a super  majority                                                                    
vote  to  reverse the  sweep,  many  of the  problems  being                                                                    
discussed, including  the deficit, would be  eliminated. The                                                                    
CBR vote ensured that if  revenue fell during the year, even                                                                    
though   the  legislature   submitted  a   balanced  budget,                                                                    
government would  not shut down.  Money would be  taken from                                                                    
the  CBR needed  to continue  all programs.  The legislature                                                                    
was  currently  in  uncharted  territory.  Other  state  had                                                                    
procedures in  place to handle such  circumstances, whereas,                                                                    
Alaska did not.                                                                                                                 
                                                                                                                                
11:55:29 AM                                                                                                                   
                                                                                                                                
Senator  Olson  considered  what  happened in  the  time  of                                                                    
Governor Sheffield, where  he took the bull by  the horns to                                                                    
figure  out an  answer  to the  issue in  front  of him.  He                                                                    
wondered  if  the present  governor  would  step in  to  put                                                                    
pressure  on legislators  to come  up  with a  three-quarter                                                                    
vote. Mr. Teal  could not answer the question.  Thus far, it                                                                    
did not appear the  governor supported a three-quarter vote.                                                                    
He had not discussed the issue with the governor.                                                                               
                                                                                                                                
Senator  Wielechowski  asked  if  the  governor  could  veto                                                                    
partial  amounts  of  a  reverse sweep.  Mr.  Teal  did  not                                                                    
believe the  governor could, as  it was an  appropriation of                                                                    
unnamed funds. He  would not be able to add  a list of funds                                                                    
he wanted to reverse to the  budget. He could only cross out                                                                    
line items. He thought the  question was legal in nature and                                                                    
would  be  better directed  to  Megan  Wallace [Director  of                                                                    
Legislative Legal Services].                                                                                                    
                                                                                                                                
Senator  Wielechowski asked  if Mr.  Teal was  familiar with                                                                    
the repeal language in Section 9 and what it would repeal.                                                                      
                                                                                                                                
Mr.  Teal recalled  that the  repeal was  the Department  of                                                                    
Corrections' fiscal note regarding  $16 million of PCE funds                                                                    
to  reopen the  Palmer  Correctional Center.  He added  that                                                                    
there was  an important  distinction in  the way  the matter                                                                    
was addressed.  The fiscal  note was  added in  the original                                                                    
bill because  of a desire  to add specific  limitations. The                                                                    
limitation  included  population  counts.  If  the  facility                                                                    
population  reached  a  certain  level, one  wing  could  be                                                                    
opened. If  the department's  projections were  reached, the                                                                    
entire correctional facility could  be opened. The money was                                                                    
prohibited from  being used for  anything except  the Palmer                                                                    
Correctional Center.                                                                                                            
                                                                                                                                
Mr. Teal  continued that  the change  currently in  the bill                                                                    
removed any conditions associated  with the $16 million. The                                                                    
Department   of  Corrections   would  receive   the  funding                                                                    
regardless of  population or prisoner count.  There was also                                                                    
a structural  change. Instead of being  limited to reopening                                                                    
the Palmer Correctional Center, the  money could be used for                                                                    
management  of inmate  population  for  anything within  the                                                                    
appropriation  including moving  prisoners out  of state  or                                                                    
purchasing equipment unrelated to the Palmer facility.                                                                          
                                                                                                                                
11:58:48 AM                                                                                                                   
                                                                                                                                
Senator Wielechowski  asked, if the repeal  language passed,                                                                    
whether the Department of  Corrections could shift prisoners                                                                    
to  out-of-state private  prisons. Mr.  Teal replied  in the                                                                    
affirmative.                                                                                                                    
                                                                                                                                
Senator  Wilson asked  about the  version of  the bill  that                                                                    
passed  over to  the  other body  and  whether the  language                                                                    
provided  a broader  use of  the funds.  Mr. Teal  could not                                                                    
answer the question.                                                                                                            
                                                                                                                                
Co-Chair von  Imhof clarified that  Mr. Teal was  present to                                                                    
discuss cash balances.  Mr. Teal stated that  there had been                                                                    
so  many versions  of the  bill  that he  was unclear  which                                                                    
version Senator Wilson was referring to.                                                                                        
                                                                                                                                
Co-Chair  von  Imhof  thanked  Mr.   Teal  for  putting  the                                                                    
spreadsheet together,  as it was clear  and informative. She                                                                    
would  be setting  the bill  aside. The  committee would  be                                                                    
recessing to the call of the chair.                                                                                             
                                                                                                                                
12:00:35 PM                                                                                                                   
RECESSED                                                                                                                        
                                                                                                                                
6:14:00 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair von  Imhof relayed that  earlier the  committee had                                                                    
heard an overview of SB 2002  as introduced by the governor.                                                                    
The governor's bill was introduced  to fill critical funding                                                                    
gaps  in  the capital  budget.  However,  the bill  did  not                                                                    
include all  of the  items in  SB 19 as  was passed  by both                                                                    
bodies.  Both  bodies  worked on  their  respective  capital                                                                    
budgets  throughout   the  regular  session,   the  extended                                                                    
session,  and  the  first special  session  and  reached  an                                                                    
agreement  over  which  projects  should  be  included.  The                                                                    
committee  substitute  before  the committee  reflected  the                                                                    
agreements.  However,  it  was still  a  bare-bones  capital                                                                    
budget which  paid for essential  capital items  and ensured                                                                    
the state's  federal highway and aviation  match monies were                                                                    
secured.  The funding  for the  capital budget  was the  CBR                                                                    
unless otherwise noted.                                                                                                         
                                                                                                                                
Co-Chair von  Imhof continued that the  committee also heard                                                                    
extensively on  the impacts  of the  failure to  reverse the                                                                    
CBR  sweep.  The legislature  had  learned  that failing  to                                                                    
reverse  the  sweep would  cost  the  state more  than  $100                                                                    
million in general funds to  fill budget holes and thousands                                                                    
of hours of staff time.  Without the reverse sweep the state                                                                    
had no funding  for the crime bills,  the Alaska Performance                                                                    
Scholarships, power  cost subsidies for rural  Alaskans, the                                                                    
WWAMI  program,   or  basic  operational  funding   for  the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
to issue business licenses.                                                                                                     
                                                                                                                                
Co-Chair von  Imhof relayed  that all  of the  capital items                                                                    
before the  committee had been previously  heard and vetted.                                                                    
Therefore,  the committee  would  not  be taking  additional                                                                    
public  testimony  in  the  present   day.  As  always,  she                                                                    
encouraged Alaskans to  reach out to specific  offices or to                                                                    
send a message to finance.committee@akleg.gov.                                                                                  
                                                                                                                                
Co-Chair   Stedman  MOVED   to   ADOPT  proposed   committee                                                                    
substitute for  SB 2002,  Work Draft  31-GS3565\M (Caouette,                                                                    
7/19/19)(copy on file).                                                                                                         
                                                                                                                                
Co-Chair von Imhof OBJECTED for discussion.                                                                                     
                                                                                                                                
6:17:15 PM                                                                                                                    
                                                                                                                                
SHAREEN CROSBY, STAFF, SENATOR  NATASHA VON IMHOF, recounted                                                                    
that in  June the House  and Senate  voted to concur  on the                                                                    
had concurred  on a vote on  the capital budget, SB  19. She                                                                    
relayed that  in the budget  many items were  funded through                                                                    
the  CBR which  required a  three-quarter vote.  Due to  the                                                                    
failure of  the three-quarter vote,  a large portion  of the                                                                    
bill  was  not  funded,  including  critical  appropriations                                                                    
needed for  federal match for  state highways  and airports.                                                                    
Other appropriations  in the capital  budget were  vetoed by                                                                    
the governor,  including Alaska Housing  Finance Corporation                                                                    
grants. The bill  in front of the  committee was essentially                                                                    
the bill that both bodies past  in June minus the items that                                                                    
were enacted,  including federal  funds. She added  that the                                                                    
appropriations in  the bill  were either  lost when  the CBR                                                                    
vote failed in the other body  or vetoed by the governor. If                                                                    
the bill  did not pass the  fiscal notes for the  crime bill                                                                    
would  not be  funded. The  primary funding  source for  the                                                                    
bill was  the CBR account.  There were a  few appropriations                                                                    
being  funded through  other funds,  which  she would  point                                                                    
out. The  bill also  included language  for the  CBR reverse                                                                    
sweep. She offered to go through the sectional analysis.                                                                        
                                                                                                                                
Co-Chair von Imhof asked Ms.  Crosby to review the sectional                                                                    
analysis.                                                                                                                       
                                                                                                                                
Ms.  Crosby presented  the sectional  analysis beginning  on                                                                    
page 2,  Section 1 which  reflected agency  capital projects                                                                    
as passed in  SB 19 minus the enacted  items. She referenced                                                                    
page 8,  Section 2 and  Section 3 which  represented funding                                                                    
sources  for departments.  The  total equaled  $161,431,629.                                                                    
She reiterated that the funding  source was the CBR account.                                                                    
She   continued  to   page  11,   Section  4   which  showed                                                                    
supplementals. Section 5 and Section  6 detailed the funding                                                                    
sources for  the supplementals  for agency  funding totaling                                                                    
$3,220,200.  She  highlighted  page   14,  Section  7  which                                                                    
reflected the  Alaska Mental Health Trust  Authority (AMHTA)                                                                    
capital appropriations.                                                                                                         
                                                                                                                                
6:20:36 PM                                                                                                                    
                                                                                                                                
Senator Wilson referenced  page 14 of the bill  and asked if                                                                    
the  UGF  dollars would  be  used  to supplement  the  AMHTA                                                                    
Alaska  Mental  Health  Trust   Authority  budget  that  was                                                                    
already a separate appropriation.  Ms. Crosby responded that                                                                    
the items were projects vetoed by the governor.                                                                                 
                                                                                                                                
Senator  Wilson  clarified  that  the fund  source  for  the                                                                    
original items was  UGF dollars to supplement  the AMHTA. He                                                                    
asked  if the  appropriation was  a subsidy  outside of  the                                                                    
AMHTA  budget that  had already  passed.  Ms. Crosby  stated                                                                    
that AMHTA  encouraged a state  match when  using additional                                                                    
mental  health funds.  It was  the  state's portion  towards                                                                    
state programs.                                                                                                                 
                                                                                                                                
Co-Chair von  Imhof asked Mr. Carpenter  to offer additional                                                                    
comments.                                                                                                                       
                                                                                                                                
6:22:12 PM                                                                                                                    
                                                                                                                                
ROB  CARPENTER,   ANALYST,  LEGISLATIVE   FINANCE  DIVISION,                                                                    
stated that  Ms. Crosby  was correct  in her  assertion that                                                                    
AMHTA proposed  a comprehensive mental  health plan  for the                                                                    
required  program,  of  which  a  large  portion  was  state                                                                    
funded, and a large portion  was paid from the mental health                                                                    
trust.  He furthered  that AMHTA  submitted the  proposal to                                                                    
the legislature.  The legislature  then vetted  the proposal                                                                    
and  decided on  the funding  level. The  governor chose  to                                                                    
veto all  of the state  money leaving only the  trust money.                                                                    
The current bill reinstated the state money.                                                                                    
                                                                                                                                
Senator  Wilson asked  for  the total  amount  of the  AMHTA                                                                    
portion.                                                                                                                        
                                                                                                                                
Co-Chair von Imhof  asked if what was being  proposed in the                                                                    
bill  was  consistent  with  previous  years'  funding.  Mr.                                                                    
Carpenter replied  that it was  consistent with  past years.                                                                    
He  did  not  have  the  total amount  but  thought  it  was                                                                    
approximately $15  million, of  which $11 million  was state                                                                    
funding.                                                                                                                        
                                                                                                                                
Ms. Crosby was happy to get the amount to Senator Wilson.                                                                       
                                                                                                                                
Co-Chair von  Imhof noted  that it was  a policy  to include                                                                    
the  mental health  capital projects  in the  bill into  one                                                                    
capital bill. The items were  vetoed. She felt that the AHFC                                                                    
Homeless Assistance  Program was  important in  addressing a                                                                    
critical issue in the state.  The trust had indicated it had                                                                    
only  two  priorities:  homelessness and  behavioral  health                                                                    
therapy. The Trust was acting  in line with their priorities                                                                    
and had asked  the state to help them  leverage their funds.                                                                    
She  continued that  there were  several entities  trying to                                                                    
make  progress  in  the  area  of  homelessness.  She  noted                                                                    
devoted an entire finance committee  hearing to the issue of                                                                    
homeless  and heard  from a  variety of  stakeholders. There                                                                    
was a call to place the amount back in the budget.                                                                              
                                                                                                                                
6:24:44 PM                                                                                                                    
                                                                                                                                
Ms.  Crosby returned  to page  15, Section  8 and  Section 9                                                                    
reflected funding  sources for  mental health  trust capital                                                                    
appropriations for a total of  $11,700,000. She continued to                                                                    
page  17,  Section  10 which  contained  ratifications.  The                                                                    
change   was  a   technical   addition   requested  by   the                                                                    
administration.   It   righted    a   wrong   granting   the                                                                    
administration authority for prior years' expenditures.                                                                         
                                                                                                                                
Ms. Crosby stayed  on page 17 to discuss  Section 11(a). The                                                                    
section  showed  an  appropriation of  $200,000  EVOS  [Exon                                                                    
Valdez  Oil  Spill]  earnings to  Prince  William's  Science                                                                    
Center. She continued to Section  11(b), an appropriation of                                                                    
$2 million  to the Alaska Industrial  Development and Export                                                                    
Authority. She  explained that it  was for  the construction                                                                    
and  major  maintenance  of  the  Northwest  Arctic  Borough                                                                    
School.  She   addressed  Section  11(c)  on   page  18.  It                                                                    
contained   an  appropriation   of   $4   million  for   the                                                                    
construction  and expansion  of  the  Liquified Natural  Gas                                                                    
Storage Facility in  North Pole, AK. The  funding source was                                                                    
the Sustainable  Energy Transmission and  Supply Development                                                                    
Fund (SETS).                                                                                                                    
                                                                                                                                
Ms.  Crosby continued  on page  18 of  the bill.  Section 12                                                                    
contained intent  language for  the Department  of Education                                                                    
and Early Development regarding the  proceeds of the sale of                                                                    
land  in Sitka  to Mt.  Edgecombe School.  Section 13  was a                                                                    
reappropriation  of  $34,577  for Flat  Top  Mountain  Trail                                                                    
Clean  Up  Pilot  Project. Section  14(a)  reflected  intent                                                                    
language  for  the  Alaska   Marine  Highway  System  (AMHS)                                                                    
regarding the proceeds of sales.                                                                                                
                                                                                                                                
Ms. Crosby continued  to page 19, Section  14(b) reflected a                                                                    
reappropriation  of $1.6  million of  harbor facility  grant                                                                    
projects  to  the Harbor  Facility  Grant  Fund. Section  15                                                                    
outlined a  scope change for the  Ketchikan Moorage Facility                                                                    
Project. She  remained on page  19, Section 16  which showed                                                                    
reappropriations of past capital  projects to Alaska Housing                                                                    
Capital   Corporation.  She   reminded   members  that   the                                                                    
reappropriations  in Section 16  were  funds  that would  be                                                                    
sitting  available   for  the   committee  to   discuss  and                                                                    
reappropriate in the following year.                                                                                            
                                                                                                                                
Ms.  Crosby moved  to page  24, Section  17 was  the reverse                                                                    
sweep  language.  Section  17(b) contained  deficit  filling                                                                    
language.  If revenues  were lower  than  projected for  all                                                                    
appropriation bills,  the CBR would  be used to  balance the                                                                    
budget. The  language was  standard. On  page 25  in Section                                                                    
17(c) she reported headroom  for supplementals requested for                                                                    
FY 20 which  was capped at $250 million.  Section 17(c) made                                                                    
appropriations from the CBR.                                                                                                    
                                                                                                                                
Ms.  Crosby  indicated  Section   18  on  page  25  repealed                                                                    
population  triggers  enacted  in   SB  19  for  the  Palmer                                                                    
Correction Center. Section 19  detailed lapse provisions for                                                                    
when  appropriations  would  lapse. Retroactivity  could  be                                                                    
found on  page 26 in  Section 20 and was  standard language.                                                                    
Section  21  contained  contingency language  regarding  the                                                                    
reverse sweep.  The last  section of  the bill,  Section 22,                                                                    
indicated an immediate effective date.                                                                                          
                                                                                                                                
6:29:28 PM                                                                                                                    
                                                                                                                                
Senator Olson referenced  page 8 of the bill  and the Office                                                                    
of the  Governor. He asked if  there was a list  of what was                                                                    
included in the $10,700,000 figure.                                                                                             
                                                                                                                                
Co-Chair von Imhof directed Mr.  Carpenter to respond to the                                                                    
senator's question.                                                                                                             
                                                                                                                                
Mr.  Carpenter  asked  if  Senator  Olson  was  speaking  to                                                                    
page 4, line 28.                                                                                                                
                                                                                                                                
Senator Olson clarified he was  referring to page 8, line 17                                                                    
referring to  the Office  of the Governor.  He asked  for an                                                                    
itemization of the funds.                                                                                                       
                                                                                                                                
Mr. Carpenter referred to page  4, line 28 which denoted the                                                                    
project associated with the funding  source. The funding was                                                                    
for  the statewide  deferred maintenance  and renovation  to                                                                    
the Office  of the  Governor to manage  the project  for all                                                                    
state facilities.                                                                                                               
                                                                                                                                
Senator  Olson  asked  if  the   funds  were  primarily  for                                                                    
deferred   maintenance.   Mr.  Carpenter   responded,   "100                                                                    
percent."                                                                                                                       
                                                                                                                                
Co-Chair  von Imhof  thought Senator  Olson  had a  question                                                                    
about a  bill that had  been heard  earlier in the  day. She                                                                    
reported that  $2 million was  going towards  an Information                                                                    
Technology  item.  She  did  not think  the  item  that  was                                                                    
discussed  earlier was  reflected  in the  $10 million.  She                                                                    
asked if she was correct.                                                                                                       
                                                                                                                                
Mr. Carpenter believed so. He  did not recall the IT project                                                                    
unless it was related to  the reappropriation that was added                                                                    
back in  the governor's bill because  of the reappropriation                                                                    
sweep. He thought it was different.                                                                                             
                                                                                                                                
Senator Olson referenced Section 18  on page 25 of the bill.                                                                    
He  noted  that earlier  in  the  day  the committee  had  a                                                                    
presentation in  which he  heard the repeal  had to  do with                                                                    
the Palmer  Correctional Center.  The money that  was slated                                                                    
for  the  facility  could  also  be  used  for  out-of-state                                                                    
transport  of prisoners.  He wondered  if it  was still  the                                                                    
case.                                                                                                                           
                                                                                                                                
Ms.  Crosby  answered  in  the   negative.  The  funds  were                                                                    
designated  for the  Palmer  Correctional  Center only.  The                                                                    
section simply  repealed the language that  the facility was                                                                    
required to  have a  certain number of  inmates in  order to                                                                    
use the facility.                                                                                                               
                                                                                                                                
6:32:50 PM                                                                                                                    
                                                                                                                                
Senator Wielechowski asked if  the bill restored funding for                                                                    
homelessness    grants,   PCE,    WWAMI,   and    University                                                                    
scholarships. Mr.  Carpenter answered  that it did  with the                                                                    
reverse sweep.                                                                                                                  
                                                                                                                                
Senator Wilson wanted the committee  to be cautious with the                                                                    
bill. He referenced  the separation of powers  issue. He did                                                                    
not want  anything to threaten  his road safety  projects in                                                                    
action. He noted  most people were aware of  the KGB highway                                                                    
[Knik Goose Bay  Road], the deadliest highway  in the state,                                                                    
and  the  importance of  the  associated  road upgrades.  He                                                                    
noted the  doubling of the page  length in the bill.  He did                                                                    
not want to  jeopardize the good faith and  trust of finding                                                                    
a path forward  to ensure the capital project  bill, or what                                                                    
he called  the state's  "job appropriation" bill  across the                                                                    
finish line.                                                                                                                    
                                                                                                                                
Co-Chair  von  Imhof  thought  it  was  the  intent  of  the                                                                    
committee  to  meet  the  July  31st  deadline  for  federal                                                                    
matching funds.  She opined that  connecting the  state with                                                                    
its  people,   resources,  and   lands  was   a  legislative                                                                    
priority.                                                                                                                       
                                                                                                                                
Senator  Wielechowski  asked  if   the  repeal  language  in                                                                    
Section  18  deleted  the reports  that  the  Department  of                                                                    
Corrections  would  issue.  Mr. Carpenter  answered  in  the                                                                    
negative.  The  language  merely deleted  the  inmate  count                                                                    
contingencies for the release of the monies.                                                                                    
                                                                                                                                
Ms. Crosby  confirmed that she had  verified the information                                                                    
many times, as it was the  intent of the co-chairs to remove                                                                    
the contingencies.                                                                                                              
                                                                                                                                
Co-Chair von  Imhof WITHDREW her  objection. There  being NO                                                                    
OBJECTION, it  was so ordered. The  committee substitute for                                                                    
SB 2002 was adopted.                                                                                                            
                                                                                                                                
Co-Chair  Stedman  MOVED to  report  CSSB  2002(FIN) out  of                                                                    
Committee with individual recommendations.                                                                                      
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
CSSB 2002(FIN) was REPORTED out of committee with a "do                                                                         
pass" recommendation.                                                                                                           
                                                                                                                                
Co-Chair von Imhof thanked the presenters and her staff.                                                                        
She reported the next meeting would be announced and posted                                                                     
online.                                                                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
6:36:44 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 6:36 p.m.                                                                                          

Document Name Date/Time Subjects
7.19.19 SFC SB 2002 Capital Budget.pdf SFIN 7/19/2019 11:00:00 AM
SB2002
7 15 19 Short Fiscal Summary.pdf SFIN 7/19/2019 11:00:00 AM
SB 2002 Capital Budget
SB 2002 Capital Budget work draft Version M.pdf SFIN 7/19/2019 11:00:00 AM
SB2002