Legislature(2023 - 2024)ADAMS 519
03/20/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB39 || HB41 | |
| HB79 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 39 | TELECONFERENCED | |
| += | HB 41 | TELECONFERENCED | |
| += | HB 79 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 39
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making reappropriations; making
supplemental appropriations; making appropriations
under art. IX, sec. 17(c), Constitution of the State
of Alaska, from the constitutional budget reserve
fund; and providing for an effective date."
HOUSE BILL NO. 41
"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."
1:40:48 PM
Co-Chair Foster MOVED to ADOPT proposed committee
substitute for HB 39, Work Draft 33-GH1347\B (Marx,
3/15/23).
Co-Chair Edgmon OBJECTED for discussion.
Co-Chair Johnson thanked members of the House Finance
Committee for their work in the operating budget
subcommittee process. She explained that the numbers
section in the CS reflected the work of the subcommittee
process and contained few other changes. There were
numerous changes to the language section, which would be
reviewed by her staff. She shared that the goal was to
produce a balanced and sustainable operating budget that
held state spending down, included smart reductions, and
allowed for a capital budget to maintain infrastructure and
jobs in local communities. She stated that over the next
several weeks there would be robust discussions on
education, the Permanent Fund Dividend (PFD), health and
social services, and other major cost drivers to Alaskans.
She explained that the CS represented a good starting point
for discussions and the amendment process. She read from a
prepared statement:
Highlighted by the recent downswing in oil, Alaska
needed a comprehensive fiscal solution to provide the
certainty our residents deserve. I know we are all
eagerly awaiting the release of the spring revenue
forecast. It is my sincerest hope that we will
implement a fiscal solution over the next two years;
however, what is before us now is the FY 24 operating
budget - that's the point of the pencil. As the
finance committee, it is our job to ensure the budget
balances and that public dollars are used as
effectively as possible where those funds are needed.
I look forward to an open dialogue with members of the
public as well as the committee on potential
amendments over the next week.
Co-Chair Johnson asked her staff to review the proposed
changes in the committee substitute (CS).
REMOND HENDERSON, STAFF, REPRESENTATIVE DELENA JOHNSON,
reviewed the changes in the CS compared to the original
version of the bill. He highlighted reports numbered one
through four from the Legislative Finance Division (copy on
file). He read from prepared remarks:
The committee substitute includes all changes from the
subcommittee closeouts. The subcommittee closeouts
include all of the governor's amendments to the
th
numbers section submitted on February 14, so I will
not be discussing these items that the subcommittee
chairs have already covered in full finance through
the subcommittee closeout process. However, the
th
governor submitted additional amendments on March 7
with a UGF [undesignated general fund] increase of $16
million that were not included in subcommittee
reports. These items were all increases to the
Department of Education [and Early Development] and
were presented by the office of Office of Management
and Budget [OMB] to the House Finance Committee on
th
Monday, March 13. These items are not included in
this CS and may be offered as amendments.
Madam Chair, I will first provide a summary of the FY
24 operating budget request as reflected in CS 1. For
FY 24, the House Finance Committee substitute reflects
the following. A total budget of $9,809,216,800 for
agency operations, which is primarily the day to day
operations of state government. A total budget of
$571,852,300 for statewide items. These items include
debt service, retirement payments, special
appropriations, and fund capitalizations. The funding
sources for agency operations and statewide items are
as follows: $6,372,477,700 in unrestricted general
funds, $910,511,300 in designated funds,
$1,728,782,100 in other funds (the major source of
these funds is authorization of corporate receipts
such as AIDEA and AHFC, aerospace, interagency
receipts, and airport receipts), and $3,208,757,900 in
federal funds.
1:46:53 PM
Mr. Henderson summarized the few changes made in the CS to
the governor's amended budget. He noted that details of the
changes had been provided during the subcommittee closeout
process. He read from prepared remarks:
There were 15 agency closeouts with virtually no
changes in the governor's amended request. Compared to
the governor's amended budget, the unrestricted
general funds spent in this CS reflects a decrease of
$2,713,900 in agency operations, which is a 0.1
percent decrease (one tenth of one percent). This
percentage does not include the $16 million in
th
additional amendments received on March 7. The CS
also contains a $30 million increase in statewide
items for community assistance, this will be addressed
when we get into the language section.
In the Department of Environmental Conservation, we
made a technical correction to fund sources to reflect
$85.2 thousand as general funds match rather than
general funds.
Mr. Henderson directed committee members to the CS. He
continued to read from prepared remarks:
The Department of Health on page 20, lines 8 through
13, the following wording was added: "No money
appropriated in this appropriation may be expended for
an abortion that is not a mandatory service required
under AS 47.07.030(a). The money appropriated for the
Department of Health may be expended only for
mandatory services required under Title 19 of the
Social Security Act unless a U.S. Supreme Court
decision provides new precedent and for optional
services offered by the state under the state plan for
medical assistance that have been approved by the
United States Department of Health and Human
Services." This language is the exact same language
that was adopted in last year's conference committee.
Also on page 20, line 7, we remove $117,800 for the
amount of UGF that was spent in FY 22 on abortions.
The next change is on page 29, line 24. We made a
technical correction in the Department of Revenue to
reflect the appropriation name as the Child Support
Enforcement Division. The governor's budget changed
the allocation name but inadvertently did not change
the appropriation name to match.
1:50:12 PM
Mr. Henderson reviewed the other changes in the language
section between the governor's request and the CS. He noted
there were several changes in the language section made by
the governor in his amendment process and the changes were
not under the purview of the House Finance Committee;
therefore, he would address them as other language changes.
He relayed that Legislative Legal made some minor technical
clarifying changes that did not materially affect the bill,
which he would cover at the end of the language section
changes if the committee desired.
Mr. Henderson reviewed changes pertaining to the Department
of Administration (DOA) in Section 7, page 54, lines 1
through 6. He detailed it was a new section with a June 30
effective date. The section appropriated the balance of the
abandoned motor vehicle fund estimated at $110,000 to DOA
Division of Motor Vehicles to reimburse municipalities for
the cost of removing abandoned vehicles for FY 23 and FY
24. Funds were collected from the sale of abandoned
vehicles, which brought in approximately $10,000 per year.
He explained that $100,000 UGF had been added in FY 23, but
DOA needed appropriation of the fund, which was
accomplished in the new section.
Mr. Henderson turned to a change to the Department of
Education and Early Development (DEED) budget in Section 8,
page 55, lines 3 through 8. The section was new and
extended the use of the Mount Edgecumbe land sale proceeds
through FY 25, which had to be used for high school
maintenance and operations. He noted that Section 15(b) of
the previous bill was removed as it was no longer needed.
Mr. Henderson reviewed Section 11, page 55, lines 24
through page 56, line 6. The section was new and
reappropriated the unobligated balance of general fund
appropriation to the Legislature in FY 23, not to exceed $1
million for the purposes of a 30-day special session
effective for FY 23 through FY 25 as recommended by the
subcommittee. Section 15, page 57 lines 22 through 29
pertaining to the Alaska Industrial Development and Export
Authority (AIDEA) dividend. He explained that the governor
submitted an amendment deducting $13.9 million from the
cash dividend to the general fund and instead made a
transfer of land to the Department of Natural Resources
(DNR). The CS did not incorporate the governor's amendment
and retained the governor's original language related to
the dividend transfer.
1:54:17 PM
Mr. Henderson turned to the PFD in Section 16, page 58,
lines 7 through 13. The governor's original bill contained
a percent of market value (POMV) draw of $3.5 billion with
approximately $2.5 billion going towards a full PFD and
approximately $1 billion going towards state government.
The CS appropriated 50 percent of the $3.5 billion to the
dividend fund and 50 percent to the general fund for
government operations resulting in a PFD of $2,689 per
recipient compared to the $3,801 in the original bill. The
CS removed Section 16(e) of the previous bill, which
included a $1.4 billion appropriation from the Permanent
Fund Earnings Reserve Account (ERA) to the principal of the
fund for inflation proofing.
Representative Josephson asked Mr. Henderson to repeat the
information about the removal of a subsection on page 58.
Mr. Henderson clarified that Section 16(e) of the previous
bill had been removed in the CS.
Representative Josephson asked if the section had included
$1.4 billion for inflation proofing the Permanent Fund.
Mr. Henderson agreed. He noted that there was no inflation
proofing in FY 16, FY 17, FY 18, FY 21, and FY 22; however,
there had been transfers from the ERA to the principal of
$4 billion in FY 20 and FY 22.
Mr. Henderson reviewed a change in Section 17, page 58,
lines 17 through page 59, line 18 pertaining to the
Technical Vocational Education Program (TVEP). The CS
transferred the TVEP appropriation from the numbers section
to the language section with an estimated amount. He
explained that previously the numbers section had to be
adjusted repeatedly to match revenue estimates. The change
was a governor's amendment incorporated into the CS.
Mr. Henderson turned to the next change located in Section
18, page 59, lines 19 through page 60, line 4. The section
was new and related to bonuses for certain employees of the
executive branch. The section replicated language from the
FY 23 budget including monetary terms of letters of
agreement between the executive branch and employees in
collective bargaining agreements. The section also required
letters of agreement to be sent to the finance co-chairs on
March 14 and September 30.
Mr. Henderson reviewed a change to the Reinsurance Program
under the Department of Commerce, Community and Economic
Development (DCCED) in Section 20, page 62, lines 11
through 15. The section extended the use of federal
receipts for the reinsurance program to June 30, 2025 from
June 30, 2024.
Mr. Henderson noted that Section 14(i) commerce broadband
federal receipts estimated to be $0 - had been moved from
the language section of the original bill to the capital
budget.
1:59:15 PM
Representative Josephson asked Mr. Henderson to repeat the
information pertaining to broadband.
Mr. Henderson replied that broadband federal receipts
estimated to be $0 was removed from the language section of
the original bill and placed in the capital budget.
Mr. Henderson moved to a change pertaining to DEED in
Section 21, page 63, lines 1 through 6 where the wordage
for grants or reimbursement to educational entities,
nonprofit, and nongovernment organizations deleted in the
governor's amended budget. The change gave DEED the
authority to expend federal funds received in excess of the
amount appropriated in the numbers section for education
support and administrative services. The change eliminated
the restriction in the original bill that only allowed the
funds to be spent on grants or reimbursements to
educational entities, nonprofits, and nongovernmental
organizations.
Mr. Henderson addressed a change pertaining to the
Department of Health (DOH) in Section 22(b), page 63, lines
21 through 28 regarding the Homeless Management Information
System. The section was moved to the June 30, 2023
effective date section and extended use of the funds
through FY 25. The item had originally been included in the
numbers section of the commissioner's office allocation in
FY 23. The change reappropriated the funds for the same
purpose; however, it provided more years to complete the
project.
Mr. Henderson turned to a change in Section 22(e), page 64
lines 8 through 12 pertaining to a DOH federal grant. The
section was modified to correct an error made by the
department and to clarify that the American Rescue Plan Act
(ARPA) dollars estimated at $25 million were to be used
specifically for a grant to the Division of Public
Assistance for childcare versus any DOH program. Section
22(f), page 64, lines 13 through 19 pertained to public
assistance, Medicaid eligibility redetermination. The
governor submitted an amendment adding $8.9 million in
general funds and $8.9 million in federal funds as an FY
24/FY 25 multiyear appropriation to cover the cost
associated with Medicaid redeterminations.
2:02:59 PM
Representative Tomaszewski requested the last page and line
numbers.
Mr. Henderson provided the details. He moved to Section
29(g)(12), page 70, lines 6 through 8 pertaining to GO bond
debt. The change was made in the governor's amendments and
replaced 2012A and 2013B bonds with 2023A bonds for a net
savings of $603,000. He reported that two previous sections
were deleted, and the new section was added. He pointed out
that another reference to 2012A and 2013B bonds had been
deleted on lines 10 and 11 and replaced with 2023.
Mr. Henderson moved to Section 30(e) and (f), page 72,
lines 15 through 25. He stated that federal and other
program receipts had been modified to add a new section.
The original bill did not contain language used in the FY
23 operating bill that restricted the use of the RPL
[revised program legislative] process to expend federal
funds in excess amounts appropriated. The CS modified the
section to place restrictions on the use of the RPL process
to expend various federal and other funds in excess of the
amount appropriated by placing a cap of $15 million per
appropriation on the use of the RPL. The cap in FY 23 was
$10 million. He stated that the limitation did not apply to
federal fisheries disaster funding. There were seven
declared fishery disasters, but the amounts and timing were
unknown. In FY 23 there was about $32 million in federal
funding for fish processors that the governor tried to add
through the RPL process, but the $10 million restriction
resulted in the Legislative Budget and Audit Committee
(LB&A) denying all but $10 million of the RPLs. The
governor subsequently went forward with the items despite
LB&A's recommendation and had the authority to do so within
45 days. The change in the CS would hopefully eliminate the
issue and provide flexibility for fishery disasters.
Mr. Henderson stated there was also a restriction on the
use of Coronavirus state and local federal relief funds,
which were flexible federal funds. He relayed that no
balance was expected to remain, but retaining the
restriction ensured if any funds lapsed, the governor could
not reallocate them through the RPL process.
2:06:28 PM
Mr. Henderson turned to Section 21(g), page 73, lines 23
through 30 pertaining to fund caps public education. The CS
changed the total funding estimated to be $1,173,032,300
and adjusted the general fund appropriation accordingly.
The governor's original amount was based on the estimate
that $48.4 million of FY 23 forward funding would remain;
however, based on the governor's proposed supplemental
budget, the estimate was $0. The change reflected the full
funding cost with no reduction due to forward funding.
Mr. Henderson turned to Section 31, page 75, lines 18
through 21 showing a new fund capitalization section. The
section appropriated $1.2 million to the Election Fund as
required by the federal 2002 Help America Vote Act from the
following sources: $1 million in federal receipts and
$200,000 from the general fund. The item was a governor's
amendment, the timing was unpredictable, and the funds were
also for expenditure in the capital budget. Section 31(u),
page 75, lines 22 and 23 was a new fund capitalization
section. The section appropriated $30 million UGF to the
Community Assistance Fund in FY 24. He noted the section
was not included in the original bill and without the
appropriation, the FY 25 distribution would be $20 million,
which was only enough for the base payments and did not
allow for any per capita amounts.
Mr. Henderson addressed Section 32(o), page 78, lines 8 and
9, that appropriated $7.5 million from the general fund to
the Renewable Energy Grant Fund. The item was a governor's
amendment, and the funds were spent in the capital budget.
Section 34(a), page 79 lines 22 through 25 pertained to
salary and benefit adjustments. The increment was a
governor amend item adding two newly executed union
bargaining agreements including the Teacher's Education
representing the teachers of Mt. Edgecumbe High School and
the Inlandboatmen's Union of the Pacific Alaska region
representing the unlicensed marine unit. Section 38, page
82, lines 28 through page 83, line 4 retained the reverse
sweep but remove the Constitutional Budget Reserve (CBR)
deficit filling language. He detailed that based on the
fall revenue forecast, the budget did not project to have a
[deficit]; therefore, the CBR section was removed. Section
40, page 83, lines 13 through 18 added retroactivity for
all effective dates in the bill. The bill also included
various technical and conforming changes. He concluded his
report and was available for questions.
2:12:02 PM
Representative Ortiz thought Mr. Henderson had discussed a
fund source change for DEC at the beginning of his
presentation.
Mr. Henderson clarified there was one fund source change
that was a technical correction from $85,000 UGF to UGF
match or vice versa.
Representative Ortiz looked at page 73 of the language
section. He asked for the impact of the change described.
Mr. Henderson replied to Representative Ortiz's first
question and explained there was a funding source change to
$85,000 general fund match from general funds for DEC. He
responded to Representative Ortiz's second question about a
change on page 73. The section included an appropriation to
the Public Education Fund. He explained there was an amount
included previously based on $48 million of forward
funding. The money was no longer available because of the
deficit in FY 23. The section included the exact
appropriation amount based on full funding.
2:14:44 PM
Representative Hannan asked Mr. Henderson to restate the
information related to Section 38, page 82.
Mr. Henderson believed Representative Hannan was referring
to the fact that the CS maintained the reverse sweep
language but removed the CBR vote requirement because the
budget was balanced based on the fall revenue forecast and
the POMV draw included in the budget.
Representative Hannan asked if the change would happen
automatically if the spring revenue forecast produced a
different amount.
Co-Chair Johnson stated that as the committee received the
spring forecast it would be necessary to reevaluate
multiple portions of the budget. She stated the updated
forecast may mean the need for spending cuts, a CBR draw,
or other. She relayed that any change would not happen
automatically and would have to be taken care of in
committee.
Representative Hannan asked if the operating budget usually
specified whether the reverse sweep was called for or not.
Co-Chair Johnson answered that some of the language had
become more specific since the occasions there had been
challenges with the reverse sweep. She stated it had been
clarified over the past several years.
Representative Galvin looked at page 58, lines 7 through 13
and stated her understanding that the CS included a 50/50
POMV/PFD and reduced the governor's proposed PFD from
$3,800 to $2,689.
Mr. Henderson agreed. He clarified that the POMV draw
amount was the same, but the allocation had been changed to
50/50.
2:18:18 PM
Representative Josephson remarked there was a difference of
about $1,100 between the governor's proposed PFD and the
number included in the CS, which equated to about $800
million. He stated there was a spring forecast that he had
been told left the budget $250 million short in FY 23. He
calculated that $800 million minus $250 million was $550
million. He asked where the $550 million would be spent.
Co-Chair Johnson replied that one of the challenges was not
yet having the spring revenue forecast. She noted that
although the governor's budget included a $3,900 PFD, the
earnings had been significantly lower than expected in the
first quarter of the year, which brought the full PFD
amount to approximately $3,200. She was not trying to be
nonspecific, but the difference between the governor's
proposed PFD and the PFD in the CS was hard to calculate
given the unknowns. She noted that the difference was about
$1,200 or $1,300.
Representative Josephson would follow up offline.
Representative Ortiz stated that the governor's amended
budget resulted in a $431 million deficit. He asked for a
new estimate of the potential deficit under the CS.
Mr. Henderson answered the original governor's budget prior
to his amendments had a deficit of about $331 million,
whereas the current budget had a deficit of close to $450
million.
Representative Ortiz asked for verification Mr. Henderson
was referring to the CS.
Mr. Henderson agreed. He noted it did not reflect a $16
million amendment submitted for education, which would
increase the deficit.
Co-Chair Johnson questioned the $450 million deficit.
2:22:02 PM
Representative Stapp clarified that the governor's amended
budget included a deficit of close to $500 million;
however, the CS did not have a deficit. He asked for the
accuracy of his statement.
Mr. Henderson agreed.
Co-Chair Johnson asked Mr. Henderson to review the numbers
for clarification.
Mr. Henderson confirmed that Representative Stapp was
correct. He explained that because the amount of the PFD
had been reduced in the CS, the budget contained a surplus
instead of a deficit.
Co-Chair Johnson stated, "At least today."
Representative Galvin asked for verification that the
surplus in the CS did not include the $16 million the
governor proposed for education or any other additions for
education and other things.
Mr. Henderson agreed. He noted that including the
governor's proposed $16 million could be done in the
upcoming budget amendment process in committee.
2:23:34 PM
Co-Chair Johnson thanked Mr. Henderson for all of his work
on the budget.
Mr. Henderson asked if the committee would like to address
the mental health budget.
2:24:21 PM
AT EASE
2:26:35 PM
RECONVENED
Co-Chair Edgmon WITHDREW the OBJECTION.
There being NO further OBJECTION, Work Draft 33-GH1347\B
was ADOPTED.
2:28:04 PM
AT EASE
2:28:31 PM
RECONVENED
Co-Chair Foster MOVED to ADOPT proposed committee
substitute for HB 41, Work Draft 33-GH1349\B (Marx,
3/15/23).
Co-Chair Edgmon OBJECTED for discussion.
Co-Chair Johnson asked her staff to review the proposed
changes in the committee substitute (CS).
REMOND HENDERSON, STAFF, REPRESENTATIVE DELENA JOHNSON,
reviewed the changes in the CS. He highlighted report
number one from the Legislative Finance Division titled
"Mental Health Capital Project Detail" (copy on file). He
began on page 11, lines 25 to 26, which included a
governor's amendment adding $2.95 million for the Alaska
Housing Finance Corporation's (AHFC) beneficiary of special
needs housing. The item had inadvertently been left out of
the governor's original budget. The second change was on
page 15, lines 29 through 31, that included conforming
language with the operating budget reflecting the TEAME
[Teachers Education Association Mt. Edgecumbe] and IBU
[Inlandboatmen's Union] contract approvals. He concluded
his report.
Representative Galvin asked for verification that the
governor had included an additional $2.95 million into
special needs housing. She asked if Mr. Henderson had
stated the item had inadvertently been left out [of the
governor's original budget].
Mr. Henderson agreed.
Co-Chair Edgmon WITHDREW the OBJECTION.
There being NO further OBJECTION, Work Draft 33-GH1349\B
was ADOPTED.
Co-Chair Johnson set an amendment deadline for noon, March
23 for both budget bills.
Representative Josephson noted that a number of committee
members had been anticipating an amendment deadline of
Friday, March 24. He requested a deadline of Friday at 9:00
a.m.
Co-Chair Johnson recalled that she had specified a
tentative deadline of Friday, March 24. She stated the
deadline had changed to the time she had announced [noon on
March 23].
Mr. Henderson clarified the reason for the noon deadline.
2:34:05 PM
AT EASE
2:35:46 PM
RECONVENED
Co-Chair Johnson announced that the committee would recess
until 2:55 pm.
HB 39 was HEARD and HELD in committee for further
consideration.
HB 41 was HEARD and HELD in committee for further
consideration.
2:36:07 PM
RECESSED
2:59:56 PM
RECONVENED
Co-Chair Johnson asked Mr. Painter to clarify the amendment
deadline.
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
clarified the deadline was not necessarily for completed
amendments with the actual language from Legislative Legal
Services. He explained the language and numbers amendment
submittal process.
Representative Ortiz appreciated the clarification;
however, it was his understanding that public testimony
went through Thursday afternoon [March 23]. He thought the
original amendment deadline of Friday morning would allow
members to listen to the full public testimony and enable
them to submit any additional amendments that may result
from the testimony. He thought setting an amendment
deadline prior to the end of public testimony would
circumvent the public testimony process.
Co-Chair Johnson stated her understanding of Representative
Ortiz's remarks.
Representative Ortiz clarified the idea that public
testimony was meant to give the public an opportunity to
provide input on the budget. He stated it was possible a
significant idea could come up through the public testimony
process that may cause any member of the committee to see
the need for an amendment.
Co-Chair Johnson changed the amendment deadline to 9:00
p.m. on Thursday, March 23.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CS WorkDraft HB 79 v.B HFIN 031623.pdf |
HFIN 3/20/2023 1:30:00 PM |
HB 79 |
| CS Workdraft HB 39 v B Operating Budget 031523.pdf |
HFIN 3/20/2023 1:30:00 PM |
HB 39 |
| HB 39 CS v B 2 HCS1 Agency Summary All Funds.pdf |
HFIN 3/20/2023 1:30:00 PM |
HB 39 |
| HB 39 CS v B 1 HCS1 Agency Summary UGF Only.pdf |
HFIN 3/20/2023 1:30:00 PM |
HB 39 |
| HB 39 CS v B 4 HCS1 to GovAmend Transaction Compare.pdf |
HFIN 3/20/2023 1:30:00 PM |
HB 39 |
| HB 39 v B 3 HCS1 Statewide Totals.pdf |
HFIN 3/20/2023 1:30:00 PM |
HB 39 |
| CS Workdraft v. B HB 41 Mental Health Bill 031523.pdf |
HFIN 3/20/2023 1:30:00 PM |
HB 41 |
| HB 41 CS v B HCS1 MH Capital Project Detail.pdf |
HFIN 3/20/2023 1:30:00 PM |
HB 41 |
| HB 79 Amendments 1-2 032023.pdf |
HFIN 3/20/2023 1:30:00 PM |
HB 79 |
| HB 79 Amendments with Actions 032023.pdf |
HFIN 3/20/2023 1:30:00 PM |
HB 79 |