Legislature(2023 - 2024)SENATE FINANCE 532
05/11/2023 01:30 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB39 | |
| SB48 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 88 | TELECONFERENCED | |
| += | SB 89 | TELECONFERENCED | |
| += | SB 48 | TELECONFERENCED | |
| += | HB 39 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
May 11, 2023
4:15 p.m.
4:15:53 PM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 4:15 p.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Pete Ecklund, Staff, Senator Bert Stedman; Alexei Painter,
Director, Legislative Finance Division; Ken Alper, Staff,
Senator Donny Olson; John Boyle, Commissioner, Department
of Natural Resources; Rena Miller, Special Assistant to the
Commissioner, Department of Natural Resources.
SUMMARY
SB 48 CARBON OFFSET PROGRAM ON STATE LAND
SB 48 was HEARD and HELD in committee for further
consideration.
SB 88 RETIREMENT SYSTEMS; DEFINED BENEFIT OPT.
SB 88 was SCHEDULED but not HEARD.
CSHB 39(FIN) am(brf sup maj fld)(efd fld)
APPROP: OPERATING BUDGET/LOANS/FUND; SUPP
CSHB 39(FIN) was HEARD and HELD in committee for
further consideration.
Co-Chair Stedman commented that the schedule was in flux,
and the committee would first hear the operating budget
before recessing and returning to consider a committee
substitute (CS) for SB 48. He relayed that SB 88 would be
moved to the schedule for the following day.
CS FOR HOUSE BILL NO. 39(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; repealing
appropriations; amending appropriations; making
reappropriations; and making supplemental
appropriations."
4:16:57 PM
Co-Chair Hoffman MOVED to ADOPT proposed committee
substitute for CSHB 39(FIN), Work Draft 33-GH1347\O (Marx,
5/11/23).
Co-Chair Stedman OBJECTED for discussion.
Co-Chair Stedman relayed that staff would walk through the
proposed changes in the bill, after which the Legislative
Finance Division (LFD) director would give a brief update
on the states fiscal position.
4:17:35 PM
PETE ECKLUND, STAFF, SENATOR BERT STEDMAN, relayed that
Version O was an omnibus appropriation bill which included
operating, capital, supplemental, and fiscal note items. He
referenced Document A (copy on file):
The version in front of you (O), has operating,
capital, supplemental and fiscal note items.
Version O is a combination of HB 39 version P
(operating/supplemental), adopted by the committee
yesterday and SB 41 (capital budget) version Y adopted
yesterday with 4 changes:
• Added a $5 million Statutory Designated Program
Receipt (SDPR) capital amendment request by the
Governor that came to us yesterday for review of rate
structures within the Medicaid program
• Attached fiscal notes from legislation that either
has already or is possible to pass this session
• Added a $40 million appropriation to back-fill some
costs should a government shut-down occur
• Changed the 'waterfall' of additional revenue above
the Spring Forecast of $73 per barrel of oil
4:19:30 PM
AT EASE
4:19:47 PM
RECONVENED
Mr. Ecklund continued his remarks. He explained that there
were fiscal notes attached to the bill and noted that
additional fiscal notes for passed legislation could be
added upon further review. He continued to address the
document. He addressed the third bullet and discussed leave
cash-out and health insurance usage in previous possible
government shut-down periods. He addressed the final
bullet.
Mr. Ecklund summarized that between the capital and
operating budgets, the version of the bill being considered
was within the expected revenue from the spring revenue
forecast. He highlighted line one on the table on Document
A, which showed that the forecast had predicted an oil
price of $73/bbl, or $6.2 billion in revenue. In the event
that revenues were above $73/bbl, an additional $10/bbl
would send $636 million to the Constitutional Budget
Reserve (CBR). If revenues were even higher with oil prices
between $83/bbl and $105/bbl, the roughly $1.7 billion in
additional revenue would be split evenly between the CBR
and the dividend fund for an FY 25 energy relief payment up
to $881.5 million (roughly the same amount as 75/25
dividend). He noted that if oil was higher than $105/bbl,
the excess would also go into the CBR.
Senator Merrick asked about uses of revenue raised through
other measures being considered by the legislature, or if
the provision was specifically tied to the price of oil.
Mr. Ecklund relayed that if the legislature passed other
revenue measures, the funds would have an impact. He drew
attention to item 1 and noted that any revenue above
$64,300,000 would go to the CBR.
Co-Chair Stedman explained that the bill was written in
such a way after being too difficult to write the provision
based on an oil price trigger.
Mr. Ecklund added that line 2, line 3, and line 4 on the
table on Document A showed estimates.
Co-Chair Stedman WITHDREW his objection. There being NO
OBJECTION, it was so ordered. The CS for CSHB 39(FIN) was
ADOPTED.
4:24:03 PM
Senator Kiehl asked Mr. Ecklund to discuss the $40 million
backfill funding for a potential government shutdown.
Mr. Ecklund explained that the Office of Management and
Budget (OMB) would be more equipped to respond to Senator
Kiehl's question, but he understood that past threats of a
government shutdown resulted in greater insurance use and
leave cash-outs by state employees. He noted that he had
checked in with the OMB director before the meeting, who
indicated that there was over $212 million in leave that
was possible to be cashed out in the case of a government
shutdown. He furthered that even if the legislature passed
an appropriation bill and the effective dates failed, the
governor could interpret the failure to signify the bill
would not take effect for 90 days, which could go further
than July 1.
Co-Chair Stedman thought that the eventuality could incur a
bunch of costs.
Co-Chair Stedman relayed that the LFD director would update
the fiscal picture. He noted that the numbers presented
would be slightly different to those presented the previous
day, and changes would be highlighted.
4:25:54 PM
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
addressed Document C (copy on file), which was an update
from a document from the committee hearing the previous
day. He noted that Document B (copy on file) showed detail
of the fiscal notes that were included in the bill. He
noted that the revenue numbers through line 4 on Document
C, including $6.2643 billion in available revenue, had not
changed from what he presented the previous day. The agency
operations not including the $40 million appropriation
referenced by Mr. Ecklund were on line 5 and included the
$174.9 million for K-12 education that was outside the
funding formula. He noted that the fiscal note for the bill
(SB 52) was also included in the fiscal note packet, and
the amount would be different based on whether the bill
passed or not.
Mr. Painter continued that Line 6 showed statewide items
and had not changed. He highlighted that Line 7 showed the
capital budget and mental health capital budget, which was
still $356.9 million. The one amendment that was
incorporated into the capital budget was non-Unrestricted
General Funds (UGF) so it did not factor in. The Permanent
Fund Dividend (PFD) had not changed, which left Line 10
with a surplus of $132 million without considering fiscal
notes and other items. Line 11 showed the total for
included fiscal notes at $19.5 million, not including the
Base Student Allocation (BSA) increase counted on line 5.
The amount was narrowed down from the previous number.
Mr. Painter informed that the potential Conference
Committee additions had been reduced to $14.6 million.
There were two additions in the bill that were also in the
House bill - $5 million for Head Start and $3 million for
AGDC. Removing the two items from the potential Conference
Committee additions reduced the potential for the higher
items taken for both budgets.
Mr. Painter relayed that the addition of fiscal notes was
$34.1 million, leaving a potential surplus of $97.9 million
at the $73/bbl oil price level. He highlighted that the $40
million mentioned by Mr. Ecklund would only go out if there
was a government shutdown, which would reduce the 97.9
million to 57.9 million if the appropriation was used. If
not, there would be nearly $100 million available for
capital budget increases, future supplemental items or
lower oil prices.
Co-Chair Stedman relayed that the committee would take a
half hour break before returning for a brief period to
consider adopting a CS for SB 48.
4:29:33 PM
RECESSED
5:12:03 PM
RECONVENED
Co-Chair Stedman handed the gavel to Co-Chair Olson.
SENATE BILL NO. 48
"An Act authorizing the Department of Natural
Resources to lease land for carbon management
purposes; establishing a carbon offset program for
state land; authorizing the sale of carbon offset
credits; and providing for an effective date."
5:12:11 PM
Co-Chair Olson relayed that SB 48 had been heard by the
committee on May 8, at which time the committee had heard
public testimony. The co-chairs had requested amendments,
most of which were incorporated into a CS.
5:12:39 PM
AT EASE
5:12:48 PM
RECONVENED
Co-Chair Olson informed that there was a CS to consider.
5:13:00 PM
AT EASE
5:13:20 PM
RECONVENED
Co-Chair Stedman MOVED to ADOPT proposed committee
substitute for SB 48, Work Draft 33-GS1372\U
(Dunmire,5/11/23).
Co-Chair Olson OBJECTED for discussion.
5:13:51 PM
KEN ALPER, STAFF, SENATOR DONNY OLSON, explained that there
were a lot of technical changes to the bill, which was
relatively long. The committee had worked closely with the
Department of Natural Resources (DNR) as well as members of
the Senate Resources Committee, where there had been a
number of amendments to consider and refine. He addressed a
Summary of Changes Document (copy on file):
Fund Status of Carbon Revenues
Removed the creation of a separate "carbon offset
revenue fund." Carbon revenues are presumptively UGF
but separately accounted for and may be used by the
legislature to make appropriations to support the
program.
Use of Procurement Code
The blanket procurement code waiver is now limited to
only contracts between the state and the "registries."
Other contracts related to carbon projects would be
subject to the code. Removed the requirement for
legislative approval of certain contracts, and
replaced with a limitation that contracts not pay the
contractor more than a 30% commission.
Solicitation of Competitive Interest
When there is an application to lease state land for
carbon management, DNR must issue public notice and
solicit competing applications on that same land.
Examining Monetary Proposals
For both leases and contracts, clarifies that the
revenue potential to the state should be a criterion
when evaluating competing proposals.
Ensuring Other Resources Not Impacted
A variety of clarifying amendments were made to ensure
any carbon projects consider the potential impacts to
mining, timber, and other resource development
sectors. State land used for carbon management must
remain open to mineral exploration.
Class 6 Well Primacy
Authorizes AOGCC to take enforcement responsibility
for underground injection in Class VI wells. This is a
provision from the carbon storage bill, but will take
several years to implement. This ensures Alaska
projects are able to make maximum use of federal
carbon tax credits.
Mr. Alper continued to address the summary document:
Other Technical Changes
Replaced certain terms such as "validate," "verify,"
and other current industry terms with more general
language to account for potential changes in registry
protocols as the industry matures.
Mr. Alper explained that the other technical changes
regarding certain terms were made at the request of DNR.
5:19:22 PM
JOHN BOYLE, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES,
relayed that the department was continuing to look through
the CS in detail. He expressed appreciation for the
committee and staff that worked on the changes. He looked
forward to continuing the dialogue.
5:19:55 PM
RENA MILLER, SPECIAL ASSISTANT TO THE COMMISSIONER,
DEPARTMENT OF NATURAL RESOURCES, relayed that she had
nothing to add.
5:20:11 PM
AT EASE
5:20:16 PM
RECONVENED
Co-Chair Olson WITHDREW his objection. There being NO
further OBJECTION, it was so ordered. The CS for SB 48 was
ADOPTED.
SB 48 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
5:20:27 PM
The meeting was adjourned at 5:20 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 48 Summary of Changes 5-11-23.pdf |
SFIN 5/11/2023 1:30:00 PM |
SB 48 |
| SB 48 work draft version U.pdf |
SFIN 5/11/2023 1:30:00 PM |
SB 48 |
| HB 39 Doc A Omnibus Appropriation Bill changes document FINAL.pdf |
SFIN 5/11/2023 1:30:00 PM |
HB 39 |
| HB 39 SCS4 Sup Agency Summary - UGF Only (002).pdf |
SFIN 5/11/2023 1:30:00 PM |
HB 39 |
| HB 39 SCS4 Sup Agency Summary - All Funds (002).pdf |
SFIN 5/11/2023 1:30:00 PM |
HB 39 |
| HB 39 SCS4 FY24 Agency Summary - All Funds (002).pdf |
SFIN 5/11/2023 1:30:00 PM |
HB 39 |
| HB 39 SCS4 FY24 Agency Summary - UGF Only (002).pdf |
SFIN 5/11/2023 1:30:00 PM |
HB 39 |
| HB 39 SCS4 Fiscal Note Summary (002).pdf |
SFIN 5/11/2023 1:30:00 PM |
HB 39 |
| HB 39 Senate Omnibus Fiscal Picture 5-11-23.pdf |
SFIN 5/11/2023 1:30:00 PM |
HB 39 |
| HB 39 work draft version O.pdf |
SFIN 5/11/2023 1:30:00 PM |
HB 39 |