Legislature(2021 - 2022)SENATE FINANCE 532
05/05/2021 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB27 | |
| HB169 | |
| Presentation: Omb May 3, 2021 Amendments Op/cap/sup | |
| SB49 || SB51 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 169 | TELECONFERENCED | |
| += | HB 69 | TELECONFERENCED | |
| += | HB 71 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 27 | TELECONFERENCED | |
| += | SB 49 | TELECONFERENCED | |
| += | SB 51 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
May 5, 2021
9:03 a.m.
9:03:16 AM
CALL TO ORDER
Co-Chair Bishop called the Senate Finance Committee meeting
to order at 9:03 a.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman
Senator Donny Olson
Senator Natasha von Imhof (via teleconference)
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Representative Louise Stutes, Sponsor; Representative Dan
Ortiz, Sponsor; Neil Steininger, Director, Office of
Management and Budget, Office of the Governor; Pete
Ecklund, Staff, Senator Bert Stedman; Alexei Painter,
Director, Legislative Finance Division.
PRESENT VIA TELECONFERENCE
Katrina Hoffman, Self, Cordova; Kim Aspelund, Self,
Anchorage; Mike Webber, Self, Cordova.
SUMMARY
SB 49 APPROP: OPERATING BUDGET/LOANS/FUNDS
SB 49 was HEARD and HELD in committee for further
consideration.
SB 51 APPROP: MENTAL HEALTH BUDGET
SB 51 was HEARD and HELD in committee for further
consideration.
HB 27 NAMING IRENE WEBBER BRIDGE
HB 27 was REPORTED out of committee with a "do
pass" recommendation and with one previously
published fiscal impact note: FN 1(DOT).
HB 69 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 69 was SCHEDULED but not HEARD.
HB 71 APPROP: MENTAL HEALTH BUDGET
HB 71 was SCHEDULED but not HEARD.
HB 169am APPROP: EDUCATION; PUPIL TRANSPORTATION
HB 169am was HEARD and HELD in committee for
further consideration.
PRESENTATION: OMB MAY 3, 2021 AMENDMENTS OP/CAP/SUP
HOUSE BILL NO. 27
"An Act naming the irene Webber Bridge."
9:03:47 AM
Co-Chair Bishop noted that it was the second hearing for HB
27.
9:04:03 AM
REPRESENTATIVE LOUISE STUTES, SPONSOR, discussed HB 27. She
explained that irene Webber had an incredible impact on the
community of Cordova, and the proposed naming of the
bridge was exciting for the whole community. She discussed
Ms. Webber's history of recovery and involvement in running
and marathons. She emphasized the importance of the bill to
the community.
9:05:57 AM
KATRINA HOFFMAN, SELF, CORDOVA (via teleconference), spoke
in favor of the bill. She was irene Webber's daughter-in-
law. She discussed the legacy of Ms. Webber and the
community events she had created such as the Cancer Walk
and Wild Salmon Run. She discussed Ms. Webber's
contribution to the community of Cordova. She described
that the bridge was adjacent to community recreation areas
that residents frequented for skiing, four-wheeling, and
barbecuing. She described the area. She encouraged the
committee to pass the bill.
9:08:07 AM
KIM ASPELUND, SELF, ANCHORAGE (via teleconference),
testified in support of the bill. She was the daughter of
irene Webber. She discussed Ms. Webber's volunteer work.
She relayed that Ms. Webber had helped others in the
community overcome alcohol abuse. She described how Ms.
Webber was inspirational to others. She discussed Ms.
Webber's dedication to herself and the community. She
thanked the committee and asked for members to support the
bill.
9:11:19 AM
MIKE WEBBER, SELF, CORDOVA (via teleconference), spoke in
support of the bill. He discussed his mother's qualities
and history in commercial fishing. He spoke about his
mother running on the beach and inspiring others. He
thought the proposed naming of the bridge would be a
powerful statement. He relayed that his mother was a leader
in the community and discussed her kindness to others. He
discussed the community of Cordova, and the Salmon Run
event which his mother had started.
9:15:21 AM
Co-Chair Bishop OPENED and CLOSED public testimony.
Co-Chair Bishop addressed a previously published fiscal
impact note from the Department of Transportation and
Public Facilities, OMB Component 2068 with $10,200 in
unrestricted general funds.
Co-Chair Stedman MOVED to report HB 27 out of Committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
HB 27 was REPORTED out of committee with a "do pass"
recommendation and with one previously published fiscal
impact note: FN 1(DOT).
9:16:18 AM
AT EASE
9:18:03 AM
RECONVENED
Co-Chair Bishop handed the gavel to Co-Chair Stedman.
HOUSE BILL NO. 169 am
"An Act making appropriations for public education and
transportation of students; and providing for an
effective date."
9:18:07 AM
Co-Chair Stedman asked the sponsor to address the
committee.
9:18:34 AM
REPRESENTATIVE DAN ORTIZ, SPONSOR, explained that HB 169
was an appropriation bill for the foundation formula and
pupil transportation for 2022 and 2023. The bill was a
separate appropriation bill from the regular operating
budget, in order to pass funding for education early in the
session for FY 22 and provide forward-funding for FY 23. He
referenced the long legislative history of the members, and
thought they were familiar with the ongoing problem of
delayed funding for school districts. He described the
challenge of school districts that often had to send out
layoff notices to teachers because of uncertainty with
funding levels and the need to comply with contracts. He
recalled receiving such a notice early in his own teaching
career.
Representative Ortiz continued his opening remarks. He
asserted that HB 169 reflected an attempt to help alleviate
the problem as described. He identified that education and
student success was a high priority for the legislature and
the state. He asserted that HB 169 reflected the
legislature's commitment to education, students, and
teachers and would help alleviate one issue related to the
growing problem of not being able to retain teachers.
Senator Wielechowski thanked the sponsor for bringing the
bill forward, which he thought was a huge step forward in
the way education was funded. He hoped the state would
engage in the method more often. He asked if the sponsor
knew when layoff notices were sent to teachers in the
state.
Representative Ortiz thought that the layoff date varied
around the state. He thought some districts began layoffs
in the middle of April, and others at a later time
depending upon the budget cycle of the district. He
understood that the Juneau School District had an earlier
layoff date.
9:23:12 AM
Co-Chair Stedman asked if the sponsor could recall if the
legislature had ever lowered the Base Student Allocation
(BSA) amount and asked if the bill contained the targeted
BSA amount.
Representative Ortiz could not recall the legislature
having ever lowered the BSA. He mentioned the
constitutional obligation to provide an adequate education
for all students in the state, including a financial
commitment for the state to bear the responsibility. He
considered that since there was no question of having the
obligation, the legislature might as well provide the
funding earlier.
Co-Chair Stedman asked for more detail regarding the timing
of the proposed appropriation and where the funds would
come from. He asked if there had been litigation over the
issue.
Representative Ortiz was not aware of any litigation. He
thought no one could argue that the bill proposed to tie
the hands of a future legislature, as the current body
would be the legislature for FY 23. He did not think there
would be a threat of a lawsuit going forward.
Co-Chair Stedman set the bill aside. He assured the viewing
public that there would be further information coming from
the committee regarding maintenance of effort and the
federal assistance funding coming for schools. He
referenced data sheets that were being assembled. He
thought there would be dialogue over the following year as
to how to track the funds.
HB 169 was HEARD and HELD in committee for further
consideration.
^PRESENTATION: OMB MAY 3, 2021 AMENDMENTS OP/CAP/SUP
9:27:09 AM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, addressed four amendment packages
differentiated by operating, capital, supplemental
operating, and supplemental capital (copy on file). He
addressed the FY 22 operating governor amend package, which
had a memo followed by a summary spreadsheet with three
items.
Mr. Steininger addressed Line 1, which was an adjustment to
the cost-of-living adjustment (COLA) for court service
officers and deputy fire marshals. Upon further review, it
was noted that the two percent adjustment for the second
year of the contract was applied to an incorrect base
salary. The total was $317,000, $300,200 of which was
Unrestricted General Funds (UGF). The item accommodated a
four percent salary adjustment made in the first year, and
a two percent adjustment was made to the base salary.
Mr. Steininger addressed Line 2, concerning an upward
adjustment to the investment management fees for the Alaska
Permanent Fund Corporation (APFC), due to higher returns
and a larger than expected account balance. He detailed
that management fees were scaled as a percent of assets
under management. The $60 million item was an estimate, and
if the fees came in lower than $60 million the money would
be put back into the fund.
9:29:47 AM
Mr. Steininger spoke to Line 3, which was for three
temporary positions for the Department of Transportation
and Public Facilities (DOT). As the department had been
working through the complexities of the guidance and rules
surrounding the federal relief from the Federal Aviation
Administration (FAA), Federal Transit Authority (FTA), and
the Federal Highway Administration (FHWA) in all 3 primary
COVID-19 funding acts, there was about 9 pots of money with
differing rules that necessitated additional accounting
staff.
Co-Chair Stedman observed that the item description listed
three long-term non-permanent (LTNP) positions. He asked
for greater detail.
Mr. Steininger explained that in the classification system
for state employees there was permanent full-time
employees, and non-permanent employees were split into
short-term and long-term positions. The short-term non-
permanent positions were limited to 90 or 120 days
depending upon the bargaining contract. The long-term non-
permanent positions were those requiring more than 90 or
120 days.
Co-Chair Bishop asked if the department had the position
control numbers (PCNs) available, or if a classification
study would be needed. He asked if the positions would go
away after the funds were expended.
Mr. Steininger stated that the proposed amendment would
create three new PCNs and were labeled as long-term non-
permanent position to ensure that the employees understood
the positions would go away once the need and federal
funding expired.
Senator Wielechowski asked if there were any other
collective bargaining agreements that were currently being
negotiated that might necessitate a supplemental request.
Mr. Steininger answered affirmatively. There were two
tentative agreements that he had received that morning, and
there would be further amendments related to the bargaining
units. He thought there was a third agreement outstanding.
He affirmed that OMB would come back before the committee
with more information when it was available.
Co-Chair Stedman asked if the further amendments would be
within the next seven days.
Mr. Steininger stated that OMB was working on formal backup
in order to transmit the information to the legislature in
the next 24 to 48 hours.
Senator Wielechowski about Item 2 pertaining to APFC
management fees. He asked about the fee rate.
Mr. Steininger had to the defer the question back to APFC.
He believed the fees varied according to the management
entity.
Co-Chair Stedman thought the fees would be tied to the
asset base. He suggested that as the Permanent Fund
advanced in value the fees would go up.
9:33:47 AM
Senator Wilson asked about the two forthcoming amendments
and the bargaining unit that Mr. Steininger referenced.
Mr. Steininger thought the supervisory unit and the
Correctional Officers Association would be ready in the
next 24 to 48 hours, his office was putting together the
technical records so that the Legislative Finance Division
(LFD) could put the adjustments in the right components. He
recalled that the remaining contract was labor, trades, and
crafts.
Co-Chair Stedman clarified that the committee had expressed
interest in having the OMB formalize amendments so that
paperwork was in order and the committee would take action
on the amendments were presented.
Mr. Steininger addressed a memo and spreadsheet with
capital budget amendments (copy on file). He discussed Item
1 on the spreadsheet, relating to FTA. He explained that
the item was not related to federal COVID-relief funding
but was an adjustment to the normal federal transit
administration grant. The increase was due to the FTA
apportionment rising over the previous years and
communities being able to submit applications through DOT.
The increase was for $25.26 million from a base of $10
million and would be a pass-through to community transit
organizations.
Mr. Steininger discussed Item 2, related to federal COVID-
relief funds. A portion of the Coronavirus Response and
Relief Supplemental Appropriations Act (CRRSAA) funding
through DOT would be passed through to the Anchorage
Metropolitan Area Transit Solutions Organization. The act
required that the monies be passed through to Anchorage,
and the pass-through had been omitted from earlier
appropriation vehicles. The funding was in the amount of
$11.3 million.
Senator Olson considered the proposed DOT funding listed in
item 1 and item 2. He asked if any of the funding had to do
with the Knik Arm Bridge and Toll Authority (KABATA)
project.
Mr. Steininger did not believe either of the items would
deal with the KABATA issue but would confirm with the
department and get back to the committee.
9:37:13 AM
Mr. Steininger addressed a spreadsheet with supplemental
operating amendments (copy on file). He addressed Item 1,
which would be an increase to federal authority for the Mt.
Edgecumbe Boarding School to accommodate COVID-19 relief.
The item was related to the relief funding managed by the
Department of Education and Early Development that got
spread to different school districts. For Mt. Edgecumbe to
collect the funds it needed federal authority within its
budget in the amount of $5.3 million.
Mr. Steininger addressed Item 2, which was $410,000 of
judgement settlements and claims. He directed attention to
the list of judgement settlements and claims against the
state.
Mr. Steininger spoke to Item 3, which was a reappropriation
to the Marine Highway System Fund. He noted that there
would be a corresponding decrease in the supplemental
capital budget. The item was a reappropriation of the
aviation match for FY 21. The aviation match had been
waived in FY 21 as part of one of the federal relief
packages, and the Marine Highway System Fund was posting a
$5.5 million deficit at the close of the current fiscal
year. The item utilized the reduced need for match in the
aviation program to backfill the need in the Marine Highway
System Fund.
Mr. Steininger addressed FY 2021 Supplemental Capital
Budget Amendments. Item 1 corresponded with the transfer to
the Marine Highway System Fund and reflected the reduction
in the capital budget for aviation state match of $5.5
million. Item 2 was $11 million from the Coronavirus Aid,
Relief, and Economic Security (CARES) Act funding for rural
airport deferred maintenance. The item covered deferred
maintenance at airports owned by the state. Item 3 was
authority for the Alaska International Airport System to
use some of its COVID-19 relief to pay down debt service.
He explained that the relief funds received by the airport
system could be deposited into its International Airport
System Fund as general revenue, however in order to use it
outside day to day operations an additional appropriation
was needed.
Mr. Steininger addressed Item 4, another reappropriation of
the aviation state match. The $1 million would be
reappropriated to an emergency weather event capital
project for the department to be able to respond to
emergency weather events that required funding above and
beyond the amount available in normal maintenance operating
budgets. He used the example of extreme freeze events and
avalanches, after which the funds could be used without
having to come forward with individual supplemental items
for every weather event.
9:41:16 AM
Senator Wilson asked how much estimated debt service would
be paid with the federal COVID-19 relief funds.
Mr. Steininger specified that the item proposed to use $30
million in debt service for the Alaska International
Airport System. He believed the system had been able to use
other federal receipt authority at the close of the
previous year to pay down debt service. He agreed to
provide more detail at a later time.
Senator Wilson asked if there were other departments that
would be using federal CARES Act funding to pay down debt
service.
Co-Chair Stedman asked if Mr. Steininger could provide the
information at a later time.
Mr. Steininger was not aware of any other departments
paying down debt service with federal CARES Act funding. He
knew there was a proposal in the other body to use some of
the American Rescue Plan Act (ARPA) funding to pay down the
state's annual debt service as a replacement for general
funds. He agreed to look to see if there were any other
areas with debt service not in the main area of the
operating budget.
Co-Chair Bishop asked about Item 2 pertaining to CARES Act
funding and rural airport deferred maintenance. He asked
about the inclusion of capital expenses for equipment.
Mr. Steininger explained that most of the funding had
limitations on purchasing equipment, but the maintenance
work was generally eligible. He thought was nuance involved
since there was multiple pots of money and multiple sets of
rules. He would work with the department to see if there
was allowability in one or more pots of money for purchase
of equipment.
9:44:34 AM
Senator Olson considered aviation funds being
reappropriated to the Alaska Marine Highway System (AMHS)
and extreme weather events. He asked where the funding was
originally allocated.
Mr. Steininger explained that in the previous year's
capital budget there had been $8.8 million in one
appropriation intended for matching the airport improvement
program. Part of it was proposed to be reappropriated, and
the remaining amount was being reserved for potential costs
that were not federally reimbursable. Originally the funds
were UGF intended to match the airport improvement program,
but the change in FAA rules allowed for the state (in that
one year) to not require match for the program, and the
need went away.
Senator Olson asked if there was any other fund source that
could be used.
Mr. Steininger asked if Senator Olson referenced the Marine
Highway System Fund or weather events.
Senator Olson answered "yes."
Mr. Steininger informed that the state could use a
straightforward UGF appropriation rather than a
reappropriation, or other Designated General Fund (DGF)
sources that had available balances, however using the
reappropriation as proposed was a place where there was not
necessarily a competing need.
Senator Wielechowski asked if the proposed reappropriations
of aviation funds would be a loss for the Airport
Improvement Program.
Mr. Steininger stated that the match was waived for the
Airport Improvement Program and the FAA had provided
significant additional amounts of relief that could be
applied to airport maintenance improvement needs throughout
the state. Through the federal relief funding, the total
amount available for airport needs had grown significantly,
but there was no longer a need for general fund match. He
summarized that the airports were not necessarily harmed by
the use of the matching funds as there was other FAA money
coming in that could backfill the amount.
9:47:52 AM
Senator Olson asked if the funding switch would slow down
any projects.
Mr. Steininger relayed that the projects funded through the
projects funded through the FY 21 Airport Improvement
Project would use federal funds that were still available
for use. He understood that the change would not slow down
any of the projects.
Senator Olson considered the $410,000 UGF in judgements,
settlements, and claims referenced in Item 2 of the
supplemental operating amendments. He wondered about any
other judgements, settlements, and claims were present in
the regular operating budget.
Mr. Steininger offered to provide a full list of the
judgements, settlements and claims inclusive of new items.
He explained that there were not any in the FY 22 operating
budget, and generally the way the state managed judgements
and settlements was in a supplemental budget after the item
occurred, so the items were primarily always supplemental
needs. he offered to provide a full list by case and
amount.
Senator Olson asked how much the state paid in total, which
he thought was more than $410,000.
Mr. Steininger did not know the exact number but estimated
that the amount was in the several million dollar range.
Co-Chair Stedman asked for Mr. Steininger to provide the
information to the committee at a later time.
Senator Wielechowski requested a list of management fees
listed in Item 2 in the operating budget amendments. He
thought the amount seemed huge on top of other fees the
state was already paying.
Mr. Steininger stated he would work with APFC to get the
information. He cited that the increase in management fees
was a result of market returns increasing the value of the
fund. He agreed to provide the information.
Co-Chair Stedman relayed that the committee would reconvene
at one o'clock in the afternoon to consider proposed
committee substitutes for SB 49 and SB 51, and to hear a
presentation about recurring revenue and recurring
expenditures. The committee would be engaging in budget
discussions over the following two weeks, and would build
upon the afternoon presentation as different monies and
transactions were layered in. The committee was also
waiting for the other body to transmit the companion
operating budget bill, which he suspected would not be done
for several days. He asserted that the Senate would try and
advance the process and minimize the number of days it
would take to put the final budgets together after
receiving the version from the House. He referenced the
constitutional deadline on the 19th of May and was unsure
if the deadline would be met.
9:53:24 AM
RECESSED
1:04:50 PM
RECONVENED
SENATE BILL NO. 49
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making reappropriations; making
supplemental appropriations; 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."
SENATE BILL NO. 51
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; making
supplemental appropriations; and providing for an
effective date."
1:05:21 PM
Co-Chair Stedman discussed the afternoon portion of the
agenda. The committee would consider adoption of a
committee substitute (CS) for SB 49 and SB 51 and would
hear a fiscal update from LFD. He explained that the
committee had been working on a base budget with fund
source exchanges, COVID-19 relief funds, and transfers from
other fiscal years excluded. The committee would consider
the base budget with recurring revenues and recurring
expenditures. The CS would include all subcommittee work,
and he would look to members for amendments and other
concerns to be submitted to his office by Friday.
Senator Hoffman MOVED to ADOPT proposed committee
substitute for SB 49, Work Draft 32-GS1509\N (Marx,
5/4/21).
Co-Chair Stedman OBJECTED for discussion.
1:07:27 PM
PETE ECKLUND, STAFF, SENATOR BERT STEDMAN, spoke to the
proposed CS. He discussed the structure of the bill, which
had been divided into sections and groupings for purposes
clarity. There was multiple numbers sections. He detailed
that Section 1 through Section 3 were the regular operating
budget, which contained the recommendations from all the
Senate Finance budget subcommittees. Section 2 and Section
3 were all the funding source roll-ups of all the
appropriations made in Section 1. He continued that Section
4 through Section 6 were the number sections operating and
supplemental items, and Section 5 and Section 6 were the
funding source roll-ups for all the supplemental operating
items listed in Section 4.
Mr. Ecklund added that Section 7 through Section 9 was the
numbers section for capital supplemental items. Sections 8
and 9 were the funding source 'roll ups' of all of the
supplemental capital items listed in section 7.
Mr. Ecklund read from a prepared statement:
The Language Section
The bulk of supplemental language items have been
grouped together at the beginning of the language
section. These varying supplemental language
appropriations could be for either operating or
capital items, as well as direct or 'inflexible' ARPA,
CRRSAA, CARES or from other federal acts that require
appropriation to be accepted.
Sections 10 27 of the language section are the bulk
of those varying language supplemental items for FY21
I just referred to
The remaining sections (28-59) are mainly more
'normal' or 'usual' FY22 language appropriations
1:09:45 PM
Mr. Ecklund continued his remarks about the proposed CS for
SB 49. He addressed the substance of the bill. He noted
that there were many reports that described the funding
laid out in the CS in varying degrees of detail. He noted
that there would be even more detailed reports posted on
LFD's website after the hearing.
Mr. Ecklund highlighted that one change incorporated in the
CS was the many transactions approved to accommodate the
Governor's request to consolidate human resources and
procurement into the Department of Administration. He
highlighted that it was the reason that members might
notice small differences between their subcommittee
recommendation and what was contained in the draft CS.
Mr. Ecklund gave a high-level overview of the dollars and
fund sources appropriated in the bill. He affirmed that he
would list all of the reports in front of members and may
reference them but did not intend for members to look at
the reports each time. He noted he would use round numbers
for clarity.
Mr. Ecklund addressed the budget totals:
Totals
FY22 Operating totals
All Funds 10.78 billion
UGF 4.56 billion
General funds 5.42 billion
FY21 Operating supplemental totals
All funds 1.27 billion
UGF 77.2 million
General funds 76.1 million (neg DGF sup of
just over 1 M)
FY21 Capital supplemental totals
All funds 168.7 million
UGF 10.2 million
General funds 30.8 million
Mr. Ecklund noted that there was a typo on member's sheets
and that the capital supplemental total should be for FY 21
rather than FY 22.
Mr. Ecklund addressed a packet of reports with a cover
sheet entitled "CS1 Reports Master Sheet" (copy on file).
The reports went into detail listing the fund sources and
dollars in the CS. He noted that there were three
spreadsheets in the packet, which OMB had presented the
previous Friday. The spreadsheets covered operating and
capital governor supplemental requests as well as federal
direct or 'inflexible' grant funds. He noted that there was
an added a Senate column that denoted whether a request had
been included in the CS. Further, there was a column
labeled 'lang', which stood for 'language'. He clarified
that a 'Y' in that column denoted that an item, if
included, could be found in the language section; while an
'N' in the column instructed that if that item was
included, it could be found in the supplemental numbers
section.
1:13:46 PM
Mr. Ecklund highlighted language items of note in the bill:
Sec 14 (f) the Administration requested extension
of an 'estimated to be $9 million federal'
appropriation related to CARES act funding from last
year, we are partially granting that request. There is
approximately $331 million of Coronavirus Relief Funds
(CRF) associated with the estimated to be
appropriation that we are not rolling forward to next
fiscal year
Sec 20 amends the current year 'Federal and Other
Program Receipts' or RPL language, to restrict
designated program and federal receipt authority from
being added to the Alaska Gasline Development
Corporation and for natural gas pipeline expenditures.
It also restricts the RPL process from being used for
the 'flexible' CRRSAA DOTPF funds and the flexible
ARPA funds. This section further restricts the RPL
process from being used for any future funds
appropriated by the 117th Congress for infrastructure,
jobs, or as part of the American Jobs Plan and federal
funds related to economic recovery.
Sec 21 (a) supplemental fund cap of $21,315,700 of UGF
to the Community Assistance Fund to bring the balance
of the fund to $90 million dollars so the FY22 payout
to communities will be $30 million
(b) $30 million UGF to the Disaster Relief Fund, the
Administration had asked for a re-appropriation for
this, we are using UGF
(c) $6.7 million re-appropriation of FY21 FAA match
that is no needed for match, to the Alaska Marine
Highway fund to bring the AMHS fund balance up to zero
at the end of FY21
Sec 27 NPRA Impact Grant Program, updated the FY21
estimate available and listed out the projects that
are to receive funding in FY21
Sec 31 Updated the Alaska Industrial and
Development and Export Authorities (AIDEA) dividend to
the correct amount, $17,305,000
Sec 32 (e) $2 billion transfer from the Permanent Fund
Earnings Reserve to the Corpus: leaving 9 billion 652
million of spendable realized earnings in the ERA on
June 30th (based on March 31st statement)
Sec 35 Carry forward language allowing FY21 federal
funds from man-day billings to be carried forward into
FY22 for the Anchorage Correctional Complex
Sec 37 Deleted: former section 13 (e), the request
to carry forward $35 million of Medicaid lapse for
FY22 expenses
Sec 38 Deleted: former section 14 (f) open ended
federal authority to the Dept of Labor for employment
and training services
Sec 40 Deleted: former section 16 (e) re-
appropriation request of $5 million in lapsing fire
suppression funds to DNR for fire break activities
will be addressed in the capital budget.
1:18:13 PM
Mr. Ecklund continued to highlight notable language items:
Sec 41 (b-j) this is the 18-month Marine Highway
Funding plan. The total AMHS budget for one year is
proposed to be the same level the Legislature passed
last year, $123.5 million. The proposal uses a mix of
CRRSAA FTA and FHWA federal funds (53,093,700), UGF
($66 million) and other funds ($4.4 million) to
support Marine Highway operations for the next
calendar year. This one-time 18-month plan uses one-
time federal funds to move the funding of the System
onto a calendar year basis.
Moving to calendar year funding will allow managers to
get the ferry schedule out to the public in July or
August for the following calendar year. Having a
reliable schedule out in advance has shown to increase
system revenues by over $5 million dollars.
Sec 41 (k) $10,525,400 dollars of federal CRRSAA and
ARPA FTA funds for Coordinated Transportation Grants
Sec 41 (l) $6 million of federal CRRSAA grants to the
Inter-Island Ferry Authority to replace their depleted
reserves and allow them to continue operation
Sec 44 debt and other obligations Deleted the
former section 20, relating to allowing the Department
of Revenue to issue Revenue Anticipation Notes
Sec 44 (L) full funding for school bond debt
reimbursement
$83,543,960
$52,744,460 UGF
$30,799,500 School Fund
Sec 45 (c) Same RPL restrictions as FY21, but for FY22
Sec 46 (g) $12,394,800 in FY22 from the PCE formula
payment to the Community Assistance Fund
Sec 46 (h) $17,605,200 in FY22 from the general fund
to the community assistance fund to bring the FY22
balance of the C.A. Fund to $90 million so there can
be a $30 million dollar payout to communities in FY23.
Sec 46 (k) $34,238,00 from the general fund to the
Regional Educational Attendance Area (REAA) Fund (full
funding)
Deleted: former section 22 (u) $50 million in program
receipt authority for AGDC for deposit into the Alaska
liquefied natural gas project fund
Deleted: former section 22 (v) open ended federal
receipt authority for AGDC
Sec 46 (u) Oil and gas tax credits: not to exceed $114
million from the general fund.
Sec 46 (v) $100 thousand from general fund program
receipts collected by DMV to the abandoned motor
vehicle fund for removing abandoned vehicles from
highways.
Sec 47 (L) Fund transfers: authorizes repayment of
WWAMI loans to the Alaska Commission on Postsecondary
Education to be deposited into the Higher Education
Fund, $504,044
Sec 47 (m) change the estimate to a zero balance of
the large passenger vessel gaming tax account deposit
into the general fund.
Sec 52 (a) Statutory Budget Reserve: The unencumbered
balance of the Unrestricted General Fund available for
lapse on June 30, 2021 are appropriated to the SBR
(estimated to be $100 million)
Sec 52 (b) the sum of $325 million is appropriated
from the general fund to the SBR (an FY21
appropriation)
Deleted the Constitutional Budget Reserve sections
Effective Dates: Made supplementals effective April
15th for agency supplemental funding needs and June
30th, for lapse and reappropriation provisions
1:23:43 PM
Senator Wielechowski asked about Section 31 and the Alaska
Industrial Development and Export Authority (AIDEA)
dividend, which referred to the "correct amount." He asked
if there was a statutory formula for the dividend.
Mr. Ecklund affirmed that there was a statutory formula for
the AIDEA dividend.
Senator Wielechowski asked if the formula was for a range
or a set number.
Mr. Ecklund could not recall the formula but thought the
amount would approximate half of the earnings.
Co-Chair Stedman thought the committee could ask the
question of LFD.
Senator Hoffman thought the general public should be aware
that although the Permanent Fund Dividend (PFD) was not
addressed in the CS, it was the intent of the Senate to
fund a PFD. He asked if his assumption was correct.
Co-Chair Stedman affirmed that Senator Hoffman was correct.
He stated that the topic of the PFD had yet to be taken up
by the committee. The committee's intent was to work on the
topic over the following two weeks. he informed that the
proposed $2 billion transfer from the corpus was a
placeholder. The committee would discuss and further review
the Earnings Reserve Account (ERA) with input from all
members as to whether to increase or decrease the amount.
He recalled that the previous legislature had put $4.9
billion in as a transfer.
1:26:14 PM
Senator Olson asked how $2 billion was decided upon as a
placeholder.
Co-Chair Stedman relayed that he had grabbed the number as
a starting point after consideration of inflation-proofing
numbers. He stated that a data sheet would be available to
the members when the topic was up for consideration. He
thought it would be nice if members had time to consider
the issue.
Senator Olson asked about Section 41, and the AMHS moving
to an 18-month funding plan. He wondered why the department
would not go to a six-month funding plan.
Co-Chair Stedman explained that the bill proposed to add
six months of one-time funding to the AMHS appropriation,
and later adjustments could be made with COVID-19 relief
funds. The following year would return to a 12-month cycle
with 6 months of lead time.
Senator Wilson asked about the proposed deletion of the CBR
section and asked if there would need to be a three-
quarters vote to enact the proposed budget.
Co-Chair Stedman stated there was currently no need for the
three-quarters vote, but as the budget process continued
the provision would have to be put back in.
Senator Wielechowski asked about Section 44 (l), which
proposed full funding for school bond deb reimbursement. He
asked if the funding was typical and normally drew from the
School Fund.
Mr. Ecklund answered in the affirmative, and that the
number used in the CS was the amount available that was
unspent in other parts of the budget.
Senator Hoffman asked about Section 46(u) pertaining to oil
and gas tax credits. He knew that the item had been
discussed by the committee as well as both bodies. He noted
that the language for funding the credits used the word
"may," which had been pointed out many times by Senator
Wielechowski; while the language for funding the PFD used
the word "shall." He felt a little uncomfortable in funding
the credits without knowing what the support was for
different level of funding.
Co-Chair Stedman thought the original submission was for
$60 million and there had been an amendment from the
administration that had been added. He thought the item was
open for discussion by the committee.
Senator Hoffman asked about discretionary capital funds.
Co-Chair Stedman noted that the committee was considering
the operating budget.
1:31:50 PM
AT EASE
1:31:55 PM
RECONVENED
Senator von Imhof asked about Section 52(a) relating to the
Statutory Budget Reserve (SBR) Fund, and the sum of $325
million. She asked for explanation of the section.
Co-Chair Stedman noted that the issue might warrant
discussion or changes by the committee. He explained that
that at the end of the fiscal year, the excess revenue in
the General Fund was swept into the CBR. The action would
"front-run" the balance available to sweep to the CBR
(which took a three-quarter vote to access) and put it in
the SBR, which only took a majority vote to access. He
considered that the action would make the funds more
accessible, while the funding amounts in the state's
accounts would be the same. He anticipated the committee
would discuss the matter and had the option of making
changes. He noted that LFD would discuss projected account
balances shortly.
Senator Hoffman referenced Section 32(e), which addressed
the transfer of $2 billion from the ERA to the corpus of
the Permanent Fund. He asked how the proposal was brought
forward to be included in the budget.
Co-Chair Stedman thought the state needed to make sure it
was inflation-proofing the Permanent Fund, and even though
there was a substantial appropriation the previous year,
the proposed appropriation would be an additional amount
into the constitutionally protected portion of the fund. He
reiterated that the amount was just a starting point for
the committee to consider. He acknowledged that the
committee may consider not doing the appropriation at all,
or changing the amount. He thought the committee needed to
consider a presentation on the Permanent Fund, including
the corpus and the ERA. He reminded that the PFD came out
of the ERA. He estimated that there was about $10 billion
unencumbered in the ERA, and perhaps $17 billion including
encumbered funds.
1:36:47 PM
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered. The CS for SB 49 was
ADOPTED.
Co-Chair Stedman encouraged members to contact his office
with concerns or proposed amendments by midday Friday, and
work with committee aides to resolve issues.
Senator Wilson MOVED to ADOPT proposed committee substitute
for SB 51, Work Draft 32-GS1508\G (Marx, 5/4/21).
Co-Chair Stedman OBJECTED for discussion.
Mr. Ecklund explained that the dollars appropriated in the
mental health bill were accounted for in the operating
budget reports. He noted that the other body would remove
the capital projects listed in the bill, and the Senate
would do the opposite, so all items were coferenceable. He
highlighted that there were six proposed capital projects
in the mental health budget bill, and the other body
removed five of the projects. The Senate proposed to fund
deferred maintenance and accessibility improvements for
$500,000.
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
OBJECTION, it was so ordered.
1:40:18 PM
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
addressed an earlier question by Senator Wielechowski about
the AIDEA dividend. He specified that the AIDEA dividend
could be anywhere between 25 percent and 50 percent of net
income, and the proposed $17.3 million represented the full
50 percent.
Mr. Painter discussed a presentation entitled "Fiscal
Update with Senate Committee Substitute" (copy on file).
Mr. Painter turned to slide 2, "Fiscal Summary Based on
Senate Committee Substitute," which showed a table of a
fiscal summary of SB 49. He detailed that the table went
back to FY 20 and showed the final budget and supplementals
for that year. The information for FY 21 included the
enacted budget and the supplementals included in the bill.
Information for FY 22 only included the appropriations
listed in the bill. The numbers for supplementals
referenced by Mr. Ecklund were on line 9 and line 12, which
resulted in a total deficit for FY 21 of just over $600
million. He explained that if the operating appropriations
in the bill for FY 22 on line 6 were the only
appropriations, there would be a $172.4 million pre-
transfer surplus. After transfers there would be a surplus
of $157.8 million.
Co-Chair Stedman asked if there was an expectation that the
capital budget would go against the $157.8 million.
Mr. Painter explained that the next slide showed more
information.
1:42:31 PM
Mr. Painter spoke to slide 3, "Fiscal Summary with Capital
Budget Placeholder," which showed a table using the
governor's amended capital budget of $62.2 million and
added UGF in place of the AHFC bonds. He relayed that the
bonds were in a bill that had not advanced very far in the
legislative process and were not relied upon for the
calculations. Adding the two amounts together would result
in a capital budget of $166.2 million of UGF, which was
highlighted in red on line 10. He summarized that there
would be a post-transfer deficit of $8.4 million with using
the placeholder, and the amount could end up higher or
lower. He noted that the numerics did not reflect the PFD.
Co-Chair Stedman asked if Mr. Painter was indicating that
the state's recurring revenue equaled its recurring
expenses if the legislature paid all the oil tax credits
and did not pay a PFD.
Mr. Painter answered in the affirmative.
Co-Chair Stedman reminded that there was an estimation for
the price of oil.
Mr. Painter agreed. He thought as oil prices went up and
down, the state could end up with a surplus or deficit, and
it was difficult to project.
Mr. Painter discussed slide 4, Use of Lapsing Funds in
Senate CS":
?According to OMB, $100.7 million of FY21 UGF
appropriations are expected to lapse:
$90.0 million in Medicaid (reduction from
previous $100.0 million
$4 million in Department of Corrections
$5.7 million in Department of Education
$1.0 million in other agencies
Senate CS directs this to the Statutory Budget
Reserve
?$75 million CBR direct appropriation for COVID 19
relief is also set to lapse to CBR as CARES Act made
it unnecessary
Governor requested reappropriating $30 million
of this to the Disaster Relief Fund and carrying
forward the remaining $45 million to FY22 this
would require a ? vote of the legislature
Senate CS allows full amount to lapse to the
Constitutional Budget Reserve
Direct appropriations from the CBR in FY21 coupled
with increased oil prices leads to post transfer
surplus in FY21 estimated to be $367.5 million after
supplemental appropriations
Senate CS includes $325.0 million appropriation from
general fund to SBR in FY21, essentially redirecting
this money from the CBR to the SBR"
Mr. Painter noted that in the CS for SB 49, the $100.7
million was directed towards the SBR. In the governor's
budget, $35 million of the amount was reappropriated for FY
22, and in the other body the budget reflected about $87
million of Medicaid lapsing funds were directed towards the
FY 22 budget as well.
1:46:55 PM
Mr. Painter continued to address slide 4. He recalled that
the previous year the legislature had funded about one
quarter (about $980 million) of the budget directly from
the CBR. There was a balanced budget after the transfer,
however higher revenue led to a projected $367.5 million
post-transfer surplus for FY 21. He explained that the CS
redirected $325 million of the surplus to the SBR. Instead
of the funds entirely lapsing back to the CBR, a portion
would go to the SBR.
Senator Wilson wondered why it was necessary to have a
three-quarters vote for an appropriation from the CBR, but
not necessary to divert the funds to the SBR.
Mr. Painter explained that because the funds were not being
appropriated from the CBR, the three-quarters vote was not
needed. However, at the end of the year the sweep provision
would capture the funds because the SBR was a "sweepable"
account. To keep the funds out of the CBR would require a
reverse-sweep three-quarters vote on July 1.
Co-Chair Stedman thought the reverse sweep could occur on
August 1 or September 1, whenever the legislature got to
doing a reverse sweep.
Mr. Painter referenced slide 5, "Projected Reserve Balances
in Senate Committee Substitute with Capital Budget
Placeholder," which showed a table entitled 'CBR Balance'
and a table entitled 'SBR Balance.' The starting balance of
the CBR available for appropriation was projected to be
about $1.4 billion for FY 21. He highlighted that about
$980 of direct appropriations that came out of the CBR,
while the $75 million from the COVID-19 appropriation and
the post-transfer surplus went back in, and the SBR
transfer came out. All the transactions roughly netted an
ending balance of $615 million. Based on the placeholder
capital budget, in FY 22 there would be some deposits and
earnings, a small post-transfer deficit, and an ending
balance of $657 million.
Mr. Painter addressed the SBR balance table shown on slide
5. He identified that the SBR would receive the $325
million appropriation, then the $1.7 million of lapsing
appropriations for an ending balance of $425.7 million and
a combined $1 billion in reserves. Without the SBR
appropriations, the CBR balance at the end of FY 21 would
be approximately $1 billion based on the CS.
1:51:06 PM
Co-Chair Stedman thought the committee would need the
assistance of LFD and perhaps the Alaska Permanent Fund
Corporation (APFC) to get an estimate and breakdown of the
ERA. He also thought assistance in understanding the amount
of the statutory dividend for FY 22. He wanted LFD to
return and present a wholistic picture for members to
consider. He referenced Senator Hoffman's earlier question
about the inter-tangling of appropriations and political
relationships. He thought it would be nice for LFD to
present some history of contributions into the corpus of
the Permanent Fund in order to understand the effects of
contributions.
Co-Chair Stedman asked the members to communicate with his
office regarding any data requests for LFD.
Co-Chair Stedman asked for Mr. Painter to look at a
hypothetical oil price of $70/bbl for FY 22. He considered
state revenues if oil prices were strong.
SB 49 was HEARD and HELD in committee for further
consideration.
SB 51 was HEARD and HELD in committee for further
consideration.
Co-Chair Stedman discussed the agenda for the following
day.
ADJOURNMENT
1:55:27 PM
The meeting was adjourned at 1:55 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 50 Supplemental All Funds-UGF-GF.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 50 |
| SB 50 Supplemental Capital Spreadsheet 5.5.21.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 50 |
| SB 49 Supplemental All Funds-UGF-GF.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 |
| SB 49 Supplemental Operating Spreadsheet 5.5.21.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 |
| SB 49 Federal Direct Inflexible ARPA Spreadsheet 5.5.21.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 |
| SB 49 OP All Funds-UGF-GF Summary.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 |
| SB 49 CSSB 49-50-51 Reports Master Sheet.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 |
| SB 49 work draft version N.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 |
| SB 51 work draft version G.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 51 |
| SB 49-SB 51 SFIN Fiscal Position 5-4-21.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 SB 51 |