Legislature(2021 - 2022)SENATE FINANCE 532

05/17/2021 09:00 AM Senate FINANCE

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Heard & Held
Heard & Held
Heard & Held
                 SENATE FINANCE COMMITTEE                                                                                       
                       May 17, 2021                                                                                             
                         9:09 a.m.                                                                                              
9:09:19 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Bishop called the  Senate Finance Committee meeting                                                                    
to order at 9:09 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Click Bishop, Co-Chair                                                                                                  
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Natasha von Imhof                                                                                                       
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Erin Shine, Staff, Senator  Click Bishop; Representative Dan                                                                    
Ortiz,  Sponsor;  Christopher  Clark, Staff,  Senator  Click                                                                    
PRESENT VIA TELECONFERENCE                                                                                                    
Sam  Rabung,  Director,  Commercial Fisheries,  Juneau;  Rob                                                                    
Carpenter,     Deputy     Commissioner,    Department     of                                                                    
Transportation  and Public  Facilities;  Ben White,  Program                                                                    
Development  Director,  Department   of  Transportation  and                                                                    
Public  Facilities;  Dom  Pannone,  Administrative  Services                                                                    
Director,   Department   of    Transportation   and   Public                                                                    
SB 50     APPROP: CAP; REAPPROP; SUPP; AMEND                                                                                    
          SB 50 was HEARD and HELD in committee for further                                                                     
CSHB 41(FIN)                                                                                                                    
          SHELLFISH PROJECTS; HATCHERIES; FEES                                                                                  
          CSHB 41(FIN) was HEARD and HELD in committee for                                                                      
          further consideration.                                                                                                
HB 117    EXTEND BOARD OF DIRECT-ENTRY MIDWIVES                                                                                 
          HB 117 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
CS FOR HOUSE BILL NO. 41(FIN)                                                                                                 
     "An Act  relating to management  of enhanced  stocks of                                                                    
     shellfish; authorizing  certain nonprofit organizations                                                                    
     to engage  in shellfish enhancement  projects; relating                                                                    
     to  application fees  for salmon  hatchery permits  and                                                                    
     shellfish enhancement project  permits; relating to the                                                                    
     marketing  of  aquatic  farm  products  by  the  Alaska                                                                    
     Seafood  Marketing  Institute;  and  providing  for  an                                                                    
     effective date."                                                                                                           
9:10:14 AM                                                                                                                    
Co-Chair Bishop relayed that it  was the first hearing of HB
41,  however   the  committee   had  already   heard  public                                                                    
testimony on, and passed, the companion legislation, SB 64.                                                                     
Senator   Hoffman   MOVED   to  ADOPT   proposed   committee                                                                    
substitute   for  CSHB   41(FIN),  Work   Draft  32-LS0291\G                                                                    
(Bullard, 5/13/21).                                                                                                             
9:11:04 AM                                                                                                                    
AT EASE                                                                                                                         
9:11:30 AM                                                                                                                    
Senator   Hoffman   MOVED   to  ADOPT   proposed   committee                                                                    
substitute   for  CSHB   41(FIN),  Work   Draft  32-LS0291\G                                                                    
(Bullard, 5/13/21).                                                                                                             
Co-Chair Bishop OBJECTED for discussion.                                                                                        
9:12:05 AM                                                                                                                    
ERIN  SHINE,  STAFF,  SENATOR CLICK  BISHOP,  spoke  to  the                                                                    
proposed  Committee  Substitute  (CS).   She  spoke  to  the                                                                    
changes from version I to version G:                                                                                            
     Deletes Sections 7-12 from Version I                                                                                     
     Removes the promotion of aquatic farm products from                                                                        
     the purview of the Alaska Seafood Marketing Institute.                                                                     
Ms.  Shine  added that  the  bill  also made  technical  and                                                                    
conforming   changes  pertaining   to  the   effective  date                                                                    
section. She  added that version  I had  previously provided                                                                    
additional powers to the  Alaska Seafood Marketing Institute                                                                    
(ASMI) board to market aquatic  farm product, in addition to                                                                    
commercially harvested seafood from  Alaska. She stated that                                                                    
ASMIs   current  seafood  marketing activities  were  funded                                                                    
from the  Seafood Marketing  Assessment under  AS 16.51.120,                                                                    
which was  not collected  from aquatic farms.  She furthered                                                                    
that it  was therefore  appropriate for the  aquatic farmers                                                                    
of fisheries such  as kelp, crab, and oysters to  first be a                                                                    
stable  market and  overtime be  able to  establish a  self-                                                                    
assessment to  contribute towards marking of  their products                                                                    
via ASMI before the removed  provisions of the previous bill                                                                    
version became law.                                                                                                             
9:13:24 AM                                                                                                                    
Co-Chair Bishop  asked whether the  sponsor agreed  with the                                                                    
proposed changes to the legislation.                                                                                            
9:13:37 AM                                                                                                                    
REPRESENTATIVE DAN ORTIZ, SPONSOR,  commented that HB 41 had                                                                    
the ASMI  provision as a  part of  the bill. He  shared that                                                                    
ASMI  was  currently   charged  with  marketing  wild-caught                                                                    
Alaskan seafood and was  currently prohibited from marketing                                                                    
aquatic farm products. He said  that without a change in the                                                                    
statute,  ASMI  could  not  market  farm  products  such  as                                                                    
oysters and  kelp. He  noted that  the bill  included sunset                                                                    
language  that limited  how long  ASMI could  market aquatic                                                                    
farm   products,  which   incentivized  the   industry,  the                                                                    
Department of Revenue, and ASMI  to determine a feasible way                                                                    
for the  industry to buy  in to  the marking. He  thought it                                                                    
was a  key point that  the bill would allow  for mariculture                                                                    
industry  to  seek grants  and  other  non-state funds  that                                                                    
could be used to cover marketing costs.                                                                                         
Representative Ortiz  relayed that when  he had spoken  to a                                                                    
representative from ASMI and had  been assured that ASMI had                                                                    
no intention of  using money donated by people  or groups to                                                                    
market  traditional products.  He stressed  that the  intent                                                                    
for ASMI was  to gain access to federal  resources that were                                                                    
specifically for the marketing of mariculture products.                                                                         
9:16:51 AM                                                                                                                    
Senator Hoffman  requested information about which  parts of                                                                    
the  state  contributed  to  the ASMI  budget.  He  did  not                                                                    
believe  the  testifier  had  answered   as  to  whether  he                                                                    
supported the CS.                                                                                                               
Representative Ortiz asserted that he  would like to see the                                                                    
passage of HB 41.                                                                                                               
9:17:44 AM                                                                                                                    
Senator  Olson  commented  on the  multi-management  of  the                                                                    
industry.  He  aske  whether the  commercial  crab  industry                                                                    
would be  solely managed  by the  Alaska Department  of Fish                                                                    
and Game (DF&G).                                                                                                                
Representative  Ortiz was  not  sure  he understood  Senator                                                                    
Olson's question.                                                                                                               
Senator Olson asked who would  be managing the crab industry                                                                    
in the Bering Sea.                                                                                                              
Representative Ortiz stated  that he did not  have an answer                                                                    
to the question.                                                                                                                
9:19:03 AM                                                                                                                    
Senator Olson restated his question.  He thought, looking at                                                                    
the  current  bill  version,  it  appeared  there  had  been                                                                    
consolidation  of shellfish  management in  his district  to                                                                    
SAM  RABUNG,  DIRECTOR,  COMMERCIAL FISHERIES,  JUNEAU  (via                                                                    
teleconference),  did not  think  that  the bill  referenced                                                                    
fisheries management. He relayed  that the bill pertained to                                                                    
the permitting of the  shellfish enhancement projects, which                                                                    
would be managed as shellfish were currently managed.                                                                           
Senator Olson  understood that  there was  no change  in the                                                                    
management system within the crab industry.                                                                                     
Mr. Rabung said that was correct.                                                                                               
Senator  Olson  asked  the sponsor  whether  enhancement  of                                                                    
shellfish farming included crab.                                                                                                
Representative Ortiz replied in the affirmative.                                                                                
9:20:43 AM                                                                                                                    
Senator  Wielechowski asked  whether  the  department had  a                                                                    
preference between the proposed  CS and the original version                                                                    
that came to the senate from the other body.                                                                                    
Mr. Rabung  replied that the CS  did not affect the  work of                                                                    
DF&G. He  revealed that  he was a  member of  the governor's                                                                    
Mariculture  Taskforce, and  one of  the goals  had been  to                                                                    
find a way to allow ASMI  to market all seafood and not only                                                                    
commercially harvested seafood.                                                                                                 
9:21:56 AM                                                                                                                    
Senator  Olson asked  the  sponsor whether  he  had been  in                                                                    
contact  with  any  of the  participants  of  the  Community                                                                    
Development Quota (CDQ) program in the affected areas.                                                                          
Representative Ortiz  had not  specifically been  in contact                                                                    
with  those  groups.  He  noted  that  United  Fishermen  of                                                                    
Alaska,  who represented  those groups,  were in  support of                                                                    
the bill.                                                                                                                       
9:22:40 AM                                                                                                                    
Senator  Wilson  supported   the  legislation.  He  wondered                                                                    
whether there  was additional language  that could  be added                                                                    
to  allow  for  federal   receipt  authority  or  additional                                                                    
9:23:25 AM                                                                                                                    
Senator Hoffman thought  there was a way to  do what Senator                                                                    
Wilson suggested.  He thought while  the bill wanted  to use                                                                    
ASMI  as a  marketing  agent,  the bill  did  not allow  for                                                                    
collection  of taxes  from aquatic  farms. He  thought there                                                                    
might be a way to include a tax that would fund the ASMI                                                                        
marketing activity.                                                                                                             
Co-Chair Bishop WITHDREW his objection. There being NO                                                                          
further OBJECTION, it was so ordered.                                                                                           
CSHB 41(FIN) was HEARD and HELD in committee for further                                                                        
HOUSE BILL NO. 117                                                                                                            
     "An Act extending the termination date of the Board of                                                                     
     Certified Direct-Entry Midwives; and providing for an                                                                      
     effective date."                                                                                                           
9:24:22 AM                                                                                                                    
Co-Chair Bishop introduced the bill.                                                                                            
9:24:47 AM                                                                                                                    
AT EASE                                                                                                                         
9:25:59 AM                                                                                                                    
Co-Chair Bishop noted it was the second hearing of HB 117.                                                                      
He discussed FN 1, from Department of Commerce, Community                                                                       
and Economic Development, OMB Component Number 2360. He                                                                         
cited the analysis on page 2 of the fiscal note:                                                                                
     HB 117 extends statutory authorization for the                                                                             
     existing Board of Certified Direct-Entry Midwives to                                                                       
     June 30, 2023.                                                                                                             
     If the bill passes the following expenses will be                                                                        
          Travel: $20.3 (5 board members and 1 staff                                                                          
          member, to attend four board meetings per year)                                                                       
          Services: $0.4 (advertising of public notice of                                                                     
          board meetings)                                                                                                       
               $1.0 (training and conference fees)                                                                              
               $0.1 (stipends for board members attending                                                                       
               board meeting in community of residence)                                                                         
9:27:11 AM                                                                                                                    
Senator Olson  understood that there  had been some  type of                                                                    
legal proceeding that occupied the board.                                                                                       
Representative   Ortiz   stated   that   the   Division   of                                                                    
Legislative   Budget  and   Audit   Recommendation  for   an                                                                    
extension  of two  years  was  due to  issues  of which  the                                                                    
sponsor had not been privy.                                                                                                     
Senator Olson contended that if  the lawsuit was serious the                                                                    
extension recommendation should have been for one year.                                                                         
Representative  Ortiz reiterated  that he  was not  aware of                                                                    
the issues had been raised  and that the two-year extension,                                                                    
which  was   a  shorter  extension  than   usual,  had  been                                                                    
recommended  by  the  Division  of  Legislative  Budget  and                                                                    
Senator  Olson  expressed  concern with  the  legal  matters                                                                    
connected to the board.                                                                                                         
9:28:57 AM                                                                                                                    
AT EASE                                                                                                                         
9:31:19 AM                                                                                                                    
Co-Chair Bishop stated  he would set HB 117  aside until the                                                                    
afternoon  meeting, at  which time  the legislative  auditor                                                                    
would be available to testify.                                                                                                  
Senator Olson  commented that  he was  fine with  a two-year                                                                    
Co-Chair Bishop  affirmed the committee  would set  the bill                                                                    
aside until the afternoon meeting.                                                                                              
HB  117  was  HEARD  and   HELD  in  committee  for  further                                                                    
9:32:19 AM                                                                                                                    
AT EASE                                                                                                                         
9:36:36 AM                                                                                                                    
SENATE BILL NO. 50                                                                                                            
     "An  Act   making  appropriations,   including  capital                                                                    
     appropriations,     reappropriations,     and     other                                                                    
     appropriations;  making   supplemental  appropriations;                                                                    
     making   appropriations   to  capitalize   funds;   and                                                                    
     providing for an effective date."                                                                                          
9:36:41 AM                                                                                                                    
Co-Chair Bishop  stated that the  committee's intent  was to                                                                    
hear  the bill  for the  purpose of  discussion. He  related                                                                    
that  the   bill  version   before  the   committee  largely                                                                    
reflected  what  had  been   previously  introduced  by  the                                                                    
governor.  He said  that all  fund other  than UGF  had been                                                                    
removed for clarity.                                                                                                            
CHRISTOPHER CLARK,  STAFF, SENATOR CLICK BISHOP,  spoke to a                                                                    
proposed  CS  to  SB  50.  He  relayed  that  all  documents                                                                    
pertaining to  the document were  posted on BASIS  under the                                                                    
legislation.  He  referenced   an  overview  agency  summary                                                                    
document  labeled "A2"   2021 Legislature    Capital  Budget                                                                    
Agency  Summary    Governor Structure   (copy  on file).  He                                                                    
noted  that the  column,  22GovAmdT   showed all  amendments                                                                    
received  form the  governor to  date. He  said that  the CS                                                                    
represented  the  governor's   request  from  December  2020                                                                    
through  the amendment  deadline  of February  16, 2021.  He                                                                    
shared that the  column took out those funds  that were non-                                                                    
UGF  under  the  governor's   proposal,  but  the  committee                                                                    
considered UGF,  namely   bond  receipts from AHFC  and PCE,                                                                    
which  were now  being funded  with UGF.  He pointed  to the                                                                    
total on  the spreadsheet of  $169.4 million, which  did not                                                                    
include $7 million  from HB 71, which would  bring the total                                                                    
$176.6 million and had been  reflected in presentations form                                                                    
Legislative Finance Division.                                                                                                   
9:40:24 AM                                                                                                                    
Co-Chair  Stedman  understood  that document  A2  was  still                                                                    
under discussion.                                                                                                               
Mr. Clark  affirmed that he  was still  referencing document                                                                    
Co-Chair  Stedman  asked for  further  clarity  as to  which                                                                    
columns were being discussed.                                                                                                   
Mr. Clark  directed attention to the  column  22GovAmdT  and                                                                    
pointed to  the  Funding Summary  line,  which showed $128.2                                                                    
million  in  UGF  and  represented  what  the  governor  had                                                                    
submitted  in   his  budget  and  budget   amendments  since                                                                    
December 2020. He stated that  column 2, which showed UGF of                                                                    
$169.4 million, which was part  of a total of $176.6 million                                                                    
in  capital projects.  He noted  that  the federal  receipts                                                                    
were  $1.7 billion,  up from  $1.2 billion,  which would  be                                                                    
discussed  later. He  said that  the numbers  reflected what                                                                    
had been done with transportation projects in the bill.                                                                         
9:42:25 AM                                                                                                                    
Mr. Clark  directed attention to  Section 1 of  the proposed                                                                    
CS. He asked  members to go to  the bottom of page  7 of the                                                                    
bill. He spoke  to the appropriations for  the Department of                                                                    
Transportation  and Public  Facilities.  He  shared that  in                                                                    
previous years, appropriations  for airport improvements and                                                                    
surface  transportation had  been  lump  sums. He  explained                                                                    
that the  current bill reflected  what had been  done before                                                                    
2017,  when   appropriations  had  been  broken   down  into                                                                    
allocations. He stated that the  reasoning for breaking down                                                                    
the  numbers were  to provide  detail for  each project.  He                                                                    
said  that there  was  a difference  between  what was  done                                                                    
before 2017 and what the billed  showed in that how the size                                                                    
of  the  allocations  to  accommodate  for  things  such  as                                                                    
unexpected  cost  due to  work  orders  or other  unexpected                                                                    
project delays.                                                                                                                 
Mr. Clark  directed attention to  page 24, lines 23  and 24,                                                                    
which  showed allocations  for "Contingency"  ($100 million)                                                                    
and "Project  Acceleration  ($150  million). He  shared that                                                                    
the funds were intended  to accommodate additional authority                                                                    
within each project  or to allow projects  to be accelerated                                                                    
should the originally  allocated project be put  on hold. He                                                                    
said  that   the  agency  had   proposed  creation   of  the                                                                    
contingency and acceleration funds.                                                                                             
9:45:35 AM                                                                                                                    
Co-Chair Bishop  added that individual lawmakers  would have                                                                    
the   ability   to   identify   individual   projects,   per                                                                    
legislative district, in the bill.                                                                                              
9:46:02 AM                                                                                                                    
Co-Chair Stedman observed that  the proposed funds comprised                                                                    
25  percent  of  the   overall  appropriation.  He  wondered                                                                    
whether the  funds were only available  for listed projects,                                                                    
or if there was flexibility when spending the funds.                                                                            
9:46:51 AM                                                                                                                    
ROB   CARPENTER,   DEPUTY    COMMISSIONER,   DEPARTMENT   OF                                                                    
TRANSPORTATION AND  PUBLIC FACILITIES  (via teleconference),                                                                    
explained  that the  two allocations  would provide  federal                                                                    
receipt   authority   to   aid  with   cost   overruns   and                                                                    
reallocating  funding to  other  STIP projects  in place  of                                                                    
delayed projects.                                                                                                               
9:48:06 AM                                                                                                                    
Senator Wielechowski  was curious  if any such  language had                                                                    
been included in previous capital  budgets. He was concerned                                                                    
that if  contractors knew  that there  was $100  million set                                                                    
aside for cost overruns, that  there would be less incentive                                                                    
to stay on budget.                                                                                                              
Mr.  Carpenter stated  that in  prior years  there had  been                                                                    
allocations in  the bill that  had caused the  department to                                                                    
over-program the  appropriation to create room  for slippage                                                                    
and  cost  overruns.   He  said  that  the   intent  of  the                                                                    
allocations listed  was to plan  for the issues  in advance.                                                                    
He appreciated Senator Wielechowskis   concern but felt that                                                                    
in the competitive environment for  projects would result in                                                                    
the best bids possible.                                                                                                         
9:49:43 AM                                                                                                                    
Co-Chair Stedman  recalled that  over previous  years, there                                                                    
had  been  many  federal  projects  in  the  STIP  that  had                                                                    
resulted  in  anticipation  and excitement  in  communities,                                                                    
only  to be  shelved and  never completed.  He referenced  a                                                                    
road  in his  district  that had  been in  the  STIP for  20                                                                    
years.   He  thought   the  STIP   was  over-programed.   He                                                                    
referenced the importance of  not misleading communities. He                                                                    
stressed  the importance  of more  transparency in  the STIP                                                                    
process and  held that the concept  of the two funds  was to                                                                    
provide more transparency in STIP projects.                                                                                     
9:51:33 AM                                                                                                                    
Co-Chair Bishop  referenced Senator  Wielechowski's question                                                                    
and thought  the line  items offered  a truer  accounting of                                                                    
STIP projects and where money was ultimately allocated.                                                                         
9:52:15 AM                                                                                                                    
Mr. Carpenter agreed.                                                                                                           
9:52:22 AM                                                                                                                    
Senator  Wielechowski  queried  the sort  of  provisions  in                                                                    
RFP's the  prevented contractors  from bidding low  and then                                                                    
seeking more funding through change orders.                                                                                     
9:52:49 AM                                                                                                                    
BEN  WHITE,  PROGRAM  DEVELOPMENT  DIRECTOR,  DEPARTMENT  OF                                                                    
TRANSPORTATION AND  PUBLIC FACILITIES  (via teleconference),                                                                    
explained   that  the   department  followed   the  standard                                                                    
contracting process  for the state and  followed the Federal                                                                    
Highways   Administration    contracting   and   procurement                                                                    
processes. He said that there  were provisions in place that                                                                    
addressed the issue. He agreed to provide the information.                                                                      
9:53:40 AM                                                                                                                    
Senator  Wielechowski   asked  how  often  bids   went  over                                                                    
projected cost.                                                                                                                 
Mr. White replied  that much of the costs  were dependent on                                                                    
the cost  of materials. He  mentioned the volatility  in the                                                                    
price of  steel, and the mobilization  and demobilization of                                                                    
equipment. He discussed cost  variables in different regions                                                                    
of the  state and  different activity  costs such  as marine                                                                    
pile driving.                                                                                                                   
9:54:45 AM                                                                                                                    
Co-Chair  Stedman asked  whether there  would be  management                                                                    
fees for the proposed $250,000,000.                                                                                             
Mr. Carpenter  did not think  there would be  fees involved;                                                                    
the  money  was  federal  receipt authority  that  could  be                                                                    
reallocated to  a project under the  Contingency and Project                                                                    
Acceleration provisions.                                                                                                        
9:56:18 AM                                                                                                                    
Co-Chair   Stedman  understood   that   the  Indirect   Cost                                                                    
Allocation Program (ICAP) charge  wound not be applied until                                                                    
the money was allocated to a  project. He asked how long the                                                                    
funds could be carried forward  before there was a potential                                                                    
risk of loss to the state.                                                                                                      
Mr. Carpenter  stated that  the funds would  be part  of the                                                                    
capital budget  appropriation. He thought there  was a five-                                                                    
year window  in which to  charge or move funds  according to                                                                    
the allocations,  at which  time the  funds would  lapse for                                                                    
the life of the project. He  said that the intent was to get                                                                    
the projects  started within the  next federal  fiscal year,                                                                    
starting the state fiscal year  YF 22, which was two federal                                                                    
fiscal years.  The funds could  be used over many years just                                                                    
as  the  capital allocations  for  other  projects would  be                                                                    
9:58:22 AM                                                                                                                    
Co-Chair Stedman  commented on  the technical nature  of the                                                                    
new  line items.  He asked  what DOT  could do  to help  the                                                                    
committee  track the  individual  years and  amounts of  the                                                                    
proposed  funds  and how  the  funds  were spent.  He  asked                                                                    
whether   the  department   would   be   reporting  to   the                                                                    
legislature on an annual basis or other.                                                                                        
Mr. Carpenter  appreciated the  question. He  suggested that                                                                    
intent   language  could   be  added   that  indicated   the                                                                    
department should  report to the  legislature each  time the                                                                    
Contingency  money was  used and  when a  project was  moved                                                                    
forward  under Project  Acceleration. He  reminded that  the                                                                    
agency reported  quarterly on  obligations and  could report                                                                    
every time there was use of the allocations.                                                                                    
10:00:00 AM                                                                                                                   
Co-Chair  Bishop  understood  that  there  was  no   double-                                                                    
dipping   on the  indirect rate  through the  Contingency or                                                                    
Project   Acceleration   allocations   to  a   project   for                                                                    
management fees for a project.                                                                                                  
Mr. Carpenter answered in the affirmative.                                                                                      
10:00:31 AM                                                                                                                   
Senator von  Imhof asked what  would happen to the  funds if                                                                    
there were no cost overruns or contingency needs.                                                                               
Mr. Carpenter explained that the  funds were not actual cash                                                                    
but was  expenditure authority  that allowed  the department                                                                    
to use federal revenue in a different manner.                                                                                   
Senator  von Imhof  referenced page  16 of  the bill,  which                                                                    
listed three  large projects.  She assumed  if one  of those                                                                    
projects did  not move forward, the  contingency money would                                                                    
be triggered.                                                                                                                   
Mr.  Carpenter answered  in the  affirmative. He  added that                                                                    
there was  a limit of what  could be moved forward  and what                                                                    
could  incur cost  overruns. The  department had  calculated                                                                    
cost overrun trends for the  past and slippage. He agreed to                                                                    
provide the details.                                                                                                            
10:02:31 AM                                                                                                                   
Mr. White stated  the department had considered  how to move                                                                    
projects forward. He  said that if a  larger project slipped                                                                    
out,  the department  needed the  ability  to move  projects                                                                    
forward and fill  the federal gap. The  department wanted to                                                                    
ensure that it obligated each federal dollar.                                                                                   
10:03:20 AM                                                                                                                   
Senator  von Imhof  asked whether  the  committee could  see                                                                    
what projects  were in  the queue.  She referenced  the STIP                                                                    
report and what  potential projects would be  chosen to fill                                                                    
any gap.                                                                                                                        
10:03:54 AM                                                                                                                   
Senator  Wielechowski asked  whether  the contingency  funds                                                                    
could  be  used  for  construction   contracts  as  well  as                                                                    
consultancy contracts.                                                                                                          
Mr. Carpenter answered in the affirmative.                                                                                      
Senator  Wielechowski wanted  to better  understand how  the                                                                    
funds might be  used. He requested more  detail, in writing,                                                                    
about the potential ways the funds could be used.                                                                               
Mr.  Carpenter  stated  that the  department  would  provide                                                                    
backup to the project  appropriation that would give further                                                                    
Senator  Wielechowski wondered  whether  he  could see  some                                                                    
detail before moving forward on voting on the proposed CS.                                                                      
Mr. Carpenter stated that he could provide the information.                                                                     
10:05:49 AM                                                                                                                   
Co-Chair Stedman  asked for clarification as  to whether the                                                                    
Contingency  and Project  Acceleration funds  would be  used                                                                    
only for projects from the STIP.                                                                                                
Mr. Carpenter replied affirmatively  that the funds would be                                                                    
used for STIP projects only.                                                                                                    
Co-Chair Stedman clarified that the  money could not be used                                                                    
for a project outside of the STIP.                                                                                              
Mr. Carpenter agreed.                                                                                                           
Co-Chair  Stedman  thought there  needed  to  be a  tracking                                                                    
mechanism to provide more clarity on DOT project spending.                                                                      
10:07:35 AM                                                                                                                   
Co-Chair Bishop believed that the  proposed CS would provide                                                                    
greater clarity than what had been available in the past.                                                                       
10:07:44 AM                                                                                                                   
Senator  Wielechowski  asked  whether  the  Contingency  and                                                                    
Project Acceleration  funds were  required to go  through an                                                                    
RFP or procurement process before issuance.                                                                                     
Mr.  Carpenter  reiterated  that   the  funds  were  federal                                                                    
receipt authority  that the  department could  reallocate to                                                                    
projects.  He  stated that  RFP  and  bidding process  would                                                                    
follow standard Federal Highway rules.                                                                                          
Co-Chair Bishop considered that  all the overruns would need                                                                    
to be vetted before meeting Federal Highway requirements.                                                                       
Mr. Carpenter affirmed that the  department was bound by the                                                                    
strict rules of the FHA on how DOT funds were spent.                                                                            
Co-Chair Bishop asserted that DOT  would have to demonstrate                                                                    
that all rules  had been followed before the  money could be                                                                    
used for cost overruns.                                                                                                         
Mr. Carpenter answered in the affirmative.                                                                                      
10:09:15 AM                                                                                                                   
Senator Wielechowski recalled that  Mr. Carpenter had agreed                                                                    
that  the funds  could  be used  for  consultants. He  asked                                                                    
whether an RFP process would  need to be followed to procure                                                                    
a consultant.                                                                                                                   
Mr.  Carpenter stated  that any  consultants  that would  be                                                                    
hired would be  strictly tied to the projects  guided in the                                                                    
STIP.  He assured  the committee  that department  would not                                                                    
randomly  hire  consultants  using  contingency  funds.  All                                                                    
expenditures  would  be  guided  by  the  STIP,  the  public                                                                    
planning process, and federal rules.                                                                                            
10:10:35 AM                                                                                                                   
Co-Chair Stedman  reminded that all the  federal funds would                                                                    
be  accompanied  by  state  matching  funds.  He  asked  Mr.                                                                    
Carpenter to  explain how the  match process would  work. He                                                                    
pondered where the  $250 million would go if  the line items                                                                    
did not pass muster.                                                                                                            
Mr. Carpenter discussed the match  process, which included a                                                                    
separate appropriation  for federal components. There  was a                                                                    
roughly  ten percent  match on  the  federal highway,  which                                                                    
would require a state match.                                                                                                    
Co-Chair   Stedman  reiterated   his   question  about   the                                                                    
distribution  of the  $250 million  without the  Contingency                                                                    
and Project Acceleration funds.                                                                                                 
Mr. Carpenter  said that in  recent years  the appropriation                                                                    
would have  been leaner  because it would  have been  a lump                                                                    
sum. He  reminded that the  projects were controlled  by the                                                                    
STIP. In the  past the bill would have  to be overprogrammed                                                                    
by nearly double  to account for expected  overruns. He said                                                                    
that the  intent with  the new  line items  was to  keep the                                                                    
bill lean, while  allowing for flexibility in  terms of cost                                                                    
overrun and slippage.                                                                                                           
10:14:23 AM                                                                                                                   
Senator Olson  considered the $250,000,000 proposed  for the                                                                    
two funds  and wondered why  the state didn't use  the funds                                                                    
for deferred  maintenance and capital projects  that were on                                                                    
the list.                                                                                                                       
Mr.  Carpenter  reminded that  the  funding  was not  actual                                                                    
cash, but  rather expenditure authority  for DOT to  be able                                                                    
to  charge  to  the  allocations with  legal  authority.  He                                                                    
stressed  that the  DOT was  still  capped at  approximately                                                                    
$600 million from the Federal Highway Administration.                                                                           
Senator Olson  thought the proposal  could be a  slanted way                                                                    
to make expenditures.                                                                                                           
Mr. Carpenter noted that the  department would not be hiring                                                                    
consultants outside  the procurement process.  He reiterated                                                                    
that every  expenditure had to  be itemized in the  STIP and                                                                    
the procurement  process was followed  to the letter  of the                                                                    
10:16:59 AM                                                                                                                   
Senator Olson assumed that the  funds would only be used for                                                                    
roads, since  the STIP was  referenced, rather  than ferries                                                                    
or airports.                                                                                                                    
Mr.  Carpenter noted  that there  were two  appropriations                                                                      
one for surface and another for airports.                                                                                       
10:17:49 AM                                                                                                                   
Senator  Wielechowski  was  trying  to  understand  how  the                                                                    
federal  government  would   allow  the  additional  receipt                                                                    
authority.  He understood  that  DOT received  authorization                                                                    
for projects and wondered how the process would work.                                                                           
Mr. Carpenter deferred to Dom Pannone.                                                                                          
10:18:56 AM                                                                                                                   
DOM  PANNONE, ADMINISTRATIVE  SERVICES DIRECTOR,  DEPARTMENT                                                                    
OF    TRANSPORTATION    AND     PUBLIC    FACILITIES    (via                                                                    
teleconference),  explained  that  if   DOT  had  a  federal                                                                    
project for  $10 million  and an  allocation in  the Capital                                                                    
Budget  for $10  million which  experienced a  cost overrun,                                                                    
the department  would tap  into the  Contingency allocation.                                                                    
He said  that this would  keep the department  from reducing                                                                    
allocations  to  other projects  and  to  continue with  the                                                                    
project without having to seek legislative approval.                                                                            
10:20:17 AM                                                                                                                   
Co-Chair Stedman  wanted to  take a  high-level view  of the                                                                    
proposed Contingency fund and  Project Acceleration fund. He                                                                    
said that the bill contained  $750 million in projects, with                                                                    
$250  million  in the  new  funds.  He  asked how  much  the                                                                    
federal government  would send  to the  state. He  asked for                                                                    
more refinement on the total expected federal dollars.                                                                          
Mr. Carpenter deferred to Mr. White.                                                                                            
Mr.  White stated  that for  each DOT  project, there  was a                                                                    
project  agreement  with  the  FHA  based  on  the  planning                                                                    
estimate. The  department would be working  closely with the                                                                    
FHA and would  make additional funding requests  to the FHA.                                                                    
The  project  could  not be  advanced  with  the  additional                                                                    
funding until the cost increase  was approved by the FHA. He                                                                    
shared that  currently, if  a project  had a  cost increase,                                                                    
they had  to find a  way to  deduct from another  project or                                                                    
allocation, which made for constant funding management.                                                                         
10:22:55 AM                                                                                                                   
Co-Chair Stedman took  note of the $750  million for federal                                                                    
receipt authority. He asked how  much the federal government                                                                    
would be sending to the state.                                                                                                  
Mr.  White cited  that  for the  current  fiscal year,  $586                                                                    
million had been allocated in  federal limitation, which did                                                                    
not  include other  funding  sources  that became  available                                                                    
during the year.  He said that the base  allocation for 2021                                                                    
was $586 million.                                                                                                               
Co-Chair Stedman  pondered that the department  had received                                                                    
$600  million,  the  bill listed  $750  million  in  receipt                                                                    
authority, which  provided and  additional $150  million. He                                                                    
furthered  that  the  Contingency and  Project  Acceleration                                                                    
added and additional $250 million.  He concluded that in all                                                                    
culminated in  the department receiving the  $600 million in                                                                    
federal authority.                                                                                                              
Mr. White answered in the affirmative.                                                                                          
10:24:57 AM                                                                                                                   
Senator  Wielechowski  asked   whether  the  department  was                                                                    
expecting 33 percent cost overruns on STIP projects.                                                                            
Mr. White  stated that the  intent was  to make use  of more                                                                    
federal funding  as it  became available.  He said  that the                                                                    
last  two years  the department  had obligated  more federal                                                                    
funding than  what had been originally  allocated because of                                                                    
earmarks  or other  available federal  funding than  had not                                                                    
been part of the base allocation from the FHA.                                                                                  
Senator Wielechowski  thought the  Contingency fund  was for                                                                    
cost  overruns and  not  allocation  of possible  additional                                                                    
federal funding.                                                                                                                
Mr.  White   stated  that  the  Contingency   was  for  cost                                                                    
overruns,  and   the  Project  Acceleration  fund   was  for                                                                    
additional federal funding.                                                                                                     
10:26:51 AM                                                                                                                   
Co-Chair Bishop  pondered that in if  the federal government                                                                    
had  money that  had  not  been spent  by  other states  the                                                                    
department  would   be  in  place  to   benefit  from  those                                                                    
additional dollars.                                                                                                             
Mr.   White  agreed.   He  said   that  during   the  August                                                                    
redistribution at  the end of  the federal fiscal  year, FHA                                                                    
would make  any unallocated funds available,  which would be                                                                    
the Project  Acceleration funding the department  would seek                                                                    
Co-Chair Bishop asked  whether Alaska was one  of the better                                                                    
states in  the country  at being  prepared to  have projects                                                                    
ready for additionally available funding.                                                                                       
Mr. White  affirmed that the  state had  done a good  job at                                                                    
being prepared for any additional funding.                                                                                      
10:28:49 AM                                                                                                                   
Mr. Clark directed attention to  page 24, line 26, which was                                                                    
an allocation for the Denali  Commission for $15 million. He                                                                    
said that  the administration  believed that  the allocation                                                                    
would help to build roads in rural Alaska.                                                                                      
10:29:19 AM                                                                                                                   
Mr.  Clark pointed  out that  Section 2,  which set  out the                                                                    
funding by agency for the  appropriations made in Section 1.                                                                    
He furthered  that Section 3  set out the  statewide funding                                                                    
for  the  appropriations made  in  Section  1. He  addressed                                                                    
Section  4  starting on  page  30,  which was  the  language                                                                    
section of  the bill. He  pointed out to the  committee that                                                                    
the first item related to  a revised program for legislative                                                                    
RPLs. He noted that the language  was the same as the Senate                                                                    
version  of   the  operating  budget  bill   that  had  been                                                                    
previously  released. The  language put  some constraint  on                                                                    
the governor's  ability to use  RPLs for  funding government                                                                    
and to retain the legislative power of appropriation.                                                                           
Mr. Clark highlighted  a few items in  the language section.                                                                    
He spoke to legislative  reappropriations the first of which                                                                    
was on  Page 32, under  the Department of Health  and Social                                                                    
Services.  He said  that the  bulk  of the  reappropriations                                                                    
could  be  found  on  Page 39,  line8,  staring  with  House                                                                    
Districts 12  and 28, these were  reappropriations requested                                                                    
by individual  legislators. He  noted that  then end  of the                                                                    
bill contained lapse dates for  projects and effective dates                                                                    
for the sections of the bill.                                                                                                   
10:32:21 AM                                                                                                                   
AT EASE                                                                                                                         
10:35:02 AM                                                                                                                   
Co-Chair   Stedman  MOVED   to   ADOPT  proposed   committee                                                                    
substitute  for  SB  50, Work  Draft  32-GS1507\N  (Dunmire,                                                                    
5/16/21). There being NO OBJECTION, it was so ordered.                                                                          
SB  50  was   HEARD  and  HELD  in   committee  for  further                                                                    
10:35:43 AM                                                                                                                   
The meeting was adjourned at 10:35 a.m.                                                                                         

Document Name Date/Time Subjects
SB 50 06 - Supp ProjectDetailByAgency.pdf SFIN 5/17/2021 9:00:00 AM
SB 50
SB 50 05 - SCS1 ProjectDetailByHD.pdf SFIN 5/17/2021 9:00:00 AM
SB 50
SB 50 03 - SCS1 Cap AgencySummary UGF.pdf SFIN 5/17/2021 9:00:00 AM
SB 50
SB 50 02 - SCS1 Cap AgencySummary All Funds.pdf SFIN 5/17/2021 9:00:00 AM
SB 50
SB 50 04 - SCS1 ProjectDetailByAgency.pdf SFIN 5/17/2021 9:00:00 AM
SB 50
SB 50 01- SB 50 Version N, 16 May 2021.pdf SFIN 5/17/2021 9:00:00 AM
SB 50
HB 41 Explanation of Changes ver I to G 5.13.2021.pdf SFIN 5/17/2021 9:00:00 AM
SFIN 1/31/2022 1:00:00 PM
HB 41
HB 41 Work Draft ver. G 5.13.2021.pdf SFIN 5/17/2021 9:00:00 AM
SFIN 1/31/2022 1:00:00 PM
HB 41