Legislature(2025 - 2026)BUTROVICH 205
04/30/2025 12:30 PM Senate RULES
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| Audio | Topic |
|---|---|
| Start | |
| SB183 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 183 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE RULES STANDING COMMITTEE
April 30, 2025
1:01 p.m.
MEMBERS PRESENT
Senator Bill Wielechowski, Chair
Senator Gary Stevens, Vice Chair
Senator Lyman Hoffman
Senator Bert Stedman
Senator Mike Shower
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Senator Scott Kawasaki
COMMITTEE CALENDAR
SENATE BILL NO. 183
"An Act relating to hindering the Legislative Budget and Audit
Committee; relating to the powers of the Legislative Budget and
Audit Committee and the legislative audit division; and
providing for an effective date."
- MOVED SB 183 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 183
SHORT TITLE: POWERS: LB&A COMMITTEE; LEGISLATIVE AUDIT
SPONSOR(s): RULES
04/23/25 (S) READ THE FIRST TIME - REFERRALS
04/23/25 (S) RLS
04/30/25 (S) RLS AT 12:30 PM BUTROVICH 205
WITNESS REGISTER
SENATOR ELVI GRAY-JACKSON, Chair
Legislative Budget and Audit Committee
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced SB 183 on behalf of the Senate
Rules Standing Committee.
KRIS CURTIS, State Legislative Auditor
Division of Legislative Audit
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Offered the sectional analysis for SB 183.
EMILY NAUMAN, Director
Legal Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Answered questions on SB 183.
ACTION NARRATIVE
1:01:26 PM
CHAIR WIELECHOWSKI called the Senate Rules Standing Committee
meeting to order at 1:01 p.m. Present at the call to order were
Senator Stevens, Shower, Stedman and Chair Wielechowski. Senator
Hoffman arrived thereafter.
SB 183-POWERS: LB&A COMMITTEE; LEGISLATIVE AUDIT
1:01:59 PM
CHAIR WIELECHOWSKI announced the consideration of SENATE BILL
NO. 183 "An Act relating to hindering the Legislative Budget and
Audit Committee; relating to the powers of the Legislative
Budget and Audit Committee and the legislative audit division;
and providing for an effective date."
1:02:21 PM
CHAIR WIELECHOWSKI introduced Senator Gray-Jackson and Ms.
Curtis to provide an overview and sectional analysis of SB 183
and announced invited testimony.
1:02:47 PM
SENATOR ELVI GRAY-JACKSON, Chair, Legislative Budget and Audit
Committee, Alaska State Legislature, Juneau, Alaska, thanked the
committee and introduced SB 183:
[Original punctuation provided.]
During my initial one-on-one office meeting with
Legislative Auditor Kris Curtis, held in Anchorage on
January 7, 2025, we discussed the challenges she was
having in obtaining information from auditees, and how
those challenges might be addressed. It was at this
time that I first became aware of the Auditor's
difficulty completing an audit authorized by the
Committee in 2020.
In response, I included an update on the special audit
titled "Oil and Gas Production Tax Audit Process" on
the agenda for the LB&A Committee's February 26, 2025,
meeting. Following an executive session that included
testimony by Ms. Curtis, the committee authorized me,
under the authority set out in AS 24.20.201(a)(3), to
send a letter to the Administration requesting full
cooperation in assembling, furnishing, and providing
to the Legislative Auditor information related to the
special audit.
In that letter, which is included in your bill packet,
I respectfully urged the Administration to fully
cooperate with the Legislative Auditor, emphasizing
that the integrity of Alaska's oil and gas tax audit
process is essential to the state's financial well-
being.
1:04:32 PM
We sent that letter with the expectation of good-faith
cooperation, hoping the Department would fulfill its
obligation to ensure the audit would move forward and
be completed.
Unfortunately, the issue remains unresolved, and the
Auditor still cannot complete this important audit,
which concerns oversight of billions of dollars in
state oil and gas revenue.
In fulfillment of our duty to the people we serve it
is now necessary to introduce Senate Bill 183.
This bill clarifies what should have been clear all
along:
• That state agencies are required to fully cooperate
with the Legislative Auditor and the Legislative
Budget and Audit Committee; and
• That full cooperation means providing information
not just in substance, but also in the form and
format requested.
This might seem like a technical distinction. But in
auditing, the ability to request information in a
usable form is absolutely critical.
If executive branch agencies can pick and choose what
information to provide, or in what format, they can
intentionally or not obstruct the legislature's
ability to perform independent oversight.
Passage of Senate Bill 183 will honor the vision set
forth in our State Constitution, which requires that
and I quote from Article 9, Section 14 "The
legislature shall appoint an auditor to serve at its
pleasure." Without this change in statute, there is a
growing risk that executive agencies may set their own
terms for transparency and accountability, limiting
the legislature's ability to conduct effective
oversight on behalf of the public and ensure the
proper use of public funds.
Frankly, Mr. Chairman, this is action that we probably
should have taken sooner. But today, we have the
opportunity to make it right reinforcing the
legislature's constitutional and statutory oversight
role and protecting the public's interest in an
accountable government.
1:07:03 PM
CHAIR WIELECHOWSKI noted Senator Hoffman arrived.
1:07:10 PM
SENATOR STEDMAN expressed his understanding that the [auditing]
duties mentioned in SB 183 refer to the [State Legislative
Auditor], for all agencies, not a legislative auditor.
SENATOR GRAY-JACKSON stated Senator Stedman's comment was
correct.
1:07:35 PM
SENATOR STEVENS expressed appreciation for Ms. Curtis's mention
of the auditor's constitutional responsibility and Senator
Stedman's comment. He asked for confirmation that the role
discussed refers to the [State Legislative Auditor], not a
legislative auditor.
1:07:53 PM
KRIS CURTIS, State Legislative Auditor, Division of Legislative
Audit, Alaska State Legislature, Juneau, Alaska, testified on SB
183 and offered the sectional analysis. She stated that statutes
identify her as the State Legislative Auditor and confirmed that
this is the official title she has been given.
SENATOR STEVENS asked Ms. Curtis to comment on what the
constitution says about the [State Legislative] Auditor's
responsibilities.
MS. CURTIS explained that the constitution requires the state to
appoint an auditor to perform post-audit functions and report to
the legislature. She stated that the legislature defines the
scope of her duties.
CHAIR WIELECHOWSKI asked Ms. Curtis to give her testimony.
1:08:31 PM
MS. CURTIS stated that SB 183 clarifies the requirement for all
state agencies to fully cooperate with the Legislative Budget
and Audit Committee and the Legislative Auditor, including
assembling, generating, and furnishing information in the
requested form and format. She explained that SB 183 is
necessary because her division was unable to complete a
legislatively directed audit of the Department of Revenue's oil
and gas production tax audit group. She noted that the
Department of Revenue's Tax Division includes a group of
executive branch employees that are responsible for auditing oil
and gas tax returns to ensure full payment to the state. When
underpayments are found, the group issues tax assessment letters
to the taxpayers indicating the additional tax owed. This is
referred to as tax assessments.
MS. CURTIS stated that taxpayers may also be required to pay
interest. She noted that the meeting packet includes an audit
request approved by the Legislative Budget and Audit Committee
in December 2020. She pointed to page two of the audit request,
where objectives six and seven address the reporting of tax
assessments. The [Division of Legislative Audit] was directed to
identify additional tax, interest, and penalties assessed for
each of the tax division's annual tax audit cycles and provide
an update on tax assessments previously communicated to the
legislature. She stated that the meeting packet also includes a
copy of tax assessment information compiled by the Department of
Revenue's Tax Division and presented to the Senate Finance
Committee in 2018. She explained that the 2020 audit request
directed the [Division of Legislative Audit] to update the 2018
tax assessment data using the most current information. The
update was to follow a format similar to the one used in the
2018 presentation.
1:10:32 PM
MS. CURTIS stated that the 2018 tax assessment data provides
insight into the materiality of these assessments. She explained
that Table One [Tax Return Revenues and Audit Assessments for
Tax Years 2006 through 2017], reports total tax and interest
assessed for tax years 2006 through 2011. She pointed to column
F, which lists those totals, and noted that when summed, the
assessments amount to approximately $1.3 billion. She emphasized
that these tax assessments are highly material to the State of
Alaska.
MS. CURTIS stated that the meeting packet includes minutes from
the December 2020 Legislative Budget and Audit Committee meeting
-the meeting where the audit request was approved. The minutes
provide historical context on legislative concerns at that time.
She noted that during that meeting, testimony indicated the
Department of Revenue previously published memos summarizing
total tax and interest assessed after each audit cycle, but
discontinued the practice around 2019. When the legislature
requested the same information, the department claimed it was
confidential, raising concerns about oversight, transparency,
and accountability of that revenue stream to the State of
Alaska. The audit was approved to ensure adequate oversight of
that executive branch audit function. Although authorized in
2020, her division did not begin the audit until early 2024; as
it progressed, the Department of Revenue refused to provide the
tax audit assessment information.
MS. CURTIS explained that the department's most recent
justification was that state law does not require it to compile
or categorize data, only to provide raw data. She emphasized
that this interpretation breaks with longstanding precedent and
could allow agencies to block legislative oversight by refusing
to format data, which SB 183 seeks to correct by reaffirming the
legislature's oversight authority.
1:13:24 PM
SENATOR STEDMAN asked who ensures there is no unintentional or
intentional misconduct occurring within the Department of
Revenue's Tax Division and other state agency divisions if the
State Legislative Auditor does not audit them.
MS. CURTIS responded that she is not aware of any other
oversight of this function.
1:14:02 PM
SENATOR SHOWER asked how legislators can identify oversight
needs when they may not even know what questions to ask. He
noted that audit guidance flows from the Legislative Budget and
Audit Committee to the State Legislative Auditor and emphasized
the importance of having sufficient information to ensure proper
oversight. He mentioned that gaps in tax collection statutes may
exist and asked how the legislature can ensure all tax laws are
being enforced. He requested insight on how to approach unknown
risks or gaps in enforcement.
1:14:50 PM
MS. CURTIS responded that the audit function provides unbiased,
independent information to support legislative policy decisions.
She explained that the legislature can request special audits on
specific topics not addressed by general financial or federal
compliance audits. She stated that [the Division of] Legislative
Audit conducts audits based on requests from the Legislative
Budget and Audit Committee, with audit objectives reviewed and
approved by the full committee. She emphasized that the audit
process itself is subject to significant oversight regarding
both scope and methodology.
1:15:41 PM
SENATOR STEDMAN emphasized that the issue involves hundreds of
millions to billions of dollars and is not minor in the context
of the state budget. He noted a sharp decline in recent years in
the amount of settlements deposited into the Constitutional
Budget Reserve (CBR), which he believes warrants a review. He
acknowledged that the decline could be due to factors such as
oil prices, expenditures, or internal operations but stressed
that without a review, the cause remains unclear. He stated that
the trend stands out when compared to the historical pattern of
payments and settlements.
1:16:38 PM
CHAIR WIELECHOWSKI asked whether information is publicly
available showing the amount of settlements in recent years
compared to past settlements.
1:16:48 PM
MS. CURTIS replied that the Revenue Sources Book provides public
information on deposits into the Constitutional Budget Reserve
(CBR), and some assumptions can be made based on that data, as
oil-related settlements from administrative proceedings must be
deposited into the CBR. She stated that the Division of
Legislative Audit reviews revenues and settlements during the
financial audit to confirm proper deposit, but only for
information made available by the Department of Revenue. She
reiterated Senator Shower's point that "we don't know what we
don't know," noting that if a settlement is not recorded as
such, it may not be reviewed. She explained that the current
audit aims to examine the tax audits more deeply starting with
whether audits result in assessments, then tracking whether
those assessments are appealed, settled, upheld, and ultimately
paid. All this information would be compiled and presented in
audit tables.
1:18:14 PM
SENATOR HOFFMAN referred to Table One [Tax Return Revenues and
Audit Assessments for Tax Years 2006 through 2017], line I, and
pointed to a column labeled "Not Yet Resolved." He noted that
for 2008, there is $170 million listed as unresolved and asked
why these amounts remain unresolved and when resolution can be
expected. He observed that the total unresolved tax assessments
from 2007 to 2010 appear to be close to $400 million.
1:19:02 PM
MS. CURTIS stated that examining unresolved tax assessments is
one of the audit's objectives. She explained that the audit aims
to update the 2018 information, and the new tables will show how
much of the previously reported "not yet resolved" amounts have
since been resolved. Specifically, the audit will determine how
much of the unresolved total reported in 2018 remains unresolved
today.
1:19:31 PM
CHAIR WIELECHOWSKI asked for a brief sectional analysis of SB
183.
1:19:37 PM
MS. CURTIS paraphrased the sectional analysis for SB 183. She
stated Sections 2 and 3 are the core provisions, addressing
Title 24, which governs the powers and duties of the Legislative
Budget and Audit Committee. She explained that Sections 1 and 4
revise statutes intended to ensure cooperation and serve as
conforming changes. She added that Section 5 modifies existing
law and Section 6 sets the effective date:
[Original punctuation provided.]
Senate Bill 183
Powers: LB&A Committee; Legislative Audit
Sectional Analysis
Section 1 AS 11.56.845(a): Hindering the Legislative
Budget and Audit Committee
Amends the criminal statute governing obstruction of
the Legislative Budget and Audit (LB&A) Committee.
This is conforming language, so the statute is
consistent with Section 2 of the bill.
Section 2 AS 24.20.201(a): Powers of the Legislative
Budget and Audit Committee
Clarifies the committee's existing authority that
requires state officials and agencies to cooperate by
requiring requested information to be provided not
only in substance, but also in the form or format
requested by the committee or its staff.
Section 3 AS 24.20.271: Powers and Duties of the
Legislative Audit Division
Updates the legislative audit division's powers to
mirror those granted to the committee in Section 2.
This section clarifies the division may require
information in specific forms or formats as part of
its audit functions.
Section 4 AS 39.25.160(l): Grounds for Disciplinary
Action
Aligns personnel law with the criminal and statutory
provisions of the bill.
Section 5 Applicability
Amends uncodified law and applies the amendment to AS
11.56.845(a) (under Section 1) to offenses committed
on or after the effective date of the Act. This
provision ensures clarity regarding the prospective
application of the new criminal standard.
Section 6 Effective Date
Provides that the Act takes effect immediately
1:20:47 PM
CHAIR WIELECHOWSKI asked Ms. Curtis if it is her opinion that SB
183 is necessary for her to fulfill her constitutional and
statutory responsibilities [as the State Legislative Auditor].
1:20:53 PM
MS. CURTIS replied yes.
CHAIR WIELECHOWSKI asked what the consequences are for the state
if the legislature fails to pass SB 183 and the State
Legislative Auditor remains unable to complete audits as
directed by the legislature.
MS. CURTIS replied that if she cannot complete the audit, she
would have to issue a report with a scope restriction, meaning
certain information was unavailable. She emphasized that, more
broadly, the inability to access information results in a lack
of accountability in a critical state function. She stated that
the Department of Revenue's reluctance to provide audit
information raises significant red flags from an audit
perspective. She expressed a desire to help determine the
reasons behind that reluctance, both for the legislature and the
public.
1:21:51 PM
SENATOR SHOWER expressed appreciation for the prior discussion
he had with Ms. Curtis, noting the information was helpful both
for him and for public understanding. He stated this subject was
new to him and that he had initially been concerned about
ensuring checks and balances so that no single individual holds
excessive authority. He asked whether the word "generate," as
included in SB 183, gives the [State] Legislative Auditor
authority to direct the collection of data not already being
collected, even if not required by statute. He also asked
whether that authority remains with the Legislative Budget and
Audit Committee, rather than being delegated solely to the
auditor.
1:23:09 PM
MS. CURTIS responded that the answer to the first question is
noSB 183 does not allow the [State] Legislative Auditor to
compel an agency to generate data it is not statutorily required
to collect. She asked for clarity on whether the second question
relates to the checks and balances in place over the audit
function.
1:23:41 PM
SENATOR SHOWER restated the question asking whether the [State
Legislative] Auditor can direct that data be collected if it is
not otherwise required by statute, or if such direction must
come with the guidance of the Legislative Budget and Audit
Committee.
MS. CURTIS confirmed that the answer remains the same: if a
department or agency is not statutorily required to perform a
function or collect certain data, the [State] Legislative
Auditor cannot compel the agency to do so.
1:24:03 PM
SENATOR SHOWER asked whether the final authority to generate
reports and direct data-related actions rests with the
Legislative Auditor or remains with the Legislative Budget and
Audit Committee. He stated this question was the final piece of
their earlier discussion and that he believed he knew the answer
but wanted it clarified on the record.
MS. CURTIS responded that she was not entirely sure she
understood the question.
1:24:40 PM
SENATOR SHOWER asked whether the legislative process provides
oversight in determining what data must be generated, or if the
inclusion of the word "generate" in the bill allows the [State}
Legislative Auditor to decide what work and data collection
needs to be performed.
1:24:54 PM
MS. CURTIS clarified that any data requested by the [State
Legislative] Auditor is vetted by the Legislative Budget and
Audit Committee. She stated that the committee determines what
it wants reported, and therefore, the authority first resides
with the committee. The committee grants the [State] Legislative
Auditor the authority to seek information, conduct the audit,
and report the findings.
1:25:25 PM
SENATOR STEDMAN noted that Table One, [Tax Return Revenues and
Audit Assessments for Tax Years 2006 through 2017], covers tax
years from 2006 to 2017 and reflects billions of dollars in
assessments. He asked Ms. Curtis to address the statute of
limitations, emphasizing its importance in understanding how
audits may be affected when cases are not resolved in time.
MS. CURTIS stated that she does not personally conduct the
audits but acknowledged there is a statutory time limit for the
state to complete them. She recalled the limit used to be six
years but was unsure if that had changed. She explained that
this creates pressure on the State Department to address audit
backlogs promptly to avoid missing potential tax assessments.
She added that once an audit is completed and an assessment
letter is issued, there is likely no statutory limit on how long
the resolution process can take.
1:26:34 PM
SENATOR STEDMAN stated that the existence of a time limit means
the audit clock is always ticking. He emphasized that
identifying and resolving any issues early is critical, as
delays could result in the loss of collectible funds.
CHAIR WIELECHOWSKI found there were no amendments.
1:27:27 PM
SENATOR STEVENS stated that, after hearing from the [State
Legislative] Auditor and the chairwoman, he believed it was
important to receive a response on whether legislative oversight
is being exercised appropriately and whether the legislature is
pursuing the correct course of action.
1:27:42 PM
EMILY NAUMAN, Director, Legal Services, Legislative Affairs
Agency, Juneau, Alaska, answered questions on SB 183. She
responded that determining whether the legislature is pursuing
the right course is a policy decision for legislators. She
stated that the legislature must decide how much authority it
wants to delegate to the Division of Legislative Audit and the
Legislative Budget and Audit Committee. She explained that while
the legislature's authority over the executive branch in the
audit function has constitutional limits, those boundaries are
broad due to the constitutional role of the [State] Legislative
Auditor. She added that the oversight provided by the
Legislative Budget and Audit Committee would likely prevent any
overreach under SB 183.
1:28:38 PM
SENATOR SHOWER asked whether, in Ms. Nauman's legal opinion, the
inclusion of the word "generate" in SB 183 allows the [State]
Legislative Auditor to independently determine what information
is generated. He also asked whether the statute, and the
Legislative Budget and Audit Committee, still retains authority
over what information can be generated.
MS. NAUMAN stated that, based on her understanding of the
process, the Legislative Budget and Audit Committee directs the
Legislative Auditor to investigate specific matters in addition
to her regular audit duties. She explained that, under SB 183,
the [State] Legislative Auditor cannot independently request the
executive branch to generate information at her own discretion.
All such actions must be directed by the Legislative Budget and
Audit Committee.
1:30:01 PM
CHAIR WIELECHOWSKI opened public testimony on SB 183; finding
none, he closed public testimony.
1:30:21 PM
CHAIR WIELECHOWSKI found no further discussion and solicited the
will of the committee.
1:30:25 PM
SENATOR STEVENS moved to report SB 183, work order 34-LS0932\A,
from committee with individual recommendations and attached
fiscal note(s).
1:30:37 PM
CHAIR WIELECHOWSKI found no objection and SB 183 was reported
from the Senate Rules Standing Committee.
1:30:53 PM
There being no further business to come before the committee,
Chair Wielechowski adjourned the Senate Rules Standing Committee
meeting at 1:30 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 183 Fiscal Note - LEG-AUD-04-24-25.pdf |
SRLS 4/30/2025 12:30:00 PM |
SB 183 |
| SB 183 Sponsor Statement.pdf |
SRLS 4/30/2025 12:30:00 PM |
SB 183 |
| SB 183 Sectional Analysis.pdf |
SRLS 4/30/2025 12:30:00 PM |
SB 183 |
| SB 183 Supporting Document 1 - DOR.TAX Response to LBAC 02.06.18.pdf |
SRLS 4/30/2025 12:30:00 PM |
SB 183 |
| SB 183 Supporting Document 2 - Special Audit Request 12.04.20.pdf |
SRLS 4/30/2025 12:30:00 PM |
SB 183 |
| SB 183 Supporting Document 3 - Excerpt from the minutes of the LBAC meeting on 12.10.2020.pdf |
SRLS 4/30/2025 12:30:00 PM |
SB 183 |
| SB 183 Supporting Document 4 - LBAC Memo re O&G Prod Tax Audits 03.03.25.pdf |
SRLS 4/30/2025 12:30:00 PM |
SB 183 |
| SB 183 Fiscal Note - OOG-OMB-04-29-25.pdf |
SRLS 4/30/2025 12:30:00 PM |
SB 183 |