Legislature(2021 - 2022)SENATE FINANCE 532
05/03/2022 01:00 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB39 | |
| SB164 | |
| HB281 | |
| HB282 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 39 | TELECONFERENCED | |
| += | HB 281 | TELECONFERENCED | |
| += | HB 282 | TELECONFERENCED | |
| += | SB 164 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
May 3, 2022
1:18 p.m.
1:18:07 PM
CALL TO ORDER
Co-Chair Bishop called the Senate Finance Committee meeting
to order at 1:18 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman
Senator Donny Olson
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
Senator Natasha von Imhof
ALSO PRESENT
Senator Mike Shower, Sponsor; Colleen Evans, Self, Juneau;
Rich Anderson, Self, Juneau; Cindy Fuller, Self, Juneau;
Steve Fuller, Self, Juneau; Rebecca Dundore, Self, Juneau;
Darrell Harmon, Self, Juneau; Lisa Ward, Self, Juneau; Cody
Grussendorf, Staff to Senator Bishop; Pete Ecklund, Staff,
Senator Bert Stedman; Alexei Painter, Director, Legislative
Finance Division.
PRESENT VIA TELECONFERENCE
Matt Roe, Voting Works, California; Logan Churchwell,
Research Director, Public Interest Legal Foundation,
Oklahoma; Barbara Tyndall, Self, North Pole; Jean Holt,
Self, Palmer; Shelly Shoupe, Self, Moose Creek; Murray
Walsh, Chair, Alaska Republican Party, District 4, Juneau;
Randy Ruedrich, Self, Anchorage; Charles Perrett, Self,
Glennallen; Anna Mackinnon, Director, Permanent Fund
Dividend Division, Juneau; Charlie Franz, Self, Homer; Gary
Tyndall, Self, North Pole; Herman Morgan, Self, Aniak;
Bonnie Lucas, National Federation of the Blind of Alaska,
Anchorage; Robert Welton, Self, Douglas; Ann Brown, Self,
Anchorage; Cheng Saechao, Self, Mat-Su; Ray Kreig, Self,
Anchorage; Carol Cooper, Self, Soldotna; Kathy Swanson,
Self, Juneau; Linda Newman, Self, Juneau; Brent Turner,
Self, California; Mike Swain, Self, Anchorage; Marlene Moto
Karl, Self, Deering; Kelly Nash, Self, Fairbanks.
SUMMARY
SB 39 BALLOT CUSTODY/TAMPERING; VOTER REG; MAIL
SB 39 was HEARD and HELD in committee for further
consideration.
SB 164 APPROP: CAP; REAPPROP; SUPP
SB 164 was HEARD and HELD in committee for
further consideration.
CSHB 281(FIN) am(brf sup maj fld)(efd fld)
APPROP: OPERATING BUDGET/LOANS/FUNDS
SCS CSHB 281(FIN) was REPORTED out of committee
with two "do pass" recommendations and with four
"amend" recommendations.
CSHB 282(FIN)
APPROP: MENTAL HEALTH BUDGET
SCS CSHB 282(FIN) was REPORTED out of committee
with three "do pass" recommendations and with
three "no recommendation" recommendations.
1:18:37 PM
AT EASE
1:19:15 PM
RECONVENED
Co-Chair Bishop discussed the agenda.
SENATE BILL NO. 39
"An Act relating to elections; relating to voter
registration; relating to ballots and a system of
tracking and accounting for ballots; establishing an
election offense hotline; designating as a class A
misdemeanor the collection of ballots from other
voters; designating as a class C felony the
intentional opening or tampering with a sealed ballot,
certificate, or package of ballots without
authorization from the director of the division of
elections; and providing for an effective date."
1:19:59 PM
Co-Chair Bishop invited the sponsor to make an introduction
of his invited testifiers.
1:20:09 PM
SENATOR MIKE SHOWER, SPONSOR, noted that there were two
experts available to speak to national best practices and
the open-source concept.
1:20:58 PM
MATT ROE, VOTING WORKS, CALIFORNIA (via teleconference),
explained that Voting Works was a non-partisan non-profit
organization that built election software. He stated that
the goal of his testimony was to briefly describe what
open-source software was and how it applied to election
administration. He stated he would be speaking from his
experience implementing open-source software but would not
be speaking to the specifics of Voting Works products. He
explained that the "source" in open source referred to
source code, which was the set of instructions written by
programmers that a computer follows to achieve the desired
software's behavior. He used an example of source code,
which he described as "a complicated recipe for baking a
cake," but qualified that for most software the source code
was kept secret and available only to the original
programmers. By contrast, open-source software had source
code that was always available to anyone who wished to see
it.
Mr. Roe continued his remarks. He asserted that much of the
software used today (including all major web browsers and
much of software that powered the internet) was open
source. He emphasized that the key benefit of open-source
technology was transparency. He cited that open-source
software was used in almost every industry, including
scientific research, financial services, and cyber-
security. He asserted that in the world of election
administration, especially when the country was
particularly polarized, open-source transparency provided a
common ground of facts that could be trusted and verified.
He described malicious code that changed votes as an
example of a problem that could be dispelled by a technical
review of the open-source code. He emphasized the
importance of proper security procedures, which should be
transparent. He mentioned the public accountability of
election officials.
1:25:00 PM
Mr. Roe wanted to discuss how open-source voting systems
were used in practice. He asserted that open-source voting
systems were used just like any other voting system, with
well-established practices for certifying, testing, and
operating voting equipment that would not change. He stated
that the only change introduced to the election process by
open-source software would be increased transparency and
public confidence in the election outcome. He opined that
SB 39 represented a non-partisan commitment to increasing
the transparency and security of Alaskan elections
throughout the entire cycle of the election. He asserted
that voter registration and signature verification
improvements ensured that only legitimate ballots were
cast. He continued that open-source software would provide
transparency to ballot counting, while post-election
auditing would confirm the election outcomes.
Senator Wielechowski guessed that open-source election
software would be meaningless to over 90 percent of people.
He asked if the open-source software made it easier for
hackers to exploit security flaws in the system.
Mr. Roe thought it was well understood that open-source
software increased security, as transparency encouraged
secure software development. He used the example that
everyone drove the speed limit when driving by a state
trooper, yet many sped up when the trooper exited the
highway. He suggested that lack of transparency led to
sloppy shortcuts and insecure coding practices. He asserted
that when software was designed in the open, it provided a
strong incentive to properly design the software.
Mr. Roe continued designing in the view of the public
strongly encouraged separation between the public source
code and the secret bit used to operate the software. He
used the example of the secret keys used to digitally sign
files. He cited that recent United States Department of
Defense (DOD) memos on open-source software supported his
perspective. He relayed that according to the DOD,
releasing source code did not give attackers an edge,
because attackers found pathways that did not involve
looking at source code. He quoted the DOD in saying that
making source code available to the public significantly
aids defenders continuous and broad peer review to improve
software reliability and security. He opined that there was
no downside to releasing source code to the public, while
there was plenty of upsides.
1:29:45 PM
LOGAN CHURCHWELL, RESEARCH DIRECTOR, PUBLIC INTEREST LEGAL
FOUNDATION, OKLAHOMA (via teleconference), explained that
the Public Interest Legal Foundation (PILF) was a non-
partisan, non-profit law firm dedicated to election
integrity. He told a story from 2011 about an individual
named John that registered to vote in Alaska despite being
a foreign national. He had used a standard paper
application and indicated he was a citizen of the United
States. He described the ballot, which contained qualifying
information such as an address and demographic information
such as a date of birth. He had a copy of the document that
was redacted. The application had been approved.
Mr. Churchwell continued his remarks. He relayed that in
2014 a comparison was performed between Alaska's voter
rolls against the Permanent Fund Dividend (PFD) recipients.
At the time, the applicant he described had applied for the
PFD and indicated he was not a U.S. Citizen, and the
discrepancy was caught. The Division of Elections had sent
the individual a letter informing that it was illegal for
non-citizens to be registered to vote. The division had
included a form indicating that he was not a citizen, which
he sent back and was then removed from the rolls. He
thought that the case was proof of concept that when Alaska
engaged in in best practices to maintain its voter rolls on
a permanent and comprehensive basis, the roll could become
more accurate.
Mr. Churchwell thought the heart of SB 39 required the
development of annual practices to assess faulty or
outdated voter registration records such as those that were
deceased, convicted of felonies, were out of state, are
foreign nationals, or other cases with questionable
eligibility. The bill would require the Division of
Elections to provide disclosures involving data breaches
and voter registration totals relative to eligible
population. He mentioned bloated voter rolls. He thought
the bill proposed common-sense measures that were regularly
seen in other states.
Mr. Churchwell asserted that Alaska had held more
registered voters than eligible adults of voting age per
the U.S. Census. He thought SB 39 followed a clear plan for
voter roll maintenance updates while also envisioning
necessary guardrails to make sure errors and bad data
complicated the process. He discussed best practices which
took Alaska's voter data and compared it with data from
other government sources.
1:34:59 PM
Mr. Churchwell continued his testimony. He referenced
different federal data sources, such as the national change
of address system. He emphasized that Alaska was expending
taxpayer funds to subscribe to the data sources. The bill
required that additional data (such as social security
numbers) would be matched. He discussed concerns with false
positives. He discussed best practices and used the example
of Kentucky, which he thought had similar problems to
Alaska. He questioned how the state would tell the
difference between negligence and sabotage and emphasized
the need for best practices.
1:37:21 PM
Co-Chair Bishop OPENED public testimony.
COLLEEN EVANS, SELF, JUNEAU, spoke in support of SB 39. She
thanked the committee members for their work. She shared
that she was a parent, volunteer, and business owner in the
community. She shared her desire for transparency.
She thought SB 39 would provide transparency. She urged the
committee to support the bill.
1:39:44 PM
RICH ANDERSON, SELF, JUNEAU, spoke in favor of the bill. He
thought the system needed to be fixed. He referenced
troubles with the federal elections. He thought
transparency was important from the beginning to the end of
the election process. He mentioned upcoming elections. He
mentioned ranked choice voting.
1:42:13 PM
CINDY FULLER, SELF, JUNEAU, spoke in support of the bill.
She had registered to vote at age eighteen. She had worked
as a volunteer at a voting station. She thought things had
changed in the last two elections. She recounted that her
ballot had not counted in the first mail-in election
because of an unmatched signature, and she had no recourse.
She had stood in line for 45 minutes during a previous
election and had her ballot counted. She preferred to vote
in person. She did not think mail-in voting was not
realistic. She did not think the bill went far enough. She
thought ballots should not be counted by machines.
1:44:52 PM
STEVE FULLER, SELF, JUNEAU, testified in support of the
bill. He was a long time Juneau resident. He thanked the
co-chairs. He wanted more trust and transparency in voting.
1:45:37 PM
REBECCA DUNDORE, SELF, JUNEAU, spoke in support of the
bill. She thanked the committee. She thought the current
voting situation was scary. She did not think the bill went
far enough.
1:46:29 PM
DARRELL HARMON, SELF, JUNEAU, testified in support of the
bill. He had lived in Juneau for most of his life. He
wanted change in order to have less question about election
results. He thought if the state was susceptible to being
hacked by Russia to sway viewpoints for the effects of
chaos, that the same was possible to affect the voting
system. He thought both political parties should be equally
interested in fixing the problem.
1:48:11 PM
BARBARA TYNDALL, SELF, NORTH POLE (via teleconference),
spoke in support of the bill. She thanked the sponsor. She
had been active in her district, by going door to door. She
had gleaned that there was great distrust in the voting
system. She thought electronic elections equipment was
vulnerable and should be banned. She was a precinct worker
and thought the ballots could be easily counted. She
mentioned ballot harvesting. She thought the state needed
to reestablish voting integrity and fix the voter rolls.
1:50:11 PM
JEAN HOLT, SELF, PALMER (via teleconference), testified in
support of the bill. She thanked the committee members. She
thought that the present-day election process was
questioned by many voters. She mentioned scare tactics used
by opponents of SB 39. She thought SB 39 addressed all
aspects of the voting system, and restored confidence in
the election process.
1:52:02 PM
SHELLY SHOUPE, SELF, MOOSE CREEK (via teleconference),
spoke in support of the bill. She thought much had been
stripped from the bill, but thought the bill was a good
start in fixing the problems in the state's election
systems. She thought the bill should be a non-partisan
issue. She mentioned cleaning up voter rolls and ballot
harvesting. She emphasized that the state must move away
from mail-in ballots.
1:53:06 PM
MURRAY WALSH, CHAIR, ALASKA REPUBLICAN PARTY, DISTRICT 4,
JUNEAU (via teleconference), testified in support of the
bill. He had sent a message to the committee regarding what
he considered problems with the Senate Judiciary Committee
CS. He cited that the provision for same-day registration
would burden election workers and favored requiring voters
to register 30 days before an election. He mentioned
transparency. He asked the committee to reconsider the CS,
perhaps for a more comprehensive fix.
1:55:11 PM
RANDY RUEDRICH, SELF, ANCHORAGE (via teleconference), spoke
in support of the bill. He asserted that the current CS for
SB 39 had several issues. He cited that the bill was
completely silent on the topic of the modifying the PFD
automatic voter registration. He thought the Division of
Elections had requested an opt-in provision be adopted for
the method of registration. He urged that the bill be
amended. He opposed same-day voter registration, and
thought it was related to low integrity elections. He had a
specific concern relating to four-year absentee
applications. He cited that 89 percent of all the ballots
mailed out were not returned. He thought the CS would
prohibit any infilling of an absentee ballot application.
He discussed tabulators, which had been used in four
recounts. He stressed the need for trustworthy equipment.
1:58:38 PM
CHARLES PERRETT, SELF, GLENNALLEN (via teleconference),
testified in support of SB 39. He lauded transparency and
honesty in elections. He thought the bill did not go far
enough. He expressed a concern with election integrity. He
relayed that he and his circle of friends had very little
confidence in the system. He thought the system had been
rigged and abused. He wanted to make the act of ballot
harvesting a crime greater than a misdemeanor. He thought
that democracy was at stake if measures were not taken. He
thanked the bill sponsor.
2:01:04 PM
ANNA MACKINNON, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION,
JUNEAU (via teleconference), stated she was available to
answer questions.
2:01:37 PM
CHARLIE FRANZ, SELF, HOMER (via teleconference), spoke in
support of SB 39. He was not satisfied that the bill had
all the needed components, but he thought it was a major
step forward. He thought the legislature needed to act in
order to reinstate public confidence in elections.
2:02:19 PM
GARY TYNDALL, SELF, NORTH POLE (via teleconference),
testified in support of the bill. He was convinced that the
integrity of Alaska's election process had been compromised
and needed reform. He supported in-person voting. He
supported elimination of mail-in voting, electronic
machines, ballot harvesting, automatic voter registration,
and early voting. He thought absentee voting should be
restricted to specific categories such as active military
personnel and people with disabilities. He thought voter
registration rolls needed to be rebuilt. He did not support
ranked choice voting.
2:04:06 PM
HERMAN MORGAN, SELF, ANIAK (via teleconference), spoke in
support of the bill. He emphasized that elections had
consequences. He mentioned gerrymandering, voter fraud, and
election tampering. He did not support voting by mail. He
was concerned about foreign nationals voting. He quoted the
Bible.
2:06:55 PM
BONNIE LUCAS, NATIONAL FEDERATION OF THE BLIND OF ALASKA,
ANCHORAGE (via teleconference), explained that she was
president of the National Federation of the Blind of Alaska
and was a person with blindness. She emphasized that it was
imperative for legislators to consider absentee digital
voting options for people with disabilities when
considering election reform. She also had a blind adult
child. She explained that casting a private and secure
ballot had been very challenging, and a digital option
would solve the difficulties she had experienced. She
mentioned examples such as unrecognized signatures and long
wait times for voting machines. She emphasized the need for
accommodations.
2:08:56 PM
LISA WARD, SELF, JUNEAU, spoke in support of the bill. She
had several children of voting age. She thought there was a
deep mistrust of the system and thought open clear
elections should be a bipartisan issue. She thought it was
important to have a ballot chain of custody. She was
incredulous that PFD rolls were used for voter registration
when one did not need to be a United States Citizen to
receive the PFD. She supported in person voting and open
polling stations. She did not support ranked choice voting.
She thought votes should be hand counted in each district
without machines being used.
2:11:20 PM
ROBERT WELTON, SELF, DOUGLAS (via teleconference),
supported the bill. He did not agree with two of the
provisions. He mentioned Section 36, which required
absentee voters to reapply for absentee ballots every four
years. He did not think the state should restrict the right
of voting by mail unless there was compelling evidence of
fraud. He cited that the Division of Elections had
testified on the record that there was no significant fraud
in the 2020 election. He referenced Department of Law
testimony, which he thought had proved that there was no
significant fraud in absentee voting. He did not agree with
the signature verification requirement for absentee
ballots. He referenced Section 38 and Section 39 of the
bill.
Mr. Welton continued his testimony. He thought the bill
would open the door to selectively reject absentee ballots.
He referenced a similar law in Texas, which had resulted in
up to 12 percent of ballots being rejected statewide, while
before the law less than 1 percent of absentee ballots were
rejected. He supported the other provisions of the bill.
2:13:49 PM
ANN BROWN, SELF, ANCHORAGE (via teleconference), spoke in
support of the bill. She did not support the proposed
prohibition of pre-filled information on absentee ballots.
She thought the pre-filled information on an absentee
ballot application increased the likelihood the voter would
complete and submit the application in a timely manner.
She suggested deletion of the witness signature requirement
on an absentee by mail ballot envelope was not a good idea.
She thought the witness signature requirement greatly aided
in the cause of election integrity.
2:15:22 PM
CHENG SAECHAO, SELF, MAT-SU (via teleconference), testified
in support of the bill. He supported election integrity. He
felt like his vote did not count in the 2020 election. He
wanted to be able to trust in the voting system.
2:16:23 PM
RAY KREIG, SELF, ANCHORAGE (via teleconference), spoke in
opposition to the CS for SB 39(JUD) Version E. He was
part of an informal group looking at election integrity
reforms Anchorage. He had spoken to the sponsor's staff and
understood the bill was still a work in progress. He was
opposed to same-day registration, elimination of the
required witness signature, and four-year absentee ballots.
He questioned if there was a definition of routine forensic
exams. He did not support PFD automatic voter registration.
2:18:22 PM
CAROL COOPER, SELF, SOLDOTNA (via teleconference),
testified in support of the bill. She had been very
concerned about election integrity in the 2020 election.
She thought the bill was a good start towards correcting
the problems. She encouraged the committee to pass the
bill.
2:19:14 PM
KATHY SWANSON, SELF, JUNEAU (via teleconference), testified
in support of the bill. She referenced mail-in ballots that
were rejected with no adjudicated process. She was strongly
against mail-in elections, which she thought were rife with
fraud. She recounted getting extra ballots in the mail. She
did not support same-day voter registration. She did not
have a problem with absentee voting. She did not support
automatic voter registration.
2:21:28 PM
LINDA NEWMAN, SELF, JUNEAU (via teleconference), shared
that she was a person with low vision and could not drive
to a polling station nor could she read a standard ballot.
She used digital-access large print to access information.
She emphasized that digital access be considered for people
with low or no vision, who also had a right to vote.
2:22:14 PM
BRENT TURNER, SELF, CALIFORNIA (via teleconference),
thanked the committee for consideration of the bill. He
stated that some considered him an expert in the field of
election systems security and technology. He thanked the
committee for considering the bill. He praised the
heightening of security and the reduction of costs by the
consideration of open-source software. He discussed use of
open-source software in California and Mississippi.
2:23:55 PM
MIKE SWAIN, SELF, ANCHORAGE (via teleconference), testified
that he believed in less government. He thought people were
farming personal information. He was against replicating
data. He considered that the signatures on the outside of
ballots were a violation of privacy. He mentioned felons.
He emphasized the need for standardized procedures. He the
referenced separation of powers.
2:26:47 PM
MARLENE MOTO KARL, SELF, DEERING (via teleconference),
testified that she had concerns about the last state
election. She discussed a lack of election workers. She
discussed ballot counting. She described working as a poll
worker. She pondered whether it was legal for city
elections and state elections to be held at the same time.
2:30:11 PM
KELLY NASH, SELF, FAIRBANKS (via teleconference), spoke in
support of the bill. She was the founder of Interior
Patriots. She was appalled at the amount of fraud that had
happened in the previous two days with absentee ballots.
She did not support ranked choice voting. She thought some
elected officials did not want fair elections. She did not
think the 2020 election had been safe and secure.
2:32:00 PM
Co-Chair Bishop CLOSED public testimony.
Senator Shower thanked the committee.
Co-Chair Bishop handed the gavel to Co-Chair Stedman.
2:32:24 PM
AT EASE
2:42:00 PM
RECONVENED
Co-Chair Stedman relayed that the committee would consider
the SB 164.
SENATE BILL NO. 164
"An Act making appropriations, including capital
appropriations, reappropriations, and other
appropriations; making supplemental appropriations;
and providing for an effective date."
2:42:24 PM
Co-Chair Bishop MOVED to ADOPT proposed committee
substitute for SB 164, Work Draft 32-GS2436\O (Dunmire,
5/2/22).
Co-Chair Stedman OBJECTED for discussion.
2:42:52 PM
CODY GRUSSENDORF, STAFF TO SENATOR BISHOP, explained that
the changes to Version O of the bill incorporated all the
amendments that were adopted by the committee the previous
day. Additionally, the CS fixed a technical drafting error.
There had been an incorrect reference in Section 30 (d), on
page 72, line 6. There had been a citation to Section 1,
which was changed to Section 4.
Co-Chair Stedman WITHDREW his OBJECTION.
Senator Olson OBJECTED for discussion. He asked about what
would happen to a number of amendments that were considered
but had not passed the previous day.
Co-Chair Stedman asked for clarification.
Senator Olson asked if the amendments that did not pass the
previous day would be reconsidered.
2:44:02 PM
AT EASE
2:44:26 PM
RECONVENED
Senator Olson WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered. The CS for SB 164 was
ADOPTED.
CS FOR HOUSE BILL NO. 281(FIN) am(brf sup maj fld)(efd fld)
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; and making capital appropriations,
supplemental appropriations, and reappropriations."
2:44:51 PM
Co-Chair Bishop MOVED to ADOPT proposed committee
substitute for CSHB 281(FIN), Work Draft 32-GH2686\K (Marx,
4/28/22).
Co-Chair Stedman OBJECTED for discussion.
2:45:13 PM
PETE ECKLUND, STAFF, SENATOR BERT STEDMAN, recalled that
the committee previously considered Version L of the bill,
at which time it considered 29 amendments. The amendments
that were adopted had been incorporated into the new CS,
Version K.
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered.
2:46:13 PM
Co-Chair Bishop MOVED to ADOPT proposed committee
substitute for CSHB 281(FIN), Work Draft 32-GH2686\Y (Marx,
5/3/22).
Co-Chair Stedman OBJECTED for discussion.
Mr. Ecklund explained that the proposed CS for CSHB 281
(Version Y) simply merged the previously adopted CS from SB
164 (Version O) and the previously adopted CS from CSHB 281
(Version K). The proposed CS was an omnibus appropriation
bill that had capital items, supplemental items, and
operating items.
Senator Wielechowski asked if the proposed CS contained
only amendments passed in the committee.
Mr. Ecklund answered affirmatively.
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered. The CS for CSHB
281(FIN) Version Y was ADOPTED.
2:47:50 PM
AT EASE
2:49:20 PM
RECONVENED
Co-Chair Stedman explained that the committee had adopted
the omnibus bill and mentioned that copies of the different
versions of the bill were available. Additionally, there
was a spreadsheet entitled "Handout D" (copy on file) that
would show school bond debt reimbursement figures. He
relayed that the Legislative Finance Division (LFD) would
be posting more fiscal reports on the omnibus bill and
other matters to its website.
2:50:17 PM
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
introduced himself. He showed slide 2, "Outline":
? Volatility and Spring Revenue Forecast
? Updated Fiscal Summary with Senate Finance CS (SFIN
budget)
? Operating Budget Growth
? Position Count Growth
Mr. Painter addressed slide 3, "Oil Price Forecast Update,"
which showed a line graph. He cited that the data was
pulled from the futures market the previous day. The spring
forecast was depicted by the red line and called for $101
per barrel (bbl) price of oil for 2023. The futures market
the previous day had shown the price to be about $99/bbl,
while the oil price for FY 22 was running about $2 under
the forecast. He summarized that the fiscal summary was
close to the spring forecast, but currently the futures
were slightly below. He commented on the price volatility
throughout the year.
2:51:33 PM
AT EASE
2:51:51 PM
RECONVENED
Mr. Painter advanced to slide 4, "Oil Prices, FY 22 to
Date," which showed a line graph entitled 'ANS West Coast
Price.' He noted that the brackets on the graph indicated
that the Department of Revenue had done the spring forecast
on the period based on the futures in that week. Since that
time, prices had been extremely volatile, dipping down as
low as $100/bbl and up to $120/bbl. He asked members to
keep in mind that the level of volatility during the year
had been high.
Mr. Painter addressed slide 5, "FY Oil Price Sensitivity
Chart," which showed a graph entitled 'FY23 UGF Revenue by
ANS Price (Excluding POMV).' He summarized that as prices
increased, revenue increased. The spring forecast showed
$101/bbl oil, which was down to about $99/bbl, which
signified a reduction in revenue of about $190 million. He
explained that there were "stair-steps" in DOR's forecast.
He noted that the line was not a fixed curve. He noted that
when the state was trying to balance the budget while
relying on high oil prices rather than savings accounts,
LFD had historically recommended that the legislature use a
sensitivity chart to give a better idea of where the state
would be if prices did not meet the forecast expectation.
He encouraged members to consider a wider span of the line
than just looking specifically at $101/bbl oil.
2:54:07 PM
Mr. Painter spoke to slide 6, "Fiscal Summary: Senate
Finance Budget, Spring Forecast (UGF only)," which showed a
data table. He highlighted that the top showed revenue,
projected to be just shy of $7 billion of Unrestricted
General Fund (UGF) revenue in FY 22, and about $8.3 billion
in FY 23. He pointed out appropriations on line 6, with the
operating budget in FY 22 (including supplementals) at $4.9
billion and a bit over $5 billion in FY 23. He pointed out
agency operations shown on line 8 increasing year to year
by $263.9 million.
Mr. Painter noted that there was a placeholder for the K-12
disparity test. There was still an ongoing concern that the
state might fail the K-12 disparity test, with an ongoing
appeal with the federal Department of Education. If the
state failed the test, it would add $72.4 million to the
state's UGF expenditures in FY 22 and $74.6 million in FY
23. He included the amount in the fiscal summary on line 9.
Mr. Painter continued to address the fiscal summary table
on slide 6. He highlighted that line 10 showed statewide
items, with an increase of $349 million from FY 22 to FY
23, primarily caused from oil and gas tax credits. There
was $54 million paid out in the FY 22 budget, and $349
million in the current budget. The other major increase was
a deposit to the retirement funds to make up for the zero
funding of healthcare by the Alaska Retirement Management
(ARM) Board. He noted that he would discuss the item more
later in the presentation.
Mr. Painter summarized that there was a bit over $500
million of operating supplementals in the budget, the
largest of which referred to school bond debt
reimbursements that paid back past amounts unpaid in
previous years. Similarly, the funds would go towards
paying unpaid amounts for Regional Educational Attendance
Area (REAA) Fund and Community Assistance, and oil and gas
tax credits. He summarized that the primary supplemental
items made up for past years. Three were other increases
relating to fire suppression and the Disaster Relief Fund.
Line 12 showed the capital budget, which was split. The
previous year there had been $242.9 million in capital
appropriations. The current capital budget was split with
$324.6 million in FY 22, and $407.4 million in FY 23. He
summarized that up for consideration was a capital budget
of about $730 million of UGF across the two fiscal years.
2:57:50 PM
Mr. Painter pointed out that line 16 showed the Permanent
Fund Dividend. He recounted that the previous fall there
was an approximately $1,100 PFD paid out, and the current
budget included a dividend of 50 percent of the percent of
market value (POMV) draw, which was estimated to be between
$2,500 and $2,600 per person. Line 18 showed that the
budget included $199 million to deposit past unpaid
royalties into the corpus of the Permanent Fund to make up
for amounts that were not paid in FY 17 and FY 18. There
was a pre-transfer surplus in FY 22 of about $550 million
and about $1.2 billion in FY 23.
Mr. Painter pointed out that forward funding for K-12
education was moved down to the fund transfers on line 23,
in order to be consistent with how LFD treated forward-
funding of K-12 in the previous period when it was forward-
funded. He explained that when the state did not forward
fund, the Public Education Fund behaved like a fund
capitalization and would be in a different part of the
fiscal summary. He thought the method made for a cleaner
fiscal summary than prior versions, because the forward
funding was a form of savings.
Mr. Painter highlighted the bottom line of the fiscal
summary, which showed a post-transfer surplus of $832
million in FY 22. The line above showed $660 million being
deposited into the Statutory Budget Reserve (SBR), and the
combined amounts would result in just shy of $1.5 billion
expected to go into the SBR in FY 22. In FY 23, there was a
post-transfer surplus of $87.4 million that would similarly
go in the SBR. In FY 23, the budget-balancing oil price was
about $99/bbl. If the oil price was above $99/bbl, the
surplus would go into the Permanent Fund as shown on line
22. He qualified that the K-12 forward funding amount would
prorate downward if the revenue was not available. The
budget balancing oil price without forward funding dropped
down to $84/bbl.
3:00:54 PM
Mr. Painter spoke to slide 7, "Fiscal Summary: Senate
Finance Budget, $84 Oil (UGF only)," which showed a data
table. He highlighted changes in the case of $84/bbl oil,
including statewide items on line 10. The oil and gas tax
credit amount would decrease, as it was a formula based on
oil revenue. He highlighted that the deposit to the
Permanent Fund shown on line 22 would not happen, and at
$84/bbl oil there would be $36 million extra put into
forward funding.
Co-Chair Stedman asked if Mr. Painter could discuss
backstop or backfill language from the SBR.
Mr. Painter explained that many times there would be
language in the budget in the case of a deficit that
allowed for the difference to be drawn from the
Constitutional Budget Reserve (CBR) or SBR. He believed the
language was in the budget for the SBR, but the mechanism
would only kick in after the $84/bbl amount.
Co-Chair Stedman asked Mr. Painter to get back to the
committee with information regarding the oil price
threshold that included evaporation of the forward-funding
and the SBR.
Mr. Painter agreed to address the topic.
Co-Chair Stedman explained that there were several issues
with increases in the FY 23 budget that would not be
recurring. He asked for Mr. Painter to get back to the
committee with what FY 24 recurring costs would look like.
He asked Mr. Painter to consider the governor's submitted
budget and wanted to look at the base rate of change for FY
24 in percentages.
Mr. Painter agreed to provide the information.
Mr. Painter referenced slide 8, "Major Increases in FY23
Governor's Budget from FY22":
? $45.0 million for Medicaid
? $33.6 million UGF increases to offset DGF lost in
CBR sweep
? $25.5 million UGF for union contracts, health
insurance, and other contractual items
? $17.4 million combined increases in Department of
Public Safety (adding troopers, VPSOs, and support
positions)
? $12.9 million combined increases in Department of
Corrections (booking and MH unit at Hiland Mountain,
adding non-CO support positions)
? $5.7 million for DEC to take primacy of federal
permitting programs
? $4.0 million for Department of Law for statehood
defense
? $3.8 million for fire suppression preparedness
Mr. Painter explained that the next few slides covered
major increases in the current budget compared to the
previous fiscal year. The governor's budget called for
several major increases (listed on the slide), and the
following few slides would show increases in the Senate
budget that were not in the governor's original budget. He
reviewed the increases on the slide.
3:06:30 PM
Mr. Painter highlighted slide 9, "Many FY23 Increases
Reverse Past Budget Reductions":
? Several increments in the Governor's FY23 budget
request reverse reductions or vetoes made since FY23:
$45.0 million Medicaid increase Medicaid was
reduced by $35.0 million in FY22.
$4.0 million University of Alaska increase UA
was reduced by $54.3 million from FY20-22.
$2.0 million for Legislative per diem vetoed
by Governor in FY22.
$0.7 million GF/MH items vetoed by the
Governor in FY22.
? Several other items reverse reductions made from
FY15-FY19 under previous governors:
$4.9 million for DEC 404 Primacy this was cut
in FY15.
$3.8 million for wildfire prevention and
academy this was cut in FY16.
$2.4 million for Village Public Safety
Officers this was cut in FY16.
$1.2 million for Judiciary for increased hours
this was cut in FY16.
Mr. Painter noted that many of the increases on the
previous slide were reversing past budget reductions from
the previous seven or eight years. He commented that many
of the items were bringing the state back to levels of
service provided before revenue decline starting in FY 15.
Co-Chair Bishop commented that the $4 million increase to
the University of Alaska was in light of a $101 million
reduction since FY 16 to date.
Senator Olson went back to slide 8 and referenced the
Department of Environmental Conservation primacy federal
permitting. He thought the funds had been cut.
Mr. Painter answered affirmatively. He shared that the item
was not in the Senate version of the budget, but was an
increase requested by the governor.
Mr. Painter showed slide 10, "Major Increases in SFIN
Agency":
Operations from Governor Proposal
? $60.0 million K-12 Outside BSA Formula
? $59.4 million for AMHS (Governor eliminated UGF)
? $27.0 million for fuel trigger to offset high oil
prices
? $16.1 million DOH to Increase Personal Care
Attendant Wages
? $14.1 million for University of Alaska
? $5.0 million for ASMI
? $4.3 million for Food Bank pilot program
? $4.3 million for 50% increase to K-12 residential
schools
Mr. Painter explained that both the House and Senate
versions of the budget had an amount of UGF for the Alaska
Marine Highway System (AMHS) that was equal to the amount
of funding the previous year. It was not an increase but
showed as one if compared to the governor's proposed
budget. He discussed the fuel trigger to offset high oil
prices for agencies and particularly the AMHS. He mentioned
that the increase to residential schools did not include
Mt. Edgecumbe High School.
3:11:39 PM
Co-Chair Stedman referenced the AMHS and thought the funds
were put in if the ferries ran the schedule and there were
high oil prices. He did not think there would be crew to
run the AMHS schedule. He mentioned backfill language for
federal funds and expected a lot of the funds would not be
spent.
Senator Olson asked if Co-Chair Stedman was referencing the
$60 million going to the AMHS listed on the slide.
Co-Chair Stedman answered affirmatively. He noted that
there would be $200 million in federal funds coming to
AMHS. He unsure of the timing of when the funds would be
available. He thought there would be a more refined number
during the following year's budget process.
Mr. Painter spoke to slide 11, "Major Increases in SFIN
Statewide Items from Governor Proposal":
? $89.3 million for PERS/TRS pension fund (amount that
would have gone to healthcare fund but for ARM Board
decision to leave it unfunded)
? $1.2 billion for K-12 forward funding (more of a
savings item than an expenditure)
? $199.0 million to PF corpus in FY22 to satisfy audit
finding relating to FY17-18 royalties
? $220.8 million in FY22 to pay past unfunded School
Bond Debt Reimbursement from FY17-21
? $84.0 million in FY22 to repay past unfunded REAA
deposits from FY17-21
? $60.0 million in FY22 to pay oil tax credits at
statutory amount
? $38.9 million in FY22 to bring Community Assistance
distributions to $30 million in FY22 and FY23
3:15:04 PM
Mr. Painter addressed slide 12, "What's the True Operating
Budget Growth Rate?"
? Several changes from FY22-23 give the FY23 agency
operations budget a lower starting point than FY22.
? The Governor's FY23 budget increases agency
operations by $95.6 million (2.5%) over the FY23
baseline.
? However, the Governor's budget uses temporary
federal funds in place of UGF for the Alaska Marine
Highway System. Keeping UGF funding level (as the
House and SFIN budgets do) would result in a $155.0
million (4.0%) over the baseline.
? SFIN Operating Budget is $319.7 million (8.3%) over
the baseline. The House is $266.9 million (6.9%) over
the baseline, although $10.3 million of salary
adjustments were submitted after the House's process
was complete.
Mr. Painter noted that the fiscal summary had shown that
agency operations were up by 6.7 percent, which could be
understating the true level of budget growth due to built-
in decreases before the budget work was started. The
decreases were listed in a small table on the right side of
the slide. He mentioned changes in retirement funds, the
decrease in student count, the removal of one-time items,
and contractual changes. The baseline before starting
budget work was $55.5 million below the previous year's
level with no change in service levels. He summarized that
doing a comparison using the baseline rather than to FY 22,
it would provide a clearer picture of growth.
Mr. Painter explained that the House budget had a growth
rate of 6.9 percent above the baseline, while the Senate
Finance Committee budget had an 8.3 percent growth rate
above the baseline. He noted that there had been some
governor's amendments that may have increased the budget
and exaggerated the difference between the two. He
commented that the proposed budget was a significant growth
rate after years of flat or declining budget, but the
Senate Finance budget was a bit over $300 million beyond
the baseline.
3:18:01 PM
Co-Chair Stedman discussed the timing process after the
governor's budget was submitted on December 15 and noted
that there were quite a few amendments and adjustments
after the House had done its work, and the budget cycle
stayed open until the very last requested changes from the
governor. He noted that the Senate did not have the same
time frame as the House and dealt with the end of the
budgetary cycle.
Mr. Painter showed slide 13, "Full-Time Position Count
Comparison," which showed a table of the position count in
different versions of the budget. He noted that the
governor's budget had proposed to increase the statewide
position count by 260 from the previous year, while the
Senate Finance budget was 43 positions below the governor's
request. There was still a substantial increase of 217
positions higher than FY 22.
Senator Hoffman asked about Conference Committee.
Co-Chair Stedman explained that the following major step
after floor action on the bill would be working out the
budget with the other body.
Co-Chair Bishop MOVED to report SCS CSHB 281(FIN) out of
Committee with individual recommendations. There being NO
OBJECTION, it was so ordered.
SCS CSHB 281(FIN) was REPORTED out of committee with two
"do pass" recommendations and with four "amend"
recommendations.
Co-Chair Bishop MOVED that the Senate Finance Committee
direct the Divisions of Legislative Finance and Legislative
Legal make technical and conforming changes to the bill as
necessary. There being NO OBJECTION, it was so ordered.
CS FOR HOUSE BILL NO. 282(FIN)
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
3:21:22 PM
Co-Chair Bishop moved to report MOVED to report SCS CSHB
282(FIN) out of Committee with individual recommendations.
There being NO OBJECTION, it was so ordered.
SCS CSHB 282(FIN) was REPORTED out of committee with three
"do pass" recommendations and with three "no
recommendation" recommendations.
Co-Chair Bishop moved that the Senate Finance Committee
direct the Divisions of Legislative Finance and Legislative
Legal make technical and conforming changes to the bill as
necessary. There being NO OBJECTION, it was so ordered.
Co-Chair Stedman discussed the schedule.
ADJOURNMENT
3:22:44 PM
The meeting was adjourned at 3:22 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 164 work draft version O.pdf |
SFIN 5/3/2022 1:00:00 PM |
SB 164 |
| HB 281 work draft version K.pdf |
SFIN 5/3/2022 1:00:00 PM |
HB 281 |
| HB 281 work draft version Y.pdf |
SFIN 5/3/2022 1:00:00 PM |
HB 281 |
| HB 281 LFD Presentation- SFIN Budget 5-2-22.pdf |
SFIN 5/3/2022 1:00:00 PM |
HB 281 |
| HB 281 School Bond Debt Reimbursement to Communities.pdf |
SFIN 5/3/2022 1:00:00 PM |
HB 281 |
| HB 281 Version Y Agency Summary Packet.pdf |
SFIN 5/3/2022 1:00:00 PM |
HB 281 |
| HB 281 Version K Agency Summary Packet.pdf |
SFIN 5/3/2022 1:00:00 PM |
HB 281 |
| SB 164 version O Agency Summary Packet.pdf |
SFIN 5/3/2022 1:00:00 PM |
SB 164 |
| SB 164 Testimony Lutchansky Anchorage Midtown Park Chalet.pdf |
SFIN 5/3/2022 1:00:00 PM |
SB 164 |
| SB 164 Testimony Hinderman Midtown Park Chalet.pdf |
SFIN 5/3/2022 1:00:00 PM |
SB 164 |
| SB 39 Support Dundore.pdf |
SFIN 5/3/2022 1:00:00 PM |
SB 39 |