Legislature(2019 - 2020)SENATE FINANCE 532

02/06/2020 09:00 AM FINANCE

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Audio Topic
08:59:35 AM Start
09:00:16 AM SB174
11:03:28 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 174 APPROP:SUPP; REAPPROP; CAP; AMEND; CBR TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                     February 6, 2020                                                                                           
                         8:59 a.m.                                                                                              
                                                                                                                                
8:59:35 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Stedman   called  the  Senate   Finance  Committee                                                                    
meeting to order at 8:59 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Click Bishop                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Bill Wielechowski                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Natasha von Imhof, Co-Chair                                                                                             
Senator David Wilson                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Neil Steininger, Director, Office  of Management and Budget,                                                                    
Office  of the  Governor; Chris  Maisch, State  Forester and                                                                    
Director,  Division  of   Forestry,  Department  of  Natural                                                                    
Resources;   April    Wilkerson,   Administrative   Services                                                                    
Director,  Department of  Corrections, Office  of Management                                                                    
and Budget,  Office of the Governor;  Senator Cathy Giessel;                                                                    
Senator  Gary Stevens;  Sana Efird,  Assistant Commissioner,                                                                    
Department of  Health and Social Services;  Torrey Jacobsen,                                                                    
Budget   Analyst,   Department   of  Public   Safety;   John                                                                    
MacKinnon,  Commissioner, Department  of Transportation  and                                                                    
Public Facilities; Kelly  Tshibaka, Commissioner, Department                                                                    
of Administration.                                                                                                              
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 174    APPROP:SUPP; REAPPROP; CAP; AMEND; CBR                                                                                
                                                                                                                                
          SB 174 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SENATE BILL NO. 174                                                                                                           
                                                                                                                                
     "An    Act    making    supplemental    appropriations,                                                                    
     reappropriations,  and  other appropriations;  amending                                                                    
     appropriations;     capitalizing      funds;     making                                                                    
     appropriations under art.  IX, sec. 17(c), Constitution                                                                    
     of the State of  Alaska, from the constitutional budget                                                                    
    reserve fund; and providing for an effective date."                                                                         
                                                                                                                                
9:00:16 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  relayed that the committee  would consider                                                                    
the supplemental  budget and a presentation  from the Office                                                                    
of  Management  and  Budget  (OMB).  He  remarked  that  the                                                                    
proposed supplemental  budget was significant  and commented                                                                    
on  the  state's  depleted cash  reserves.  He  thought  the                                                                    
committee might  want to  include conversation  with several                                                                    
department heads that were present.                                                                                             
                                                                                                                                
9:01:38 AM                                                                                                                    
                                                                                                                                
NEIL STEININGER, DIRECTOR, OFFICE  OF MANAGEMENT AND BUDGET,                                                                    
OFFICE OF  THE GOVERNOR, discussed the  presentation "Senate                                                                    
Finance  Committee  FY2020   Supplemental  Budget  Overview"                                                                    
(copy on file).                                                                                                                 
                                                                                                                                
Mr. Steininger looked at slide 2, "Supplemental Bill":                                                                          
                                                                                                                                
     ? Supplemental bill comprised of two parts:                                                                                
       Urgent/emergency response: $241,931.7 UGF                                                                                
     ? Regular supplement: $20,615.0 UGF                                                                                        
                                                                                                                                
     Total: $262,546.7 UGF, $507,910.4 All Funds                                                                                
                                                                                                                                
Mr. Steininger relayed that  there were regular supplemental                                                                    
items, which  were urgent enough  to have a FY  20 effective                                                                    
date in the appropriation but  did not need immediate action                                                                    
to be able to continue the program.                                                                                             
                                                                                                                                
9:03:09 AM                                                                                                                    
                                                                                                                                
Senator   Hoffman  had   done  a   cursory  review   of  the                                                                    
supplemental and  referenced "urgent items." He  did not see                                                                    
funds requested  by the administration other  than donations                                                                    
from Alaskans  to get the  Real I.D. He thought  people that                                                                    
would be  most affected by  the lack  of ability to  get the                                                                    
Real I.D. to  travel were the elderly and sick,  who may not                                                                    
have driver's  licenses. He wondered  why there had  been no                                                                    
request for what  he considered a life  and death situation,                                                                    
where  some  individuals would  need  to  travel for  health                                                                    
care.                                                                                                                           
                                                                                                                                
Mr.  Steininger stated  that  there was  a  small amount  of                                                                    
money  in  the  Division  of Motor  Vehicle  (DMV)  receipts                                                                    
related to document  processing. He could not  speak to what                                                                    
Senator Hoffman had mentioned.                                                                                                  
                                                                                                                                
Senator  Hoffman reiterated  that the  lack of  funds was  a                                                                    
life and death  situation. He emphasized that  it was urgent                                                                    
for the  people of Alaska  to get needed  medical attention.                                                                    
He  noted that  Senator Olson  had brought  up the  issue on                                                                    
numerous occasions.  He hoped the matter  could be addressed                                                                    
before the supplemental budget was  passed by the Senate. He                                                                    
measured the  supplemental budget  requests by  whether they                                                                    
were equivalent or  higher than the need of  those in remote                                                                    
areas that  needed Real  I.D. to  travel for  healthcare. He                                                                    
thought the request for individual  Alaskans to donate funds                                                                    
to the DMV was absurd.                                                                                                          
                                                                                                                                
Senator  Olson echoed  the comments  by Senator  Hoffman. He                                                                    
mentioned villages in his district.  He referenced slide 15.                                                                    
He was  troubled by  proposed funds  to move  a DMV  site in                                                                    
Anchorage. He  questioned the priorities  in the  budget. He                                                                    
wondered  about  the  thought process  behind  the  proposed                                                                    
budget.                                                                                                                         
                                                                                                                                
Co-Chair  Stedman  asked for  Mr.  Steininger  to provide  a                                                                    
preliminary   answer  to   Senator   Olson's  question   and                                                                    
suggested the committee revisit the topic on slide 15.                                                                          
                                                                                                                                
Mr. Steininger  suggested that the discussion  continue when                                                                    
the   presentation   was  on   slide   15   and  thought   a                                                                    
representative   from   the   department  could   join   the                                                                    
conversations.                                                                                                                  
                                                                                                                                
9:08:25 AM                                                                                                                    
                                                                                                                                
Mr. Steininger  spoke to slide  3, "UGF Operating  & Capital                                                                    
Budgets with Supplementals - FY2019    FY2021," which showed                                                                    
a bar graph. He commented that  the slide put context to the                                                                    
total budget numbers inclusive  of supplementals. He pointed                                                                    
out that  the first bar  was the  FY 19 budget  inclusive of                                                                    
supplementals past. Other bars showed  the FY 20 budget with                                                                    
proposed  supplementals to  date, and  the FY  21 governor's                                                                    
budget.  He specified  that  from the  FY 19  to  the FY  20                                                                    
inclusive  supplemental  budgets  there  was  a  significant                                                                    
reduction   in  total   undesignated  general   funds  (UGF)                                                                    
spending  of  about  $239  million.  From FY  20  to  FY  21                                                                    
(including  supplementals) there  was a  reduction of  about                                                                    
$70 million in proposed spending.                                                                                               
                                                                                                                                
Co-Chair  Stedman  thought there  were  some  issues in  the                                                                    
supplemental  that had  not been  dealt  with in  FY 20.  He                                                                    
mentioned  oil  tax  credits, which  he  understood  had  an                                                                    
impact of around  $100 million if the state  did not prevail                                                                    
in litigation dealing  with the issuance of  bonds. He asked                                                                    
if  OMB had  a position  on  the subject.  He wondered  what                                                                    
action   the   legislature   would   take   via   a   direct                                                                    
appropriation versus a bond issuance.                                                                                           
                                                                                                                                
Mr.  Steininger stated  the administration  hoped that  over                                                                    
time there would be more  clarity by resolution of a lawsuit                                                                    
so  that OMB  could  put  forward a  proposal  based on  the                                                                    
outcome. He stated that the matter was under discussion.                                                                        
                                                                                                                                
Co-Chair Stedman  thought it looked  as though if  there had                                                                    
to be  a direct appropriation, it  would be at or  above the                                                                    
appropriation for the bonds.                                                                                                    
                                                                                                                                
Mr. Steininger  did not  have the exact  number at  hand but                                                                    
acknowledged that  a direct appropriation payout  of credits                                                                    
would be an increase in the amount of UGF needed.                                                                               
                                                                                                                                
Co-Chair Stedman  wanted the public to  recognize that there                                                                    
had  been  a   great  deal  of  effort  put   forth  by  the                                                                    
legislature and  the administration to reduce  the operating                                                                    
budget over  the previous  year. When  supplemental requests                                                                    
for the current budget and  tax credits were added back, the                                                                    
amount  was   flat  or  higher  than   the  previous  year's                                                                    
spending. If  the state  issued bonds,  there would  be some                                                                    
reduction  from  the previous  year;  but  cash flows  going                                                                    
forward would be  impacted by possibly $50  million per year                                                                    
for  several   years.  The  large  step-down   in  operating                                                                    
expenditures  did  not  materialize.   He  stated  that  the                                                                    
committee  had   discussed  not  having   supplementals.  He                                                                    
thought the  supplemental being  considered was  of colossal                                                                    
size;  and  may give  that  idea  that although  there  were                                                                    
operating budget reductions, the  funds were just added back                                                                    
in.                                                                                                                             
                                                                                                                                
9:13:00 AM                                                                                                                    
                                                                                                                                
Mr.  Steininger referenced  slide  4,  "Supplemental Bill                                                                       
Urgent/Emergency Response Items":                                                                                               
                                                                                                                                
     ? Dept. of Natural Resources                                                                                               
          ?   Fire,   Land,   and  Water   Resources;   Fire                                                                    
          Suppression: $110,500.0 UGF                                                                                           
     ? Dept. of Transportation and Public Facilities                                                                            
          ?  Operating:  Highway, Aviation  and  Facilities;                                                                    
          Northern  Highways   Dalton  Highway/Atigun  Pass:                                                                    
          $158.1 UGF                                                                                                            
          ?  Capital:  Knik-Goose  Bay  Road:  $2,000.0  UGF                                                                    
          Reappropriation                                                                                                       
          ?   Capital:   Earthquake   Relief       Federally                                                                    
          Ineligible: $3,000.0 UGF                                                                                              
     ? Dept. of Military and Veterans Affairs                                                                                   
           Capital    Mass    Notification:    $900.0    UGF                                                                    
          Reappropriation                                                                                                       
     ? Dept. of Health and Social Services                                                                                      
             Medicaid  Services; Medicaid:  $128,273.6  UGF,                                                                    
          $162,130.9 Fed                                                                                                        
                                                                                                                                
     TOTAL: $241,931.7 UGF, $162,130.9 Fed                                                                                      
                                                                                                                                
Mr.  Steininger  explained that  there  was  a typo  on  the                                                                    
slide, and  that the  $900,000 in UGF  for the  capital mass                                                                    
notification  system  was  actually   $450,000  in  UGF  and                                                                    
$450,000  in federal  matching funds.  He  noted that  there                                                                    
were subsuquent  slides that provided  detail as to  how the                                                                    
administration  got into  the position  of requiring  such a                                                                    
large supplemental for Medicaid services.                                                                                       
                                                                                                                                
Senator Wielechowski  asked about the $110  million for fire                                                                    
suppression  and asked  if any  of the  funds were  for Swan                                                                    
Lake.                                                                                                                           
                                                                                                                                
Mr.  Steininger did  not know  of specific  fires the  funds                                                                    
were for,  but qualified  that the funds  were for  fires on                                                                    
state lands.                                                                                                                    
                                                                                                                                
Senator  Wielechowski recalled  that the  federal government                                                                    
had made the decision to let  the fire run, which had turned                                                                    
out to be  a poor decision. He was curious  as to the extent                                                                    
to which  the state  was paying for  what he  considered the                                                                    
negligence of the federal government.                                                                                           
                                                                                                                                
Co-Chair  Stedman   thought  the  question  might   be  best                                                                    
directed to  the Department of Natural  Resources and agreed                                                                    
that the issue was of concern.                                                                                                  
                                                                                                                                
9:16:24 AM                                                                                                                    
                                                                                                                                
CHRIS  MAISCH,  STATE  FORESTER AND  DIRECTOR,  DIVISION  OF                                                                    
FORESTRY,  DEPARTMENT OF  NATURAL RESOURCES,  explained that                                                                    
the  supplemental did  not include  any costs  for the  Swan                                                                    
Lake fire. The fire was  covered under the federal authority                                                                    
portion  of fire  cost accounting,  which was  separate than                                                                    
the general  funds. The state  would be reimbursed  the full                                                                    
$49 million  that was  spent in  federal authority  to fight                                                                    
the Swan Lake fire.                                                                                                             
                                                                                                                                
Senator   Wielechowski  asked   if  the   reimbursement  was                                                                    
factored into the supplemental budget.                                                                                          
                                                                                                                                
Mr. Maisch  stated that  the $49  million was  accounted for                                                                    
separately; and  the federal authority  piece of  the budget                                                                    
was the authority to collect  federal revenue and also spend                                                                    
general  funds  to suppress  fires  in  the state's  service                                                                    
area. The  Alaska Fire Service,  the primary  federal agency                                                                    
that did fire  suppression, protected a certain  area of the                                                                    
state and  the Division  of Forestry protected  another area                                                                    
of the  state. When  the division fought  a federal  fire in                                                                    
the state's  service area, it  spent general funds  up front                                                                    
and  then received  reimbursement. The  Alaska Fire  Service                                                                    
did the  same, while spending  federal money on  state lands                                                                    
and then getting reimbursed. The  arrangement was called the                                                                    
"cross-billing  process,"  and   it  took  approximately  24                                                                    
months  to complete.  He clarified  that the  payments would                                                                    
not  affect the  supplemental budget,  which included  costs                                                                    
for fire suppression on state,  federal, and municipal lands                                                                    
which by statute the division was charged with protecting.                                                                      
                                                                                                                                
Senator Wielechowski  asked if the state  would be receiving                                                                    
$49  million  from  the federal  government  that  would  be                                                                    
reflected in the budget.                                                                                                        
                                                                                                                                
Mr. Maisch affirmed  that the state would  be reimbursed the                                                                    
full amount, which would go to the general fund.                                                                                
                                                                                                                                
Co-Chair Stedman thought  OMB or LFD could  help clarify the                                                                    
accounting process to see what  was owed the state. He noted                                                                    
there was a 24-month delay.                                                                                                     
                                                                                                                                
Senator  Bishop  asked  about  the  $110  million  for  fire                                                                    
suppression and asked if the funds were gone.                                                                                   
                                                                                                                                
Mr.  Maisch confirmed  that  the funds  had  been spent.  He                                                                    
explained that three of the  fires in the previous year were                                                                    
considered  Fire Mitigation  Assistance  Grant fires,  which                                                                    
were dangerous fires that threatened  urban areas, the costs                                                                    
of  which  could  be  applied  for  reimbursement  from  the                                                                    
Federal Emergency Management Agency  (FEMA). The process was                                                                    
lengthy  and could  return as  much  as $30  million to  the                                                                    
treasury. He  thought the funds  would not show up  until FY                                                                    
21 or FY 22. The fires  were audited extensively by FEMA and                                                                    
would be reimbursed up to 75 percent for eligible expenses.                                                                     
                                                                                                                                
9:20:10 AM                                                                                                                    
                                                                                                                                
Senator Hoffman asked Mr. Maisch if  he knew how much of the                                                                    
$110 million was spent to save property.                                                                                        
                                                                                                                                
Mr. Maisch  thought 100  percent of the  funds was  spent to                                                                    
protect life  and property. The  majority of the  costs were                                                                    
for large  project fires, mainly  up in Fairbanks  and rural                                                                    
parts  of the  state.  He mentioned  the  McKinley fire,  in                                                                    
which  there had  been significant  loss  of structures.  He                                                                    
mentioned the Malaspina fire near  Talkeetna, and many fires                                                                    
in the area in late August.                                                                                                     
                                                                                                                                
Senator  Wielechowski understood  that many  or most  of the                                                                    
fires were caused by human  activity. He asked if there were                                                                    
efforts  underway   to  try  and  recover   from  people  or                                                                    
organizations that caused fires.                                                                                                
                                                                                                                                
Mr. Maisch  stated there were many  human-caused fires every                                                                    
year, and there was always  an investigation to determine if                                                                    
there  had  been   negligence  and  if  so   if  there  were                                                                    
recoverable  funds. Typically,  the  recoverable funds  were                                                                    
from   insurance  proceeds   from  homeowners   or  business                                                                    
policies.  He estimated  that there  were four  cases moving                                                                    
through  the civil  process to  recover funds.  There was  a                                                                    
seven-year  statute  of  limitations,  and  because  of  the                                                                    
workload at  the Department  of Law, many  of the  cases did                                                                    
not start until 5 years after the event.                                                                                        
                                                                                                                                
9:22:13 AM                                                                                                                    
                                                                                                                                
Mr.  Steininger  turned  to slide  5,  "Medicaid:  Ambitious                                                                    
Goals":                                                                                                                         
                                                                                                                                
     Governor's FY20 budget had ambitious savings targets                                                                       
     for Medicaid based on changes to several elements                                                                          
     ? Reduced provider payments                                                                                                
     ? Withhold payment inflation adjustments                                                                                   
    ? Elimination of adult preventative dental benefit                                                                          
     ? Timely filing allowance                                                                                                  
     ? Transportation efficiencies                                                                                              
     ? Tribal claiming                                                                                                          
     ? Other efforts                                                                                                            
                                                                                                                                
Mr. Steininger spoke  to the bar graph on  slide 5, entitled                                                                    
'FY 2020 UGF Medicaid Budget'.  He identified that there had                                                                    
been  ambitious  goals  built on  savings  initiatives.  The                                                                    
initiatives were  related to  a lot of  items that  had been                                                                    
believed  to be  optional items  or supposed  reductions. He                                                                    
pointed out  that there  was a  projected about  $20 million                                                                    
shortfall just moving from FY 19  budget going to FY 20. The                                                                    
projected  need  for the  program  as  it was  projected  in                                                                    
November   2018  was   about  $683   million.  Through   the                                                                    
legislative  process  the  budget   was  reduced  to  $574.6                                                                    
million; then through further vetoes  the amount was reduced                                                                    
to $516.3 million.                                                                                                              
                                                                                                                                
Co-Chair Stedman  was confused by  the bar on  the left-hand                                                                    
side of  the graph. He  asked for Mr. Steininger  to discuss                                                                    
the projected shortfall.                                                                                                        
                                                                                                                                
Mr. Steininger explained that the  blue bar represented what                                                                    
the  FY  19  "base  budget"  for  Medicaid,  which  was  the                                                                    
starting  point  that OMB  used  to  build the  budget.  The                                                                    
orange  portion of  the bar  showed the  projected shortfall                                                                    
for  FY  20.  On  November   30,  2018  the  department  was                                                                    
projecting the  general fund need  for the  Medicaid program                                                                    
for FY  20 would be  $683 million. The amount  was reflected                                                                    
in  initial  budget proposals  at  the  time; prior  to  the                                                                    
governor-amended  budget  after  the  administration  worked                                                                    
with  the department  to identify  areas for  reduction. The                                                                    
graph was intended  to provide context of the  true scale of                                                                    
spending reductions the department had going into FY 20.                                                                        
                                                                                                                                
Co-Chair  Stedman did  not  recall  the projected  shortfall                                                                    
shown on the  graph. He asked if the committee  should be on                                                                    
the lookout for another shortfall for the FY 21 budget.                                                                         
                                                                                                                                
Mr. Steininger  thought one could consider  the supplemental                                                                    
request  to be  orange bar  on the  graph for  FY 20,  as it                                                                    
represented  the   anticipated  revenue  shortfall   in  the                                                                    
Medicaid program.                                                                                                               
                                                                                                                                
9:26:28 AM                                                                                                                    
                                                                                                                                
Mr.  Steininger  considered  slide  6,  "Medicaid:  Realized                                                                    
Savings":                                                                                                                       
                                                                                                                                
     FY2020 ambitious savings goal of $166,707.7 UGF was                                                                        
     not realized.                                                                                                              
                                                                                                                                
     Even after supplemental, FY2020 Medicaid spending is                                                                       
     still substantially reduced.                                                                                               
                                                                                                                                
     11/30/18 FY2020 Projection [UGF)   $ 683,038.4                                                                             
     Provider rate reductions           $ (17,716.9)                                                                            
     Savings through tribal claiming    $ (20,100.0)                                                                            
     Savings thru pharmacy and Medicare Part B $ (5,538.0)                                                                      
     Other utilization changes          $ 4,919.9                                                                               
     FY2020 Projected Total             $ 644,603.4                                                                             
     Projected Savings in FY2020        $ (38,435.0)                                                                            
                                                                                                                                
Mr.  Steininger summarized  that there  had been  difficulty                                                                    
achieving   the    ambitious   savings    goals   previously                                                                    
identified. Some  of the  services that  were thought  to be                                                                    
optional at the time the budget  was built turned out not to                                                                    
be optional. There  were still savings of  about $38 million                                                                    
from what  the status quo  projection was. While  there were                                                                    
failures  in implementation  of  savings  goals, there  were                                                                    
also  successes.  He  thought  a  $38  million  savings  was                                                                    
significant.  He thought  it was  easy for  the point  to be                                                                    
lost when considering  a supplemental need as  large as $128                                                                    
million.                                                                                                                        
                                                                                                                                
Senator  Hoffman thought  the committee  had identified  and                                                                    
pursued  the  tribal  claims with  the  cooperation  of  the                                                                    
tribes in  the state. He noted  that over 50 percent  of the                                                                    
savings on the  page were contributed to  the tribal members                                                                    
of Alaska.                                                                                                                      
                                                                                                                                
Co-Chair  Stedman  recalled  that  the  committee  had  been                                                                    
concerned about the matter and  had been urging action for a                                                                    
number  of  years.  He  thought  the  inability  to  control                                                                    
Medicaid  was concerning.  He thought  it  was alarming  and                                                                    
discomfiting   that  the   state   did  significant   budget                                                                    
reductions then  added back the  spending six  months later.                                                                    
He  thought it  made it  more  difficult for  the public  to                                                                    
understand  the  difficulty   with  reducing  the  operating                                                                    
budget as the state's cash ran out.                                                                                             
                                                                                                                                
Senator Bishop commented that the  slide had said "projected                                                                    
savings," which indicated it was not sure.                                                                                      
                                                                                                                                
Mr.  Steininger  confirmed  that  the  slide  was  based  on                                                                    
current projections.                                                                                                            
                                                                                                                                
Senator  Wielechowski asked  about the  impact to  the state                                                                    
and Medicaid  services if the  legislature did not  add back                                                                    
on $128 million to Medicaid.                                                                                                    
                                                                                                                                
9:29:41 AM                                                                                                                    
                                                                                                                                
Mr. Steininger  displayed slide  7, "Medicaid:  General Fund                                                                    
Cash Flow," which  showed a line graph. He  thought the next                                                                    
slide  would address  Senator  Wielechowski's question.  The                                                                    
blue line showed the cash  flow in the Medicaid program with                                                                    
current   funding.   The   implication  was   that   without                                                                    
supplemental  appropriation, the  state would  no longer  be                                                                    
able to pay out to service  providers starting at the end of                                                                    
March,  2020. The  average weekly  spend  projected for  the                                                                    
rest of  the year was about  $13.8 million in UGF.  The last                                                                    
point  on the  slide, "insufficient  funding to  get through                                                                    
the  last  quarter  of  FY   20"  was  a  fairly  optimistic                                                                    
statement. He stated that there  was insufficient funding to                                                                    
guarantee the state got through the third quarter of FY 20.                                                                     
                                                                                                                                
Co-Chair Stedman asked Mr. Steininger  to explain a formula-                                                                    
driven program,  and why  the funding could  not just  go to                                                                    
zero and stay at zero.                                                                                                          
                                                                                                                                
Mr. Steininger  stated that  about 35  percent of  the state                                                                    
were   beneficiaries    of   the   Medicaid    program.   As                                                                    
beneficiaries utilized services, the  state was obligated to                                                                    
pay   providers  for   services   rendered.   Even  if   the                                                                    
appropriation was  less than  the costs,  the state  did not                                                                    
have  a choice  in having  to pay.  The department  had been                                                                    
working with different stakeholders  to reduce costs and had                                                                    
had  been looking  at the  different services  provided; but                                                                    
such  changes  required  coordination between  many  outside                                                                    
parties. He noted that the  federal government provided over                                                                    
70 percent of  the funding for the program and  had a lot of                                                                    
say over the services provided under the program.                                                                               
                                                                                                                                
Co-Chair  Stedman  stated  that the  program  was  operating                                                                    
under federal law.                                                                                                              
                                                                                                                                
Mr. Steininger answered "yes."                                                                                                  
                                                                                                                                
Co-Chair  Stedman  thought  the   committee  would  be  very                                                                    
concerned when it put together  the upcoming budget to avoid                                                                    
the  current situation  and have  more realistic  numbers in                                                                    
the  budget. He  pointed out  that  it was  not possible  to                                                                    
identify and  fix problems unless  they were  delineated and                                                                    
defined more  accurately. He recognized that  Mr. Steininger                                                                    
was the new director of OMB,  and that the last director had                                                                    
made the  commitments. He  said some of  his comments  had a                                                                    
historical perspective.                                                                                                         
                                                                                                                                
9:33:32 AM                                                                                                                    
                                                                                                                                
Mr.  Steininger  highlighted  slide 8,  "Medicaid  Spending:                                                                    
FY2004 -  FY2021," which showed  a graph  entitled 'Medicaid                                                                    
Actuals.' The  slide was  updated from  the same  slide that                                                                    
had  been  included  in  his  general  budget  overview.  He                                                                    
pointed out that  the slide had been updated  to include all                                                                    
fund  sources  to  show Medicaid  historical  spending.  The                                                                    
slide  illustrated the  growth  in the  program. He  pointed                                                                    
that there  were not  significant reductions  projected into                                                                    
FY 21. He stated the  department would rather come back with                                                                    
savings  that  had  been  realized  rather  than  projecting                                                                    
savings that could not be guaranteed.                                                                                           
                                                                                                                                
Co-Chair Stedman thought the  committee would appreciate the                                                                    
representation, as  well as a  more refined estimate  of the                                                                    
state's  cash position.  He noted  that  that the  committee                                                                    
would  work  with  the   department  through  the  budgetary                                                                    
process  to identify  cost savings  and have  discussions on                                                                    
what  formula-driven  mechanisms  could be  altered  to  get                                                                    
costs under  control. He  did not want  the public  to think                                                                    
that the legislature would do nothing.                                                                                          
                                                                                                                                
Senator   Hoffman   requested  information   on   geographic                                                                    
distribution of  growth in Medicaid beneficiaries  from 2015                                                                    
to 2020.                                                                                                                        
                                                                                                                                
Co-Chair  Stedman   asked  for   Mr.  Steininger  to   do  a                                                                    
geographical   distribution   of   beneficiaries   and   the                                                                    
beneficiary's  growth.  He thought  the  chair  of the  DHSS                                                                    
subcommittee could  incorporate the information  into budget                                                                    
discussions. He  wanted information including  several years                                                                    
before the growth started.                                                                                                      
                                                                                                                                
Mr.  Steininger looked  at  slide  9, "Regular  Supplemental                                                                    
Items."  The  next  section of  the  presentation  addressed                                                                    
items   that  were   sufficiently  urgent   to  warrant   an                                                                    
appropriation in FY  20, but not so urgent  that they needed                                                                    
to be addressed  immediately. He noted that  there were also                                                                    
some items  included that had a  supplemental effective date                                                                    
for technical reasons and were part of the bill.                                                                                
                                                                                                                                
9:37:04 AM                                                                                                                    
                                                                                                                                
Mr.  Steininger  addressed  slide  10,  "Supplemental  Bill:                                                                    
Department of Administration":                                                                                                  
                                                                                                                                
     Operating Total: $1,700.0 UGF, $550.0 DGF                                                                                  
                                                                                                                                
       Legal and Advocacy Services, Office of Public                                                                            
     Advocacy                                                                                                                   
    Caseload growth and operational cost: $1,700.0 UGF                                                                          
                                                                                                                                
     ? Division of Motor Vehicles                                                                                               
     Document security and preservation system: $50.0 DGF                                                                       
     Anchorage office location move: $500.0 DGF                                                                                 
                                                                                                                                
Mr. Steininger  explained that the Anchorage  DMV office was                                                                    
relocating to avoid a large rent increase.                                                                                      
                                                                                                                                
Co-Chair Stedman  asked if the  relocation was into  a state                                                                    
facility.                                                                                                                       
                                                                                                                                
Mr. Steininger  thought the  new facility  was owned  by the                                                                    
University of Alaska Anchorage.                                                                                                 
                                                                                                                                
Mr.  Steininger advanced  to slide  11, "Supplemental  Bill:                                                                    
Dept. of Commerce, Community, and Economic Development":                                                                        
                                                                                                                                
     Capital Total: $45,526.1 Fed                                                                                               
     ? Housing and Urban Development (HUD) Community                                                                            
    Development Block Grant, Disaster Recovery Program:                                                                         
     $38,856.0 Fed                                                                                                              
     ? National Petroleum Reserve-Alaska (NPR-A) Impact                                                                         
     Grants:                                                                                                                    
     $6,670.1 Fed                                                                                                               
                                                                                                                                
Mr. Steininger noted that there was  a typo on the slide and                                                                    
the block grant  should be $35.8 million  of federal receipt                                                                    
authority.                                                                                                                      
                                                                                                                                
Senator  Bishop   asked  if  the  slide   listed  additional                                                                    
royalties  that came  in  after the  budget  was passed  the                                                                    
previous year.                                                                                                                  
                                                                                                                                
Mr. Steininger answered in the affirmative.                                                                                     
                                                                                                                                
Mr.  Steininger  looked  at slide  12,  "Supplemental  Bill:                                                                    
Department of Corrections":                                                                                                     
                                                                                                                                
     Operating Total: $8,025.7 Fed                                                                                              
     ?   Population   Management,   Anchorage   Correctional                                                                    
     Complex                                                                                                                    
          Add carryforward language: $8,025.7 Fed                                                                               
     ? Population Management, Palmer Correctional Center                                                                        
     (PCC)                                                                                                                      
          Extend appropriation for PCC efforts (FY20-FY21)                                                                      
                                                                                                                                
Mr.  Steininger stated  that carry-forward  language related                                                                    
to  federal   man-day  collections   had  been   added.  The                                                                    
collections of  revenue were for housing  of federal inmates                                                                    
at state  facilities, and  the amount was  set on  a per-day                                                                    
cost  for inmates.  There had  been some  additional revenue                                                                    
from  the  collections  over time  and  the  department  was                                                                    
adding language to access the  prior collections in order to                                                                    
avoid   a  general   fund  supplemental   need  to   address                                                                    
population  management issues.  He discussed  the amount  of                                                                    
time  required  to open  the  Palmer  facility, which  would                                                                    
extend into the next fiscal year.                                                                                               
                                                                                                                                
Senator  Wielechowski   asked  what  sort  of   efforts  the                                                                    
Department   of  Corrections   was   undertaking  to   start                                                                    
recruiting corrections officers. He  had heard concerns that                                                                    
the  process should  be  started  expeditiously rather  than                                                                    
waiting.                                                                                                                        
                                                                                                                                
Mr.  Steininger  knew  that  recruitment  and  retention  of                                                                    
correctional officers was an issue being addressed.                                                                             
                                                                                                                                
9:41:02 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:41:42 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
APRIL    WILKERSON,   ADMINISTRATIVE    SERVICES   DIRECTOR,                                                                    
DEPARTMENT OF CORRECTIONS, OFFICE  OF MANAGEMENT AND BUDGET,                                                                    
OFFICE  OF THE  GOVERNOR,  addressed Senator  Wielechowski's                                                                    
question   regarding   the  recruitment   for   correctional                                                                    
officers for the Palmer Correctional Center.                                                                                    
                                                                                                                                
Ms.  Wilkerson believed  it would  take 12  to 18  months to                                                                    
make  the  facility  operational.  She  explained  that  the                                                                    
current  process for  recruitment for  correctional officers                                                                    
took  8  to  12  weeks.  Given the  timeline  to  bring  the                                                                    
facility  operational  for  housing  capacity,  she  thought                                                                    
there was time  to address the officer needs  for the Palmer                                                                    
facility.                                                                                                                       
                                                                                                                                
Co-Chair Stedman  thought there would be  more questions and                                                                    
work  on  the  issue  during the  subcommittee  process.  He                                                                    
commented  that the  Department  of Corrections  was not  as                                                                    
large  as Medicaid  but was  part  of the  magnitude of  the                                                                    
budget.                                                                                                                         
                                                                                                                                
Mr. Steininger spoke to slide  13, "Supplemental Bill: Dept.                                                                    
of Education and Early Development":                                                                                            
                                                                                                                                
     Operating Total: $100.0 UGF, $150.0 DGF, $10,000.0 Fed                                                                     
     ? Education Support and Administrative Services,                                                                           
     Student and School Achievement                                                                                             
          Additional federal receipts for U.S. Dept. of                                                                         
          Education grants: $10,000.0 Fed                                                                                       
        Mt. Edgecumbe Boarding School, MEHS Facilities                                                                          
     Maintenance                                                                                                                
          Operational and maintenance costs for MEHS                                                                            
          Aquatic                                                                                                               
     Center: $100.0 UGF, $150.0 DGF                                                                                             
                                                                                                                                
Mr. Steininger  detailed that the $10  million in additional                                                                    
receipt authority  was for pass-through grants  to allow for                                                                    
obligation  of  federal  receipts  to  send  out  to  school                                                                    
districts throughout the state.                                                                                                 
                                                                                                                                
9:44:26 AM                                                                                                                    
                                                                                                                                
Senator Olson shared  a concern from his  district about the                                                                    
lack  of swimming  instruction for  children.  He asked  how                                                                    
much of  the funding was  going towards getting the  pool up                                                                    
and  running to  teach rural  students how  to swim.  He had                                                                    
heard ongoing  concerns with the pool.  He discussed boating                                                                    
accidents.                                                                                                                      
                                                                                                                                
Mr.  Steininger explained  that  the  Mt. Edgecumbe  aquatic                                                                    
center was  currently operating for  the instruction  of the                                                                    
students. The funds were for  continued operation for spring                                                                    
semester for courses  for the students. The  $100,000 was to                                                                    
ensure that the cost for operation  of the pool did not come                                                                    
at the expense of other instructional areas.                                                                                    
                                                                                                                                
Senator Olson  asked about the  likelihood that  students at                                                                    
Mt. Edgecumbe  had received a  swimming lesson.  He wondered                                                                    
if  students could  have  received  swimming instruction  as                                                                    
recently as yesterday.                                                                                                          
                                                                                                                                
Mr.  Steininger  answered  in the  affirmative,  assuming  a                                                                    
student was enrolled in a swimming course.                                                                                      
                                                                                                                                
Co-Chair  Stedman stated  that  there would  be an  upcoming                                                                    
hearing  on the  bond  package. He  referenced the  document                                                                    
"Operating Maintenance  Costs" (copy  on file)  which showed                                                                    
the projects in the bond  package. He noted that the dollars                                                                    
being spent from FY 14 to  FY 21 in the proposed budget were                                                                    
operating funds.  He was concerned  that seven of  the eight                                                                    
projects had been  completed and funded after a  vote by the                                                                    
people.  He  pointed  out  the  Mt.  Edgecumbe  High  School                                                                    
project,  which  had  an appropriation  of  $38  million  in                                                                    
operating funds. Of  the $38 million, $500,000  was put into                                                                    
the aquatic center in FY  18, which was part municipal match                                                                    
and part other funds. A  significant portion of the $500,000                                                                    
was for maintenance of the facility.                                                                                            
                                                                                                                                
9:47:57 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  continued his  remarks. He noted  that for                                                                    
FY 19, there was $250,000  in receipt authority and the pool                                                                    
was not in operating due to  mechanical issues. In the FY 20                                                                    
budget,  there had  been nothing  enacted for  the facility,                                                                    
while  there was  $5.2 million  for the  other projects.  He                                                                    
thought  there  was an  urban/rural  issue.  He opined  that                                                                    
rural  projects  received  no  funds  while  urban  projects                                                                    
received funding with no discussion.  In the current budget,                                                                    
there  was $650,000  in receipt  authority.  He thought  the                                                                    
issue  needed  work  and rectification.  He  explained  that                                                                    
receipt authority  allowed for the aquatic  center to reduce                                                                    
the  subsidy  needed  to  run  the  facility.  In  order  to                                                                    
minimize  budget  impacts,  it   was  important  to  collect                                                                    
revenue from users.                                                                                                             
                                                                                                                                
Co-Chair Stedman continued his  remarks. He pointed out that                                                                    
removal of  the receipt authority blocked  the facility from                                                                    
receiving   a  check   in  excess   of  $150,000;   and  put                                                                    
considerable disruption in the  marketing of the facility to                                                                    
entities that would  gladly contribute for use  of the pool.                                                                    
He  commented on  the  facility's use  by  the Alaska  State                                                                    
Troopers  and  the United  States  Coast  Guard. He  thought                                                                    
there was  continued work to  do. He thought the  matter did                                                                    
not bode  well for  future bond packages,  particularly from                                                                    
rural legislators.                                                                                                              
                                                                                                                                
9:51:12 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  continued  to discuss  the  document  and                                                                    
listed the projects that were  part of the 2010 bond package                                                                    
projects as listed on the document:                                                                                             
                                                                                                                                
     State Library, Archives, and Museums                                                                                       
    Valley Center for art and learning - Mat-Su Campus                                                                          
     Community Arena and athletic facility - UA - Anchorage                                                                     
     Life Science Classroom and Lab UA - Fairbanks                                                                              
     Student Housing - Kenai Campus                                                                                             
     Career and Technical Education Center - Kenai Campus                                                                       
     ADFG - Near Island Research Facility                                                                                       
     Mt. Edgecumbe Aquatic Center                                                                                               
                                                                                                                                
Co-Chair Stedman reminded the  public and the administration                                                                    
that the projects  were voted on by the people  of the state                                                                    
of  Alaska  to  build  and operate.  He  reminded  that  the                                                                    
legislature was the appropriators and  had to make sure that                                                                    
there was the fairest  possible distribution of the treasury                                                                    
to facilitate  everyone's equal interest. He  recognized and                                                                    
appreciated the $100,000 in cash  to the aquatic center. The                                                                    
school had  been taking funds  from other areas to  keep the                                                                    
aquatic  center operational.  He commented  that the  center                                                                    
had missed the opportunity of  the high revenue time of year                                                                    
without the ability to collect money at the door.                                                                               
                                                                                                                                
Senator Hoffman reminded  that the region of  the state with                                                                    
the largest  participation at Mt.  Edgecumbe was  the Yukon-                                                                    
Kuskokwim  Delta  and emphasized  that  the  region had  the                                                                    
largest rate of drowning. He  thought the aquatic center was                                                                    
a health-life-safety  issue. Even  thought he  had supported                                                                    
the  other  projects;  it  was   hard  for  him  to  compare                                                                    
appropriations  for other  projects against  the health  and                                                                    
safety issue that  he felt had been ignored  by previous and                                                                    
current administrations. He  requested the administration to                                                                    
come  forward with  a  number it  felt  was appropriate  for                                                                    
addressing the  health-life-safety of  the people  of Alaska                                                                    
in Senator Olson's district, his own district, and others.                                                                      
                                                                                                                                
Senator  Hoffman   thought  the  swimming  program   at  Mt.                                                                    
Edgecumbe  should be  mandatory. He  referenced the  lack of                                                                    
request  by  the  Department  of  Administration  (DOA)  for                                                                    
addressing the Real  I.D., which he thought  could result in                                                                    
deaths  of elders  in the  state. He  believed that  health-                                                                    
life-safety   issues  should   rise  to   the  top   of  the                                                                    
administration's   priorities.   He  reiterated   that   the                                                                    
projects were voted on by  the people and the implementation                                                                    
should be  fully supported by  the administration.  He hoped                                                                    
that the  administration would come  forward to  address the                                                                    
two issues of health-life-safety that he had brought up.                                                                        
                                                                                                                                
9:57:01 AM                                                                                                                    
                                                                                                                                
Senator Bishop  noted that he  also represented  rural areas                                                                    
of the state such as  the Yukon, Porcupine, Black River, and                                                                    
Koyukuk.  He   had  received  letters  from   Mt.  Edgecumbe                                                                    
students  as recently  as the  previous week.  He wanted  to                                                                    
work  with  the co-chair  to  make  sure the  pool  received                                                                    
enough DGF funds to support long-term contracts.                                                                                
                                                                                                                                
Co-Chair  Stedman stated  that the  committee would  take up                                                                    
the  suggestion  by Senator  Hoffman  and  ask OMB  to  come                                                                    
forward  with solutions.  He  reiterated  that the  projects                                                                    
would be considered when the  bond package was in review. He                                                                    
wanted to assure  that the committee was  looking for equity                                                                    
going forward.                                                                                                                  
                                                                                                                                
Mr.  Steininger  referenced  slide 14,  "Supplemental  Bill:                                                                    
Office of the Governor":                                                                                                        
                                                                                                                                
     Operating Total: $233.4 UGF                                                                                                
     Capital Total: $3,700.0 Other                                                                                              
     Operating                                                                                                                  
       Executive Operations, Lieutenant Governor                                                                                
          Voter initiative public hearings: $18.0 UGF                                                                           
     ? Elections                                                                                                                
          Voter   initiative   review,   certification   and                                                                    
          language translation: $215.4 UGF                                                                                      
     Capital                                                                                                                    
     ? Help America Vote Act: $3,700.0 Other                                                                                    
                                                                                                                                
Senator Wielechowski was curious  about the $215 million for                                                                    
the   voter   initiative   review  and   certification.   He                                                                    
understood  that   the  initiative   was  reviewed   by  the                                                                    
lieutenant  governor and  by the  attorney  general and  was                                                                    
done  in-house. He  did not  understand  where the  $215,400                                                                    
went.                                                                                                                           
                                                                                                                                
Mr. Steininger stated that there  were costs associated with                                                                    
translation of  ballots. He  stated that  while done  in the                                                                    
lieutenant  governor's office,  review and  certification of                                                                    
ballots cost money.                                                                                                             
                                                                                                                                
Senator Wielechowski asked for a  breakdown on the costs. He                                                                    
pointed out that  the election was not until  the next year.                                                                    
He was also  interested in the $18,000  for voter initiative                                                                    
public hearings.  He asked about  the plan for  the meetings                                                                    
including the date, location, and format.                                                                                       
                                                                                                                                
Mr.  Steininger  stated  that  he  would  get  back  to  the                                                                    
committee with the requested information.                                                                                       
                                                                                                                                
10:00:24 AM                                                                                                                   
                                                                                                                                
Mr.  Steininger  turned  to slide  15,  "Supplemental  Bill:                                                                    
Department of Health and Social Services":                                                                                      
                                                                                                                                
     Operating Total: $15,600.0 UGF                                                                                             
     ? Alaska Pioneer Homes, APH Payment Assistance                                                                             
          Alaska Pioneer Homes payment assistance: $1,000.0                                                                     
          UGF                                                                                                                   
     ? Alaska Psychiatric Institute                                                                                             
          Add authority to achieve full capacity: $6,000.0                                                                      
          UGF                                                                                                                   
     ? Public Assistance, Adult Public Assistance                                                                               
          Restore    Adult    Public   Assistance    payment                                                                    
          maintenance of effort requirements: $8,600.0 UGF                                                                      
                                                                                                                                
Mr. Steininger  explained that  in review  of the  change to                                                                    
the  maintenance  of  effort calculation  with  the  federal                                                                    
government, the  effect of the  change was too  onerous, and                                                                    
funds needed to be added back into the budget.                                                                                  
                                                                                                                                
Senator  Wielechowski asked  about  the $6  million for  the                                                                    
Alaska Psychiatric Institute (API), and  asked if any of the                                                                    
funds were going to Wellpath, Inc.                                                                                              
                                                                                                                                
Mr.  Steininger   asked  for   a  representative   from  the                                                                    
department to discuss the question in more detail.                                                                              
                                                                                                                                
SANA  EFIRD, ASSISTANT  COMMISSIONER,  DEPARTMENT OF  HEALTH                                                                    
AND  SOCIAL SERVICES,  confirmed  that some  portion of  the                                                                    
funds  was for  continuation of  the Wellpath  Contract. The                                                                    
original contract  began in February  of the  previous year,                                                                    
and the contract  was renewed for the  stabilization of API.                                                                    
She was  happy to say that  92 of the findings  that API was                                                                    
under  had  been  resolved.  She   continued  that  API  was                                                                    
continuing  to  contract  with  Wellpath;  and  the  current                                                                    
contract ended March 31, with an option to renew.                                                                               
                                                                                                                                
Senator Wielechowski was interested  in a breakdown of where                                                                    
the  $6  million was  going.  He  asked  if the  funds  were                                                                    
expected  to   go  towards  increased  nurse   or  assistant                                                                    
positions, or to the Wellpath organization.                                                                                     
                                                                                                                                
Ms.  Efird stated  that  the funds  were to  be  spent on  a                                                                    
number  of  things,  including an  increase  in  salary  for                                                                    
nurses  after a  nurse study  had been  done. She  continued                                                                    
that  the  funds were  also  to  contract  when it  was  not                                                                    
possible  to  hire  for   psychiatrists  and  other  medical                                                                    
personnel. There was continued  recruitment for staff. There                                                                    
was  an  additional  cost for  continuation  of  a  security                                                                    
contract,  due  to  the  acuity   of  the  patients  at  the                                                                    
hospital.                                                                                                                       
                                                                                                                                
Co-Chair  Stedman  asked  Ms.  Efird  to  get  back  to  the                                                                    
committee with additional information.                                                                                          
                                                                                                                                
10:04:28 AM                                                                                                                   
                                                                                                                                
Senator Olson  asked if Wellpath  employed the  nurses being                                                                    
discussed.                                                                                                                      
                                                                                                                                
Ms. Efird  noted that the  state employed nurses  and staff,                                                                    
and Wellpath  was present to advise  and stabilize. Wellpath                                                                    
had   been  providing   assistance  with   API  to   provide                                                                    
stabilization and  to meet all the  requirements through the                                                                    
findings from the survey.                                                                                                       
                                                                                                                                
Senator  Olson  assumed that  Wellpath  did  not employ  the                                                                    
psychiatrists.                                                                                                                  
                                                                                                                                
Ms.   Efird   affirmed   that   the   state   employed   the                                                                    
psychiatrists at API.                                                                                                           
                                                                                                                                
Mr.  Steininger  considered  slide 16,  "Supplemental  Bill:                                                                    
Department of Law":                                                                                                             
                                                                                                                                
     Operating Total $150.0 Other, $250.0 Fed                                                                                   
     ? Criminal Division, Second Judicial District                                                                              
          Reopening Utqiagvik District Attorney's Office:                                                                       
          $150.0 Other                                                                                                          
      Criminal     Division,    Criminal     Appeals/Special                                                                    
     Litigation                                                                                                                 
     Expand prosecutions in rural Alaska: $250.0 Fed                                                                            
                                                                                                                                
Senator Olson  asked if it  was true that the  facilities on                                                                    
the  North  Slope  were  also  chipping in  to  make  it  so                                                                    
reopening the offices  did not cost the state as  much as it                                                                    
would otherwise.                                                                                                                
                                                                                                                                
Mr.  Steininger understood  that there  was a  Memorandum of                                                                    
Agreement to receive money from  the community to reopen the                                                                    
office.                                                                                                                         
                                                                                                                                
Senator Olson asked if the  office was still doing cases, or                                                                    
if the cases were going to Fairbanks.                                                                                           
                                                                                                                                
Mr. Steininger  did not know  the answer to  Senator Olson's                                                                    
question.                                                                                                                       
                                                                                                                                
Co-Chair Stedman  asked Mr.  Steininger to  get back  to the                                                                    
committee   with  more   information   on  Senator   Olson's                                                                    
question. He thought  the subject was a  point of discussion                                                                    
the previous year  during the budget cycle and  he wanted to                                                                    
ensure that the topic was well understood by the committee.                                                                     
                                                                                                                                
Senator Olson  was concerned that  outside counsel  had been                                                                    
hired  by the  Department of  Law to  handle some  cases for                                                                    
which the  department did not have  expertise. He understood                                                                    
that  there  were hundreds  of  thousands  of dollars  being                                                                    
spent on law firms in the  Lower 48. He asked if the expense                                                                    
was reflected in the supplemental budget being considered.                                                                      
                                                                                                                                
Mr. Steininger stated that the  funds on the slide reflected                                                                    
reopening of  the district attorney's office.  The expansion                                                                    
of prosecutions listed on the  slide was a new federal grant                                                                    
being received  by the department, and  believed prosecutors                                                                    
were in Anchorage but assigned to rural areas.                                                                                  
                                                                                                                                
Senator  Olson  clarified  that  his  question  was  if  the                                                                    
supplemental request  was for money  being spent  on outside                                                                    
counsel for lawsuits that some considered frivolous.                                                                            
                                                                                                                                
Mr. Steininger stated he did not think so.                                                                                      
                                                                                                                                
Co-Chair Stedman thought the matter  could be fleshed out in                                                                    
the subcommittee process and would get to the answer.                                                                           
                                                                                                                                
10:08:09 AM                                                                                                                   
                                                                                                                                
Mr.  Steininger  displayed  slide  17,  "Supplemental  Bill:                                                                    
Department of Natural Resources":                                                                                               
                                                                                                                                
     Operating Total: $76.1 DGF                                                                                                 
     ? Fire Suppression, Land, and Water Resources; Mining,                                                                     
     Land and Water                                                                                                             
          Aquatic farm application processing: $76.1 DGF                                                                        
                                                                                                                                
Mr. Steininger  detailed that there  had been  a significant                                                                    
increase  in the  number  of aquatic  farms,  and there  was                                                                    
additional    authority    was   needed    for    processing                                                                    
applications.                                                                                                                   
                                                                                                                                
Co-Chair  Stedman thought  it  was good  that  there was  an                                                                    
expanding industry.                                                                                                             
                                                                                                                                
Co-Chair  Stedman  noted  that   Senator  Gary  Stevens  was                                                                    
present.  He thought  some of  Senator Stevens  constituents                                                                    
were students at Mt. Edgecumbe.                                                                                                 
                                                                                                                                
Senator Bishop asked if Mr.  Steininger thought the funds on                                                                    
slide 7  were due to  having missed  the mark on  the fiscal                                                                    
note  when there  was  associated  legislation being  passed                                                                    
through the body.                                                                                                               
                                                                                                                                
Mr. Steininger believed that the  number of applications had                                                                    
risen from 4 to 16, and  did not recall when the information                                                                    
was known.                                                                                                                      
                                                                                                                                
Co-Chair Stedman thought the  subcommittee could address the                                                                    
topic in detail.                                                                                                                
                                                                                                                                
Mr.  Steininger highlighted  slide  18, "Supplemental  Bill:                                                                    
Department of Public Safety":                                                                                                   
                                                                                                                                
     Operating Total: $6,743.4 UGF                                                                                              
     Capital Total: $605.0 UGF                                                                                                  
                                                                                                                                
     Operating                                                                                                                  
        Alaska  State   Troopers,  AST  Detachments,  Alaska                                                                    
     Wildlife  Troopers,  and   Wildlife  Troopers  Aircraft                                                                    
     Section  -   Meet  FY2020   operating  needs   and  law                                                                    
     enforcement safety equipment: $6,743.4 UGF                                                                                 
     Capital                                                                                                                    
     ? FAA required aircraft equipment: $105.0 UGF                                                                              
     ? Radio replacement: $500.0 UGF                                                                                            
                                                                                                                                
Mr.  Steininger  commented on  the  good  news of  increased                                                                    
recruitment  and  retention  of Alaska  State  Troopers.  He                                                                    
noted that  the amount of  people coming in for  new trooper                                                                    
classes  was exceeding  the amount  of  people turning  over                                                                    
within  the ranks,  so additional  authority  was needed  to                                                                    
outfit and pay new troopers.                                                                                                    
                                                                                                                                
10:10:33 AM                                                                                                                   
                                                                                                                                
Senator Hoffman  was glad  to see that  public safety  was a                                                                    
priority of the administration. He  made note of the lack of                                                                    
request  for  funds  for operation  of  the  Village  Public                                                                    
Safety  Officer  (VPSO)  program  and asked  if  it  was  an                                                                    
indication of the program functioning fully.                                                                                    
                                                                                                                                
Mr.  Steininger  stated  that   there  was  no  request  for                                                                    
additional funding  for the VPSO  program as they  amount of                                                                    
money the  program had was sufficient  for operations within                                                                    
the current year.                                                                                                               
                                                                                                                                
Senator  Hoffman  asked  if  the  people  of  rural  Alaska,                                                                    
considering  that  there  were  no  additional  funds  being                                                                    
requested, should feel that the  program was running at full                                                                    
steam and pumping  on all cylinders and should  feel safe at                                                                    
night.                                                                                                                          
                                                                                                                                
Mr. Steininger  thought it was the  goal of the DPS  for all                                                                    
people of Alaska to feel safe at night.                                                                                         
                                                                                                                                
Co-Chair  Stedman thought  the topic  would be  addressed in                                                                    
subcommittee.                                                                                                                   
                                                                                                                                
Senator  Wielechowski asked  how many  VPSOs there  were and                                                                    
how many vacancies there were in the program.                                                                                   
                                                                                                                                
Mr. Steininger did  not have the information.  He offered to                                                                    
get back to the committee with the information.                                                                                 
                                                                                                                                
Co-Chair Stedman  thought the issue  was sizeable  and would                                                                    
be worked on in subcommittee.                                                                                                   
                                                                                                                                
Senator  Olson was  a member  of  a VPSO  working group.  He                                                                    
explained that the  program was at an all-time  low, with 38                                                                    
officers.  He thought  there had  been anticipation  for 100                                                                    
officers that  had been  funded a number  of years  ago, but                                                                    
there had  been challenges  with recruitment  and retention.                                                                    
He commented that  the VPSO in his town of  Golovin had been                                                                    
there the  second longest of  any VPSO. He thought  the VPSO                                                                    
program  needed  an  overhaul  and  suffered  from  lack  of                                                                    
funding  reaching the  point where  it  was implemented.  He                                                                    
mentioned that  one recommendation of the  working group was                                                                    
to pull the funding allocation from  DPS and put it into the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
to more reasonably delegate the funds.                                                                                          
                                                                                                                                
Senator Hoffman  thanked Senator Olson for  his comments. He                                                                    
asked  if the  administration had  reviewed the  report from                                                                    
the  task  force on  the  VPSO  program,  and if  there  was                                                                    
interest  in  getting the  report  implemented  so that  the                                                                    
people of rural  Alaska could feel safe when  going to sleep                                                                    
at night.                                                                                                                       
                                                                                                                                
Mr.  Steininger  wanted  to  get  back  to  Senator  Hoffman                                                                    
regarding the analysis of the report.                                                                                           
                                                                                                                                
Senator Hoffman  asked if Mr.  Steininger had a  lifeline to                                                                    
respond to his question.                                                                                                        
                                                                                                                                
10:14:54 AM                                                                                                                   
                                                                                                                                
TORREY  JACOBSEN,  BUDGET   ANALYST,  DEPARTMENT  OF  PUBLIC                                                                    
SAFETY, stated  that the commissioner  was not  present, and                                                                    
he  was  not  able  to   respond  to  decisions  within  the                                                                    
department. He offered  to research the matter  and get back                                                                    
to the committee.                                                                                                               
                                                                                                                                
Senator Olson  thought there was  a great deal of  funds put                                                                    
into trooper recruitment and retention.  He assumed that the                                                                    
previous  testifier  was  aware  of how  much  had  been  to                                                                    
improve recruitment and retention for the VPSO program.                                                                         
                                                                                                                                
Mr. Steininger asked  to get back to the  committee with the                                                                    
information  as  to  what  funds   had  been  allocated  for                                                                    
recruitment and retention within the VPSO program.                                                                              
                                                                                                                                
Senator Olson  said unequivocally  that people would  not be                                                                    
sleeping  better as  a result  of  feeling that  communities                                                                    
were currently safer.                                                                                                           
                                                                                                                                
10:16:42 AM                                                                                                                   
                                                                                                                                
Mr.  Steininger  looked  at slide  19,  "Supplemental  Bill:                                                                    
Department of Revenue":                                                                                                         
                                                                                                                                
     Operating Total: $854.4 UGF, ($400.0 Other)                                                                                
     ? Taxation and Treasury, Tax Division                                                                                      
     Tax Revenue Management System maintenance and support                                                                      
     costs: $400.0 UGF, ($400.0 Other)                                                                                          
     Tax subject matter experts, economic and legal                                                                             
     analysis                                                                                                                   
     (FY20-FY22): $350.0 UGF                                                                                                    
    ? Administration and Support, Commissioner's Office                                                                         
     Technology refresh and space utilization and planning:                                                                     
     $104.4 UGF                                                                                                                 
                                                                                                                                
Mr. Steininger detailed that the  new tax revenue management                                                                    
system  capital project  funds had  been  exhausted and  the                                                                    
costs of  supporting the  system needed to  be moved  to the                                                                    
operating budget.                                                                                                               
                                                                                                                                
Senator Olson  considered the proposed  $350,000 in  UGF for                                                                    
economic  and  legal analysis  and  thought  the amount  was                                                                    
sizable. He  asked how the funds  would be used in  the next                                                                    
four to five months.                                                                                                            
                                                                                                                                
Mr.  Steininger stated  that  the work  on  the tax  matters                                                                    
would be starting  in FY 20, but  the appropriation extended                                                                    
into FY  22. The funds would  extend through FY 22  and were                                                                    
to  provide  additional support  as  DOR  looked at  various                                                                    
proposals related to taxation.                                                                                                  
                                                                                                                                
Senator  Olson understood  that there  was consideration  of                                                                    
implementation of  a statewide  sales tax.  He asked  if the                                                                    
matter was covered in the proposed funds.                                                                                       
                                                                                                                                
Mr.  Steininger  stated  that the  funds  would  assist  the                                                                    
economic  research group  in the  Department of  Revenue and                                                                    
would go towards any tax related issue proposed by anyone.                                                                      
                                                                                                                                
Co-Chair   Stedman  thought   the   funds   might  be   more                                                                    
appropriate in the FY 21 budget.                                                                                                
                                                                                                                                
Senator  Hoffman considered  the expenditure  being included                                                                    
in the supplemental  in the current year's  budget and asked                                                                    
if the  legislature could anticipate legislation  to address                                                                    
additional revenue measures.                                                                                                    
                                                                                                                                
Mr. Steininger could not comment  on bills that had not been                                                                    
introduced. He  knew there were  various tax ideas  that DOR                                                                    
wanted to review.                                                                                                               
                                                                                                                                
10:19:44 AM                                                                                                                   
                                                                                                                                
Mr.  Steininger  addressed  slide  20,  "Supplemental  Bill:                                                                    
Dept. of Transportation and Public Facilities":                                                                                 
                                                                                                                                
     Operating Total: $7,050.0 DGF                                                                                              
     Capital Total: $5,000.0 DGF, $3,155.0 Other                                                                                
     Operating                                                                                                                  
    ? Administration and Support, Measurement Standards                                                                         
     Replace   capital   funding    with   unified   carrier                                                                    
     registration receipts: fund source change                                                                                  
     ? Marine Highway System, Marine Vessel Operations                                                                          
     Maintain AMHS vessel operations: $7,050.0 DGF                                                                              
     Capital                                                                                                                    
     ? AMHS vessel overhaul:$5,000.0 DGF                                                                                        
     ? DPS patrol vehicles: $3,155.0 Other                                                                                      
                                                                                                                                
Mr.  Steininger explained  that the  proposed funds  for the                                                                    
Alaska  Marine  Highway System  (AMHS)  were  to cover  some                                                                    
additional costs  for boats  that ended  up in  layup longer                                                                    
than  anticipated;  which  had resulted  in  more  expensive                                                                    
boats  being  used and  other  expenses  such as  fuel  cost                                                                    
increases. The funds  were to ensure that  the service level                                                                    
planned  for the  year could  be met.  The costs  for vessel                                                                    
overhauls  had   been  significantly  more   expensive  than                                                                    
anticipated.  The DPS  patrol vehicle  fund request  was for                                                                    
fund the department had already paid into the fund.                                                                             
                                                                                                                                
Senator Bishop  asked about  the balance  of the  fund after                                                                    
the proposed purchase of patrol vehicles.                                                                                       
                                                                                                                                
Mr.  Steininger believed  the credits  DPS had  in the  fund                                                                    
were in  the $12 million  dollar range. The  department paid                                                                    
into the  fund based  on the  vehicles it  had, so  the fund                                                                    
balance  was replenished  every  year roughly  equal to  the                                                                    
average amount spent yearly.                                                                                                    
                                                                                                                                
10:22:09 AM                                                                                                                   
                                                                                                                                
Senator Olson  asked if any of  the funds on slide  20 would                                                                    
supplement  some   of  the  AMHS  services   that  had  been                                                                    
curtailed  because of  maintenance issues.  He noted  that a                                                                    
number of legislative vehicles had  been stuck and could not                                                                    
be transported to Juneau.                                                                                                       
                                                                                                                                
Mr.  Steininger  stated  that the  proposed  $5  million  in                                                                    
overhaul was to get boats back  in the water. The $7 million                                                                    
was to  maintain the  service level  that had  been planned.                                                                    
There  were a  couple of  routes where  the funds  would add                                                                    
service above  what was  planned when the  FY 20  budget was                                                                    
passed.                                                                                                                         
                                                                                                                                
Co-Chair Stedman thought the matter  would be best addressed                                                                    
in more  detail by the  commissioner of DOT. He  thought the                                                                    
economic significance  of having virtually the  entire fleet                                                                    
tied  up  for  several  weeks needed  to  be  addressed  and                                                                    
information  needed to  flow  to the  public.  He asked  the                                                                    
commissioner to address the matter with frankness.                                                                              
                                                                                                                                
10:25:11 AM                                                                                                                   
                                                                                                                                
JOHN MACKINNON,  COMMISSIONER, DEPARTMENT  OF TRANSPORTATION                                                                    
AND PUBLIC  FACILITIES, stated that the  proposed $7 million                                                                    
supplemental  request   would  be  used   for  unanticipated                                                                    
expenses  that  occurred  in the  current  fiscal  year.  He                                                                    
addressed  stranded  vehicles  and passengers.  He  recalled                                                                    
that when the Matanuska was tied  up in Juneau and unable to                                                                    
continue its run North, there  had been a number of military                                                                    
personnel  and  vehicles on  the  ship.  The department  had                                                                    
assisted the  military to arrange transport.  The department                                                                    
had chartered a  vessel to get other  stranded passengers to                                                                    
Haines. He  added that  there had  been some  union contract                                                                    
issues  involved. Tickets  for  truncated  voyages would  be                                                                    
refunded.                                                                                                                       
                                                                                                                                
Senator Olson thought the department  had made a good effort                                                                    
in accommodating  passengers. He  asked about  vehicles that                                                                    
had  been  shipped  south  by   legislators  and  staff  and                                                                    
wondered how the vehicles would get to Juneau.                                                                                  
                                                                                                                                
Commissioner MacKinnon  stated that the department  had been                                                                    
having  discussion on  the matter  and what  steps could  be                                                                    
taken to  get the vehicles  to Juneau. He noted  that Alaska                                                                    
Marine Lines had weekly trips  from Haines/Skagway to Juneau                                                                    
that could accommodate vehicles.                                                                                                
                                                                                                                                
Senator Olson  asked if the supplemental  cost of chartering                                                                    
vessels would be paid for by the state.                                                                                         
                                                                                                                                
Commissioner  MacKinnon mentioned  the cost  of transporting                                                                    
stranded  students, which  the department  had paid  for. He                                                                    
thought  the state  needed to  be cautious  about setting  a                                                                    
precedent.                                                                                                                      
                                                                                                                                
10:28:32 AM                                                                                                                   
                                                                                                                                
Senator Wielechowski asked how  much cost had the department                                                                    
had "eaten."                                                                                                                    
                                                                                                                                
Co-Chair  Stedman asked  if the  commissioner could  provide                                                                    
one  part of  his answer  in hindsight,  as well  as discuss                                                                    
fleet capacity.                                                                                                                 
                                                                                                                                
Commissioner MacKinnon  believed the cost of  taking care of                                                                    
the   stranded  students   was  approximately   $11,000.  He                                                                    
continued  that the  department was  looking at  options and                                                                    
there  was a  number of  community  events in  the month  of                                                                    
March. He  mentioned a  press release  the previous  day and                                                                    
stated there was a good  likelihood that AMHS would not have                                                                    
service in  Southeast in March.  The department  was looking                                                                    
at engaging  other transportation services to  serve for the                                                                    
Gold Medal Tournament and other  sports events. He mentioned                                                                    
vessels that  were laid up  in overhaul or  not operational.                                                                    
He  described  the  situation  as   a  "perfect  storm."  He                                                                    
reiterated   that  there   were  complications   with  union                                                                    
contracts that could prevent certain solutions.                                                                                 
                                                                                                                                
Co-Chair Stedman would be asking  the budget subcommittee on                                                                    
DOT  to  look at  the  current  budget,  how much  had  been                                                                    
consumed  in  operations, and  the  need  going forward.  He                                                                    
thought a broader concern was  that if all vessels were tied                                                                    
up save for  one, there was still a  substantial fixed cost.                                                                    
Even though  no ships were  running, there was still  a draw                                                                    
on the operating budget. He  thought the subcommittee needed                                                                    
to   understand  the   information   and   then  bring   the                                                                    
information  to the  full committee.  He thought  the public                                                                    
should take  note of the  commissioner's comment  that there                                                                    
was high likelihood of minimal to no service through March.                                                                     
                                                                                                                                
Co-Chair  Stedman  discussed   the  challenges  inherent  in                                                                    
having vessels in  the shipyard. He asked the  public to try                                                                    
and have flexibility as the  issue was being worked through.                                                                    
He asked the commissioner to  discuss the issue with the M/V                                                                    
Matanuska and  give more information  on why the  vessel was                                                                    
not running.                                                                                                                    
                                                                                                                                
10:33:27 AM                                                                                                                   
                                                                                                                                
Commissioner MacKinnon  commented on  the complexity  of the                                                                    
operational scheduling  of ferries.  He discussed  costs for                                                                    
fuel  and overhaul.  Ships in  overhaul  required some  crew                                                                    
presence.  For  some  longer-term  savings,  ships  were  in                                                                    
layup, which also required  crew. He discussed unanticipated                                                                    
costs for vessel overhaul.                                                                                                      
                                                                                                                                
Commissioner   MacKinnon   discussed  vessel   testing   and                                                                    
overhaul.  The  M/V  Matanuska  underwent  extensive  engine                                                                    
replacement  and overhaul.  The  department had  anticipated                                                                    
that the ship could handle  much of the mainline service for                                                                    
the  winter,  but  there  had  been a  failure  of  the  new                                                                    
equipment.                                                                                                                      
                                                                                                                                
Co-Chair  Stedman   summarized  that  there  was   a  severe                                                                    
mechanical issue  that made the  ship inoperable  and repair                                                                    
would take time.                                                                                                                
                                                                                                                                
10:36:09 AM                                                                                                                   
                                                                                                                                
Senator Hoffman  recalled that it  was reported in  the news                                                                    
that the  governor had  expressed that the  AMHS was  a high                                                                    
priority of  the administration.  He asked if  the statement                                                                    
of commitment to  the people of coastal  Alaska would result                                                                    
in an  additional supplemental to  FY 20 and FY  21 budgets.                                                                    
He asked if the commissioner  and the governor had discussed                                                                    
the matter.                                                                                                                     
                                                                                                                                
Commissioner  MacKinnon  stated  that the  conversation  was                                                                    
taking  place. The  department was  considering which  ships                                                                    
could be returned  to operation. He discussed  the status of                                                                    
various vessels. The M/V Aurora  had extensive repairs to be                                                                    
done.  The department  was working  with  the United  States                                                                    
Coast  Guard   to  determine  eligibility  of   vessels  for                                                                    
operation.  When the  department knew  what was  possible it                                                                    
would  address finances  and come  back  to the  legislature                                                                    
with a request for more funds if needed.                                                                                        
                                                                                                                                
Co-Chair Stedman  stated that  the DOT  finance subcommittee                                                                    
(chaired by  Senator Bishop)  would be  looking at  the AMHS                                                                    
maintenance  schedule. He  thought  there  had been  concern                                                                    
that there  had not been  requests put forward to  deal with                                                                    
major maintenance  items. He pointed out  that decomposition                                                                    
of steel  ships happened over  time and was curious  why all                                                                    
of the  maintenance and certification issues  were happening                                                                    
simultaneously.  He wanted  the  subcommittee  to come  back                                                                    
with  a recommendation  of what  it  would take  to get  the                                                                    
fleet back into operation  to serve land-locked communities.                                                                    
He  noted  there  were  food   supply  issues  with  smaller                                                                    
communities.                                                                                                                    
                                                                                                                                
10:40:31 AM                                                                                                                   
                                                                                                                                
Senator  Bishop understood  that the  mechanical failure  on                                                                    
the M/V Matanuska was under warranty.                                                                                           
                                                                                                                                
Commissioner MacKinnon affirmed that  that the equipment was                                                                    
under  warranty  but  reminded   that  there  were  multiple                                                                    
stakeholders. He thought there  would be finger-pointing and                                                                    
the matter would take time to address.                                                                                          
                                                                                                                                
Co-Chair Stedman  stated that the committee  over funded the                                                                    
request from the  AMHS the previous year.  The committee had                                                                    
over   funded  by   around  $20   million  and   added  back                                                                    
substantial funds for maintenance.  He pointed out that that                                                                    
there   were  no   ships   immediately   in  the   Statewide                                                                    
Transportation Improvement Program  for replacement. To have                                                                    
new  ships  constructed was  an  8  to 10-year  process.  He                                                                    
thought  there would  be forthcoming  conversation regarding                                                                    
the M/V Tustemena and a  replacement. He expected that there                                                                    
would  be encouragement  from the  committee  to move  along                                                                    
with replacement.                                                                                                               
                                                                                                                                
Co-Chair  Stedman thought  timely  planning  was needed.  He                                                                    
reminded that last  time the state had two  ships built, the                                                                    
funding  had  been driven  by  the  legislature. He  thought                                                                    
there  was  a  significant   challenge  to  figure  out  the                                                                    
transportation  system within  coastal Alaska.  He mentioned                                                                    
the military bases  and the ability for the  AMHS to respond                                                                    
to any  catastrophic events and  be able to  transport goods                                                                    
to the Railbelt. He thought  there was concern that with the                                                                    
fleet inoperable it  would hinder the states  response to an                                                                    
emergency such  as an  oil spill. He  thought the  issue was                                                                    
much  broader than  moving  cars and  people.  He asked  the                                                                    
public to be cognizant that  it would likely be April before                                                                    
the AMHS was operable.                                                                                                          
                                                                                                                                
10:45:00 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman appreciated  DOT's  ability to  facilitate                                                                    
the needs of  the communities since no one  had expected the                                                                    
entire fleet being tied up.                                                                                                     
                                                                                                                                
Co-Chair Stedman  asked Mr. Steininger  to address  the next                                                                    
two slides and then return to slide 10.                                                                                         
                                                                                                                                
Mr.  Steininger advanced  to slide  21, "Supplemental  Bill:                                                                    
Fund Capitalization and Transfers":                                                                                             
                                                                                                                                
    Fund Capitalization: Total $600.0 UGF, $3,000.0 Fed                                                                         
     Capital                                                                                                                    
          ? Election Fund - FY20 capitalization of the                                                                          
          Election Fund with federal receipts: $600.0 UGF,                                                                      
          $3,000.0 Fed                                                                                                          
                                                                                                                                
     Fund Transfers: Total $1,100.0 deposit into General                                                                        
     Fund                                                                                                                       
          ? Undesignated Reserve (UGF out), AHFC Subsidiary                                                                     
          Fund                                                                                                                  
          Transfer balance of AHCC account to the General                                                                       
          Fund:                                                                                                                 
          $1,100.0 fund transfer                                                                                                
                                                                                                                                
Mr. Steininger  explained that  emptying the  Alaska Housing                                                                    
Finance Corporation (AHFC)  Capital Corporation Account into                                                                    
the General Fund would save  costs on administrative work on                                                                    
maintaining the account.                                                                                                        
                                                                                                                                
Mr.  Steininger  turned  to slide  22,  "Supplemental  Bill:                                                                    
Special Appropriations and Capital Items":                                                                                      
                                                                                                                                
     Special Appropriations: Total $131.7 UGF                                                                                   
          ? Judgments, Settlements, and Claims                                                                                  
          FY2020 judgments, settlements, and claims: $131.7                                                                     
          UGF                                                                                                                   
     Capital: Total $4,852.9 deposit into General Fund                                                                          
          ? Capital                                                                                                             
          Repeals: $4,398.6 UGF                                                                                                 
                                                                                                                                
Mr. Steininger stated that the  capital budget had a variety                                                                    
of  repeals of  old projects,  some of  which had  remaining                                                                    
funds. It  was proposed for  $5 million of the  amount would                                                                    
be deposited into the General  Fund. Co-Chair Stedman stated                                                                    
that  the committee  had not  had  the discussion  regarding                                                                    
reappropriating funds for old projects yet.                                                                                     
                                                                                                                                
Senator Hoffman asked  if the committee could  obtain a copy                                                                    
of capital projects that were  being eliminated with funding                                                                    
going to the General Fund.                                                                                                      
                                                                                                                                
Mr. Steininger  informed that the projects  were detailed in                                                                    
the bill, as  well as in the backup documents.  He stated he                                                                    
could also provide a list.                                                                                                      
                                                                                                                                
Co-Chair  Stedman  referenced  a report  on  disposition  of                                                                    
state properties to be potentially  liquidated. He asked for                                                                    
an update.                                                                                                                      
                                                                                                                                
Mr. Steininger  updated that there was  a facilities council                                                                    
that was  undertaking to  identify various  state facilities                                                                    
that  were not  being  utilized and  could  be disposed  of.                                                                    
There was a prioritized list that was generated.                                                                                
                                                                                                                                
Co-Chair Stedman  stated the list  would be considered  at a                                                                    
future hearing, and he thought  one of the facilities on the                                                                    
list  was  the Mt.  Edgecumbe  pool.  He reminded  that  the                                                                    
public voted to build the facility.                                                                                             
                                                                                                                                
Mr. Steininger  stated that the  item was on  initial drafts                                                                    
and had been removed after discussion.                                                                                          
                                                                                                                                
Co-Chair Stedman  stated that the  topic would  be revisited                                                                    
when the committee addressed the bond package.                                                                                  
                                                                                                                                
10:49:40 AM                                                                                                                   
                                                                                                                                
Senator  Olson referenced  Senator Hoffman's  question about                                                                    
capital project  funds going  back to  the General  Fund. He                                                                    
asked if the Knik Arm Bridge was on the list.                                                                                   
                                                                                                                                
Mr. Steininger  did not have  the list  in front of  him and                                                                    
was  not   sure  if  the   bridge  was  on  the   list.  The                                                                    
administration  had worked  with  the  department to  ensure                                                                    
that projects were  completed and that the  funds were truly                                                                    
not  needed.  The list  was  in  the bill  listing  specific                                                                    
locations and projects.                                                                                                         
                                                                                                                                
Senator  Olson  commented  on the  duration  of  the  bridge                                                                    
project.                                                                                                                        
                                                                                                                                
Co-Chair Stedman stated the committee  would review the list                                                                    
and discuss the projects at a later time.                                                                                       
                                                                                                                                
Senator   Olson  had   discussed  alternative   avenues  for                                                                    
obtaining the  Real I.D.  with the  commissioner of  DOA. He                                                                    
agreed with  Senator Hoffman that  there was  a health-life-                                                                    
safety issue.  He asked  about the  lack of  funding request                                                                    
for supporting  getting the Real I.D.  situation resolved in                                                                    
rural Alaska.                                                                                                                   
                                                                                                                                
10:52:40 AM                                                                                                                   
                                                                                                                                
KELLY TSHIBAKA, COMMISSIONER,  DEPARTMENT OF ADMINISTRATION,                                                                    
appreciated  the opportunity  to address  the question.  She                                                                    
thought  it  was  important  to clarify  that  a  Real  I.D.                                                                    
driver's  license was  not needed  to fly  as of  October 1,                                                                    
2020.  She thought  some messaging  had been  confusing. She                                                                    
referenced  an  excerpt  from  the  Transportation  Security                                                                    
Administration's  (TSA) standard  operating procedures  that                                                                    
showed 30 alternative forms  of identification that Alaskans                                                                    
could use  to fly. She  listed passports, passport  cards, a                                                                    
tribal identification  with a photo,  and others.  She noted                                                                    
that a TSA-compliant identification  would be required as of                                                                    
October 1, 2020.                                                                                                                
                                                                                                                                
Commissioner Tshibaka  continued to address  Senator Olson's                                                                    
question.  She stated  that the  Real I.D.  paperwork burden                                                                    
was very  high. She  reiterated that the  Real I.D.  was not                                                                    
required to  fly, and other  pieces of  identification, such                                                                    
as a tribal  I.D., were easier to obtain.  She referenced AS                                                                    
28.15.041,   which  dictated   that  the   state  or   local                                                                    
jurisdictions  could not  require a  person to  have a  Real                                                                    
I.D.  There   were  48  DMV  locations   around  the  state,                                                                    
including  17 in  rural areas;  where applicants  could come                                                                    
and request a  driver's license. She agreed  that there were                                                                    
situations in  which Alaskans could  not get  an alternative                                                                    
form of I.D.                                                                                                                    
                                                                                                                                
Commissioner Tshibaka  asserted that the DMV  had been going                                                                    
above  and beyond  its normal  operations to  help with  the                                                                    
education  and outreach  efforts,  and  that one  department                                                                    
staff member was dedicated for  the outreach. The department                                                                    
had  engaged with  rural points  of contact  in communities.                                                                    
She  referenced  a  campaign that  started  under  the  last                                                                    
administration  and a  rural DMV  effort that  would require                                                                    
developing   digital   technology   to  take   a   biometric                                                                    
identification  camera into  rural  communities  as well  as                                                                    
other   technologies  for   signatures  and   identification                                                                    
screening.  She referenced  financial arrangements  with the                                                                    
communities paying for the services  and asserted that every                                                                    
Alaskan paid for DMV services.                                                                                                  
                                                                                                                                
10:56:48 AM                                                                                                                   
                                                                                                                                
Commissioner  Tshibaka  stated  that she  started  with  the                                                                    
department at the end of January  2019, and there had been a                                                                    
program  in place.  The technology  had  been developed  two                                                                    
months  previously and  the program  was being  piloted. The                                                                    
department had  visited New Stuyahok  in January  and issued                                                                    
83  I.D.s  to  residents.  The  department  had  experienced                                                                    
significant challenges with  the technical digitalization of                                                                    
the camera.  She was  not confident  that rural  trips would                                                                    
continue to  be successful in  rural Alaska if  the problems                                                                    
with   the   camera   were  not   solved.   She   referenced                                                                    
requirements  for  biometric  identifiers.  She  noted  that                                                                    
there were five  more communities that were on a  list to be                                                                    
visited  and  had requested  Real  I.D.  The department  was                                                                    
partnering  with  the  Department  of  Education  and  Early                                                                    
Development  and wanted  to  work with  TSA  to educate  the                                                                    
public.                                                                                                                         
                                                                                                                                
10:58:33 AM                                                                                                                   
                                                                                                                                
Senator Hoffman stated he had  met with the commissioner and                                                                    
the president of the  Yukon-Kuskokwim Health Corporation the                                                                    
previous day. He noted that  the corporation was the largest                                                                    
in the  region and  represented 56  communities over  a very                                                                    
vast area.  The president had  asserted that the  elderly of                                                                    
the state (with English as  a second language) would be hurt                                                                    
the worst  by the  Real I.D.  requirement, regardless  of if                                                                    
they had requested services. The  president had thought that                                                                    
thousands of elders  would not be able to  travel for health                                                                    
reasons.   He  thought   it   was   unacceptable  that   the                                                                    
administration had  not requested more resources  to address                                                                    
the  problem.  He  emphasized that  if  the  department  was                                                                    
having  problems with  its camera,  it  should request  more                                                                    
resources. He  strongly asserted  that if there  were people                                                                    
with lives in danger, it was  a result of the department not                                                                    
coming forward to request resources.                                                                                            
                                                                                                                                
Commissioner Tshibaka  relayed that she did  not make budget                                                                    
requests that were  not supported on data.  She referenced a                                                                    
law  passed in  2005 that  said  Real I.D.  was coming  into                                                                    
effect  and  there would  be  new  requirements for  passing                                                                    
through  TSA  checkpoints.  She  stated  that  the  DMV  was                                                                    
contributing to  the education of  Alaskans but was  not the                                                                    
only  partners  in  the  education  of  Alaskans  about  the                                                                    
requirements  for  getting   through  TSA  checkpoints.  She                                                                    
asserted that  the responsibility  of the department  was to                                                                    
issue licenses with respect to  motor vehicles and was doing                                                                    
what it  could to  also help with  the education  with other                                                                    
alternative  forms  of  I.D.s   for  getting  through  check                                                                    
points. She listed the numbers  of different I.D. types. She                                                                    
stated  that  the  department  was  open  and  available  to                                                                    
discuss  a pilot  program, and  that  she was  not going  to                                                                    
bring  forward a  supplemental budget  request when  she did                                                                    
not  have  more  than  a handful  of  communities  that  had                                                                    
requested help with getting Real I.D.                                                                                           
                                                                                                                                
Senator  Hoffman  told  Commissioner Tshibaka  to  "do  your                                                                    
homework."                                                                                                                      
                                                                                                                                
Co-Chair  Stedman was  glad the  commissioner had  brought a                                                                    
list  of alternate  identifications,  and  though the  state                                                                    
could distribute the information throughout the state.                                                                          
                                                                                                                                
SB  174  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair  Stedman discussed  the  agenda  for the  following                                                                    
day.                                                                                                                            
                                                                                                                                
AJOURNMENT                                                                                                                    
11:03:28 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 11:03 a.m.                                                                                         

Document Name Date/Time Subjects
02.06.2020 SFC FY20 Supplemental Presentation.pdf SFIN 2/6/2020 9:00:00 AM
Copy of 2010 Bond Package OM comparison 1 13 20 from OMB and added FY21 edited for .pdf SFIN 2/6/2020 9:00:00 AM
SB 152
020620 OMB Response - Response to SFC Questions.pdf SFIN 2/6/2020 9:00:00 AM
Operating Budget
020620 OMB Response - FY20 Master Grant Agreement Final 5-3.pdf SFIN 2/6/2020 9:00:00 AM
Operating Budget
020620 OMB Response - Senate Finance Response- VPSO Program.pdf SFIN 2/6/2020 9:00:00 AM
Operating Budget
020620 OMB Response - MOU of NSB and AK to fund Utqiavik DA.pdf SFIN 2/6/2020 9:00:00 AM
Operating Budget
020620 OMB Response - AKDHSS Enrollment Geo Data.pdf SFIN 2/6/2020 9:00:00 AM
Operating Budget