Legislature(2025 - 2026)ADAMS 519
04/10/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB53 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 34 | TELECONFERENCED | |
| + | HB 30 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 53 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
April 10, 2025
6:36 p.m.
6:36:01 PM
CALL TO ORDER
Co-Chair Josephson called the House Finance Committee
meeting to order at 6:36 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Andy Josephson, Co-Chair
Representative Calvin Schrage, Co-Chair
Representative Jamie Allard
Representative Jeremy Bynum
Representative Alyse Galvin
Representative Sara Hannan
Representative Nellie Unangiq Jimmie
Representative DeLena Johnson
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Alexander Schroeder, Staff, Representative Andy Josephson;
Alexei Painter, Director, Legislative Finance Division.
PRESENT VIA TELECONFERENCE
Marie Marx, Legal Counsel, Legislative Legal Services.
SUMMARY
HB 30 OFFICE OF ENTREPRENEURSHIP
HB 30 was SCHEDULED but not HEARD.
HB 34 AK INNOVATION COUNCIL
HB 34 was SCHEDULED but not HEARD.
HB 53 APPROP: OPERATING BUDGET; CAP; SUPP
CSHB 53(FIN) was REPORTED out of committee with
one "do pass" recommendation, one "do not pass"
recommendation, and nine "amend" recommendations.
Co-Chair Josephson reviewed the meeting agenda. He noted
they would not be hearing HB 30 or HB 34.
HOUSE BILL NO. 53
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making supplemental appropriations;
making reappropriations; 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."
6:36:47 PM
Co-Chair Josephson asked for a motion to rescind action on
moving out HB 53 version 34-GH1462/I.
Co-Chair Schrage MOVED to RESCIND prior action on reporting
out HB 53 [Secretary Note: CSHB 53(FIN) was reported out of
committee on April 3, 2025, at the 1:30 p.m. meeting. See
separate minutes for detail].
Representative Stapp OBJECTED. He spoke to his objection.
He noted that approximately one week ago the majority of
the committee voted to report the bill from committee. He
wondered why the majority of the committee wanted to
rescind its action.
Co-Chair Josephson believed the details would become clear
in the second motion to adopt a new committee substitute
(CS).
A roll call vote was taken on the motion.
IN FAVOR: Galvin, Hannan, Jimmie, Schrage, Foster,
Josephson
OPPOSED: Johnson, Stapp, Allard, Bynum, Tomaszewski
The MOTION PASSED (6/5). There being NO further OBJECTION,
the prior action to report the bill from committee [on
4/3/25] was RESCINDED.
6:38:23 PM
Co-Chair Schrage MOVED to ADOPT the proposed committee
substitute for HB 53, Work Draft 34-GH1462\Q (Marx,
4/10/25).
Representative Stapp and Representative Johnson OBJECTED.
Representative Johnson spoke to her objection. She stated
that the CS had just been received. She thought it included
a $680 Base Student Allocation (BSA) and a 75 percent/25
percent (75/25) Permanent Fund Dividend (PFD). She deduced
that the bill appeared to contain some trickery and
possible legal concerns. She noticed some fund changes and
a waterfall provision. She believed that it was
intentionally written to "fool the public."
Co-Chair Josephson explained that the bill contained a
$1000 "backstop BSA."
6:40:22 PM
Co-Chair Josephson asked his staff to explain the changes
in the committee substitute (CS).
ALEXANDER SCHROEDER, STAFF, REPRESENTATIVE ANDY JOSEPHSON,
explained the changes in the CS. He explained that version
Q was essentially the same as the bill that reported out of
committee in the prior week including all of the amendments
adopted by the committee. The CS included three
modifications. He delineated that the first modification
was on page 60, lines 21 through 24, Section 10, subsection
(c)(1) and (2) and changed the Percent of Market Value
(POMV) draw to a 75/25 percent split. He delineated that 25
percent or $949,722,100 million was allocated to the PFD
payments, 75 percent was appropriated to the General Fund
(GF) or $2,849,166,298 billion totaling $3,798,888,398
billion appropriated from the Earnings Reserve Account
(ERA). The total remained the same amount as what was
included in the previous version of the bill. The PFD
amount would be roughly $1,420. The second modification was
on page 66 through 67, lines 23 through line 2, Section
15(f) and changed the fund source for the one-time BSA
increase to be split so that $680 of the increase totaling
$172 million was expended from Unrestricted General Funds
(UGF) and $320 or $81 million was appropriated from the
Public School Trust Fund. He added that if a bill was
adopted with a statutory BSA increase under $1000 the
Public Education Investment Funds would be expended first
to pay the difference. The third modification was on pages
86 through 87, lines 24 through line 1. He reported that
Section 34 changed the distribution of revenue exceeding
$6.3 billion from a 50/50 percent split between an energy
relief check and Statutory Budget Reserve (SBR) deposit to
the following: 40 percent to an energy relief bonus, 30
percent to a one-time BSA increase in FY 2027 and 30
percent to the SBR. The total impact of the changes was
$1.6 billion savings in UGF reflecting an 85 percent
reduction to the deficit in the governor's budget requests.
6:43:18 PM
Representative Stapp asked to hear from the Legislative
Finance Division (LFD). He asked what the deficit amount in
the CS was.
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
replied that the amount depended on the assumptions about
the capital budget. He detailed that under the governor's
capital budget the deficit would be $350 million and under
the Senate Finance Committee version it would be
approximately $110 million.
Representative Stapp remarked that the CS traded one
deficit budget for another. He believed that it "raided"
the Public School Trust Fund, which was typically a 5
percent draw and used it to offset the foundation formula.
He asked what level of draw the amount in the CS would be.
Mr. Painter replied that the current balance was $845
million, therefore it was roughly 10 percent of the value
of the fund. Representative Stapp asked for confirmation
that the fund helped offset the foundation formula. Mr.
Painter replied affirmatively. Representative Stapp
believed that the provision would "raid" the Public School
Trust Fund to get one-time money to schools out of funds
meant for the foundation formula. Mr. Painter confirmed
that the Public School Trust Fund was used for the
foundation formula. Representative Stapp asked if the
legislature was allowed to "raid" the trust fund. He asked
if there was a legal opinion on the matter.
Co-Chair Josephson disputed the premise of the question and
did not believe the action was a raid. He calculated the
POMV draw at roughly 10 percent and noted the fund had
grown $73 million. He cautioned that Marie Marx,
Legislative Counsel, Legislative Legal Services was not
given enough time to prepare a full legal opinion but
provided a statement. He read from the statement:
"If the principle was
substantially diminished that revenue source may no
longer exist."
Co-Chair Josephson deduced the debate was whether 9.5
percent of the fund was considered a substantial
diminishment.
6:46:52 PM
Representative Johnson thought that 9.5 percent seemed like
a substantial amount. She asked if it was a POMV type fund
that was set up similar to the Permanent Fund ERA. Mr.
Painter responded in the affirmative and offered that there
was a 5 percent POMV draw from the fund. Representative
Johnson asked how it would correspond to the Permanent
Fund. She asked what the appropriate draw was from the
Permanent Fund. Mr. Painter answered that it was also 5
percent.
Representative Johnson noted the draw was almost double
what had been considered to be a safe amount to draw from
the trust fund. She deduced from Ms. Marx statement that
she was not comfortable with the amount. She wanted to hear
from a trust attorney.
Co-Chair Josephson doubted they could do that during the
current evening meeting.
Co-Chair Schrage asked what the impact on the fund would be
if the governor vetoed the current education bill or vetoed
the appropriation. Mr. Painter replied that if the governor
signed the bill the provision would not have an effect.
However, if he vetoed the bill the provision would become
effective.
Representative Johnson interjected and objected to
presuming how the governor might act.
6:50:05 PM
Co-Chair Schrage restated his question. He wondered whether
it would reduce the draw from the fund if the final amount
of education funding was below a $1000 BSA. Mr. Painter
replied that the way the language was structured the first
draw outside the formula amount would be up to $81 million
from the trust fund. He elaborated that if the statutory
BSA decreased to $680 or less the full amount from the
trust fund would be drawn before GF dollars.
Representative Allard asked if Legislative Legal Services
was online.
MARIE MARX, LEGAL COUNSEL, LEGISLATIVE LEGAL SERVICES (via
teleconference), relayed that she was available for
questions.
Representative Allard asked for her opinion on what she
considered was an "illegal draw." Ms. Marx replied that
given the short time she had to review the issue she knew
the Public School Trust Fund was created as a substitute
for a federal land trust. She expounded that the state was
under a trust obligation to maintain the trust for the
benefit of the state school system. She did not know the
extent the changes in the bill would impact the trust.
Presently, she could only caution the committee that in the
past there had been significant litigation over land trusts
and the specific education trust in the Kasayulie case
[Willie and Sophie Kasayulie et al., v. State of Alaska,
1997].
6:53:03 PM
Representative Allard presumed that Ms. Marx had never
encountered the situation with the education trust before.
Ms. Marx replied that for confidentiality reasons she could
not say what had or had not been addressed on the issue.
However, she shared that she had personally never addressed
the issue. She indicated that trust law was a complicated
area of law, and the issue would benefit from either a
trust law expert either through the Department of Law (DOL)
or in the private sector.
Co-Chair Josephson asked if the objection was maintained.
Representative Johnson maintained her objection. She
reiterated her concerns about the CS particularly regarding
the trust. She voiced that when dealing with a public
trust, actions should be transparent and legal. She
restated her disapproval of the way the CS was brought
forward and over the fund source changes.
Co-Chair Schrage understood there were concerns with the
proposal. He offered that it was done in an attempt to try
to find a workable solution to a broader group than the
previous bill. He asked Mr. Painter if there was a further
process by which the bill could be adjusted if valid
concerns were brought forward. Mr. Painter answered that
the bill's next stop was the House floor and then to the
other body.
Representative Stapp voiced that the budget was unfunded
and raided the Public School Trust Fund, which was
established by congress in 1915, and the commissioner of
the Department of Revenue was the fiduciary of the trust.
He guessed that the commissioner was not consulted on the
matter. He offered "simple" suggestions to balance the
budget. He was not in favor of adopting an unfunded budget
and felt that passing out the CS was a "folly" by the
majority members.
6:58:02 PM
Representative Josephson believed that Representative Stapp
impugned the motive of some committee members. He noted
that Representative Stapp had an opportunity to reduce the
PFD but chose not to do so.
Representative Bynum appreciated the effort to attempt a
compromise that would result in a more balanced budget. He
understood there were tremendous concerns about the
potential legalities of using the Public School Trust Fund
revenue to make up the difference in the BSA portion of the
bill. He stated there was a part of him that wanted to be
able to move a budget that was more balanced. He remarked
that the process during the present day had been rapid. He
knew that many conversations had occurred among legislators
to try to determine how to reach a balanced budget. He
shared that a part of him wanted to vote yes on the CS
because it came close to obtaining a balanced budget;
however, there was another part of him that determined he
had to vote no.
Representative Tomaszewski interjected and asked if there
was an amendment deadline for the new CS. Co-Chair
Josephson replied in the negative. Representative
Tomaszewski remarked that the CS was shared with the
committee only 30 minutes prior. Co-Chair Josephson
answered that the committee had taken up 96 amendments on
the budget. Representative Tomaszewski objected.
7:00:43 PM
AT EASE
7:00:57 PM
RECONVENED
Representative Johnson strongly objected and asked the Co-
Chair to follow a public process.
7:01:16 PM
AT EASE
7:01:30 PM
RECONVENED
Co-Chair Schrage WITHDREW the motion to adopt the CS.
Co-Chair Schrage MOVED to REPORT CSHB 53(FIN), version 43-
GH1462\I out of committee with individual recommendations
and with authorization to the Legislative Finance Division
and Legislative Legal Services to make any necessary
technical and conforming changes.
Representative Allard and Representative Stapp OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Galvin, Jimmie, Hannan, Foster, Schrage,
Josephson
OPPOSED: Johnson, Stapp, Allard, Tomaszewski, Bynum
The MOTION PASSED (6/5).
There being NO further OBJECTION, CSHB 53(FIN) was REPORTED
out of committee with one "do pass" recommendation, one "do
not pass" recommendation, and nine "amend" recommendations.
7:03:04 PM
ADJOURNMENT
The meeting was adjourned at 7:03 p.m.