Legislature(2023 - 2024)SENATE FINANCE 532
04/26/2023 01:30 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB39 || HB41 | |
| 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 | |
| + | TELECONFERENCED |
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."
CS FOR HOUSE BILL NO. 41(FIN) am
"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."
1:32:09 PM
Co-Chair Stedman relayed that the committee would adopt a
Committee Substitute (CS) for the operating budget, and
would consider a technical amendment. The committee would
also adopt a CS for the mental health budget. He relayed
that after considering the legislation, the director of the
Legislative Finance Division would give a fiscal update.
Senator Kiehl MOVED to ADOPT proposed committee substitute
for CSHB 41(FIN), Work Draft 33-GH1347\D (Marx, 4/25/23).
Co-Chair Stedman OBJECTED for discussion.
1:33:34 PM
PETE ECKLUND, STAFF, SENATOR BERT STEDMAN, discussed
Document A (copy on file) which was a spreadsheet listing
the changes incorporated into the CS. He explained that
Item 1 was a supplemental item of $9 million of fund
capitalization for the Clean Air Protection Fund. Item 2
was also a supplemental item for an elections redistricting
lapse extension requested by the governors office. He
cited that there was a total supplemental change was $1.98
million in Unrestricted General Funds (UGF).
Mr. Ecklund shared that Item 3 added intent language for
labor relations to return the job classification salary
alignment to the 60th percentile from the current 50th
percentile. Item 4 added the Public Safety Employee
Associations (PSEA) salary adjustments and also the salary
commission adjustments for commissioners and the governor.
He added that rural trooper housing was part of the PSEA
agreement, and there was also a team adjustment for a total
of $6.4 million UGF.
Mr. Ecklund shared that he would give a brief description
of Item 5, Item 6, and Item 7, after which Senator Kiehl
would speak on the items in more detail. The Senate Finance
Subcommittee on the Department of Administration (DOA) had
done a lot of work on the items. Item 5 returned the IT
Helpdesk to the various departments. Item 6 related to
human resources (HR) support, and Item 7 denied a
procurement position adjustment between various departments
and DOA.
Co-Chair Stedman asked Senator Kiehl to address the items
and give a high-level overview of what was worked on during
the subcommittee process. He wanted Senator Kiehl to inform
on the working relationship the legislature had with the
department and how it was decided to move forward with
identified challenges.
1:36:33 PM
Senator Kiehl relayed that the DOA budget subcommittee had
looked seriously at some of the consolidations that had
taken place in DOA over the recent years. Many of the
consolidations were working well and were saving the state
money, while the committee found that a few of the
consolidations needed revisiting. The subcommittee worked
with the department and subsequently with the Office of
Management and Budget (OMB) and the Office of the Governor
to come up with the recommendations reflected in the CS. He
noted that the CS did not contain all of the subcommittee's
recommendations.
Senator Kiehl explained that Item 5 through Item 7 were
small adjustments to help the executive branch do the best
work with what it had consolidated and make a few
adjustments. He addressed Item 5, which had to do with IT
helpdesk support, and was a net zero item that reallocated
helpdesk portions of the budget back to each department. He
highlighted that the item did not have to do with the lift
to the cloud, but rather the call center for software and
other concerns.
Senator Kiehl continued that Item 6 had to do with HR and
the governors budget moving more HR technicians back to
departments to help with recruiting. The item would make a
few additional position moves for departments with larger
work forces. The item added an additional HR technician to
the state's largest departments: the Department of
Transportation and Public Facilities (DOT), the Department
of Health, and the Department of Family and Community
Services. He discussed Item 7 and noted that the
administration had beta-tested toward consolidating
procurement and had started with two departments.
Senator Kiehl continued that after significant
consideration, the department and OMB and the subcommittee
agreed that the change was not ready to move forward. The
item would wind back the position moves and procurement
positions would remain in respective departments. He
expanded that DOA would work on standardizing policies and
procedure to make procurement more efficient. Procurement
would remain in each department to maximize responsiveness
to each departments mission. He thanked Co-Chair Stedman
for allowing him to elaborate on some of the fine tuning of
the states consolidations.
1:40:00 PM
Mr. Ecklund addressed Item 8, which was a $1 million
increase to rural public radio. Item 9 would make a $2
million addition to the Alaska Travel Industry Association
(ATIA) for tourism marketing. In addition to the current $3
million appropriation, there would be a total of $5 million
to ATIA. He continued that Item 10 was an additional $2
million to the Alaska Seafood Marketing Institute (ASMI),
which would also total $5 million with the current $3
million appropriation.
Mr. Ecklund continued that Item 11 was $1 million for
recidivism reduction grants to the Department of
Corrections. Item 12 was a $4 increase to the Alaska Native
Science and Engineering Program (ANSEP) and would bring the
total increase in the bill to $10 million. Item 12a was an
item at the request of the governor, which included intent
language asking that school districts report on fund
balances in the fall and spring of each year.
Co-Chair Stedman relayed that the committee had been
working on the budget for the previous two months and had
paid particular attention to education funding. He relayed
that there was some trouble with current account balances
in school districts and timely numerics to contemplate a
change to the Base Student Allocation (BSA). Item 12a
requested school districts to report account balances in
October, which would help the administration with its
December 15 budget submission. The balances would be
updated in January or February and would better position
the department to have a discussion with the legislature
about the current funding status of school districts.
1:43:00 PM
Mr. Ecklund addressed Item 13, which was removal of the 404
assumption program in the Department of Environmental
Conservation (DEC). Item 14 was a onetime item of $15
million for childcare grants. The intent was to provide
increased wages to childcare workers. Item 15 was $15
million in UGF and $15 million in federal Medicaid Services
grant to home and community-based services and personal
care attendants program. He noted that reimbursement rates
had not been re-based since 2011. The funding was in
anticipation of the rebasing that would occur in May.
Mr. Ecklund discussed Item 16 which pertained to abortion
restriction language and included a decrement of $117.8
thousand. Item 17 was mechanical inspection in the amount
of $22,5000. The item corrected a job title from a
subcommittee transaction so the plumbing inspector could
conduct inspections in smaller communities.
Mr. Ecklund addressed Item 18 was a $209,000 deletion of an
Attorney V position for a parental-rights-in-education
advocate. A second Item 18 in the Office of the
Commissioner reversed the fund source associated with the
Alaska State Defense Force for $40,700 and was more of a
technical change. Item 19 related to the Department of
Natural Resources fire suppression. The department had
communicated intent language about potential supplemental
items from fire suppression activities. He addressed Item
20 for the Department of Revenue/Alaska Permanent Fund
Corporation (APFC), which involved $863,000 of Permanent
Fund gross receipts to help with salaries, benefits, and
merit increases for APFC employees.
Mr. Ecklund addressed Item 21, within DOT Highways and
Aviation, which involved one-time funding for central
maintenance stations start-up costs. Item 22 was
$1,080,000 of UGF for ongoing operations at central
maintenance station. Item 23 related to the University and
was $1.275 million UGF for Developing Alaskas Workforce
funding for various programs. Item 24 was $3.357 million
increase for the legislature after the Legislative Council
had recently adopted a policy for the legislature to go to
a 40-hour workweek. He noted that Supervisory Union (SU)
had been on a 40-hour workweek since 2019, and the
legislature historically followed SU contracts. He added
that there was a total of $49.38 million of UGF for agency
operations.
1:47:23 PM
Mr. Ecklund addressed Item 25, which proposed a one-time
increase outside the BSA of just under $175 million, which
was equivalent to a $680 increase to the BSA. Item 26 added
PSEA bargaining unit language to the salary and benefits
section for its new contract. Item 27 was a fund
capitalization for Alaska Gasline Development Corporation
(AGDC) of $2.9 million UGF and $4 million federal funds.
The funds were earmarked by United States Senator Lisa
Murkowski, and the item would approve the earmark
acceptance and the matching funds. Item 28 was a fund
capitalization for the Capital Income Fund. He noted that
the Capital Income Fund had a negative balance and was
short $18.3 million. The item was for $18.3 million and
would bring the fund balance back to zero before adding any
new spending or yearly revenue.
Mr. Ecklund addressed Item 29, which was a Permanent Fund
Dividend of $881,522 and equal to a 75/25 percent of market
value (POMV) split. He discussed Item 30 and noted that
there was a fuel branch appropriation in the prior CS. The
committee had worked with OMB and the Legislative Finance
Division (LFD) to update the fuel trigger including the
numbers and split of funds that would go to different
departments if oil prices were higher than $73/bbl.
Mr. Ecklund relayed that Item 31 was a Public Education
Fund transfer. He noted that Item 31 and Item 32 were
related. He shared that the capital and operating budget
were balanced within the spring revenue forecast and
savings. If oil revenues came in higher than the spring
forecast, the first $1 billion surplus would be
appropriated to the Constitutional Budget Reserve (CBR) and
would bring the balance near to $3.5 billion. Further, if
oil prices were even higher than $1 billion over the spring
forecast, the next $1.1 billion would go to the Public
Education Fund to forward-fund K-12 education.
Mr. Ecklund shared that Item 33 was related to revenue and
the Alaska Industrial Development and Export Authority
(AIDEA) dividend. The CS proposed to appropriate $11
million cash and would also accept $7 million in value for
a a road as payment for the AIDEA dividend. He cited that
the General Fund total for the PFD, K-12 education spending
outside the formula, and fund capitalization was $1.77
billion, bringing the FY 24 amendment total of UGF to
$1,126,588,000.
1:51:21 PM
Co-Chair Hoffman asked about Item 25, the increase to the
BSA of $680, which would bring the BSA up to upwards of
$2,600 per student. He asked how large of an increase was
proposed and if it was more than 25 percent.
Co-Chair Stedman cited that the previous year the
legislature had added $57.8 million. The proposed CS would
add $174 million, which was equivalent to $680 per student.
The previous years increase was about 5 percent, with a
14.7 percent increase over two years. The number was higher
than what was discussed at the previous days press release,
which had been a $500 increase per student or 10 percent.
He thought the amount showed substantial support in the
Senate and the amount had been increased.
Co-Chair Stedman noted that the other body had not included
an increase in its final budget.
1:54:07 PM
Co-Chair Hoffman spoke to Item 12, which related to ANSEP.
He thought all committee members had been visited by
someone from the program that had provided statistics
demonstrating the success of the program. He cited that the
success rate in graduating students was one of the highest
for the University system. He spoke highly of the program.
Co-Chair Stedman WITHDREW his objection. There being NO
further OBJECTION, it was so ordered. The CS for CSHB
41(FIN) was ADOPTED.
Co-Chair Stedman relayed that he would be offering a
technical amendment.
Senator Bishop MOVED to ADOPT Amendment 1.
Co-Chair Stedman OBJECTED for discussion.
Mr. Ecklund spoke to Amendment 1, which was a technical
amendment. He explained that there had been an error in
communications between OMBs budget system and LFDs budget
system, and the amendment would correct the error.
Co-Chair Stedman WITHDREW his objection. There being NO
further OBJECTION, it was so ordered.
Co-Chair Stedman thanked the members and staff for the many
hours spent working on the budget. He noted that it had
been very difficult to hold the budget within the
forecasted revenue.
1:56:51 PM
Senator Merrick MOVED to ADOPT proposed committee
substitute for CSHB 41(FIN), Work Draft 33-GH1349\U (Marx,
4/25/23).
Co-Chair Stedman OBJECTED for discussion.
Mr. Ecklund looked at page 2 of Attachment A, and explained
that there was only one proposed change to the mental
health budget bill in the language section. The change
proposed to adopt the PSEA new contract language into the
bill.
Co-Chair Stedman WITHDREW his objection. There being NO
further OBJECTION, it was so ordered.
CSSB 41(FIN) was HEARD and HELD in committee for further
consideration.
Co-Chair Stedman invited the Legislative Finance Division
Director to discuss the proposed budgets and address state
finances including forecast revenue streams and how much
cushion was left.
1:58:38 PM
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
referenced Document B entitled "Fiscal Picture with Second
Senate Committee Substitutes for Operating and Capital
Budgets" (copy on file), which showed an updated fiscal
picture when the previous CS was adopted the previous week.
He corrected some verbal calculations he had done at a
previous meeting.
Mr. Painter noted that the top half of the document was the
same as the previous week when it was presented. Line 1
through Line 3 showed the spring revenue forecast with the
AIDEA dividend taken out, as it was not part of the CS.
Line 4 showed agency operations in the first CS of the
operating budget, and Line 5 showed the statewide items in
the same bill. Line 6 showed the first version of the
capital budget that was released two weeks previously. The
earlier budgets had left about $1.4 billion in surplus
remaining before considering the PFD, K-12 funding outside
the formula, and other items.
Mr. Painter explained that the remaining items on the sheet
were items that were incorporated into the new CS for the
operating budget and the capital budget CS that was adopted
the previous day. Item 9 reflected the PFD at $881 million,
which was 25 percent of the POMV draw and equated to a PFD
of $1,300 per person. Item 10 showed the K-12 education
funding outside the formula that Mr. Ecklund had discussed
earlier, in the amount of approximately $175 million or
$680 BSA-equivalent funding based on the projected student
count. He summarized that the other operating items in the
CS added up to $51.9 million of UGF, covered in Line 11.
Mr. Painter continued that Line 12 showed the capital
budget increase that was in the CS. The second CS had added
an additional $166.1 of UGF above the previous version,
which brought the Senates total capital budget in the CS
plus the mental health capital budget to $356.9 million
UGF. The amount was about $53 million higher than the
governors proposal of about $303.6 million. The $166
million reflected the difference between the first and
second versions of the capital budget. Line 13 showed the
Capital Income Fund fix of $18.3 million as explained by
Mr. Ecklund. Line 14 showed as negative because it
reflected decreased revenue. Compared to the previous
version that had no AIDEA dividend, the current version of
the operating budget had an $11 million AIDEA dividend,
which showed as a $11 million increase to the budget
surplus.
Mr. Painter noted that Line 15 and Line 16 were
approximations intended to be placeholders. He explained
that Line 15 had a $6.9 million placeholder for fiscal
notes, which was an estimate based on bills that were in
both finance committees. The amount did not include the BSA
bill, which was covered through the outside-the-formula
funding, which was contingent upon the failure of the bill
to change the BSA. If the bill passed changing the BSA, the
outside-the-formula funding would not go out. He cited that
another fiscal note that had been pulled out was a $20
million fiscal note by the governor to create a sustainable
energy fund, and the bill was recently introduced and had
not had a hearing yet. He thought the $6.9 million on Line
15 was a high estimate.
Mr. Painter explained that Line 16 was the high case for
any Conference Committee additions. He considered that
often the budget seen in Conference Committee was higher
than both the House and Senate versions. He pointed out
that the $21.7 million shown on Line 16 was the highest
case scenario, if the higher version was taken for each
item under consideration in Conference Committee. The items
in the budget plus the two placeholders added up to just
over $1.31 billion. He identified a surplus on Line 18 of
$93.4 million. He suggested that the surplus could go to an
increased capital budget in the House, supplemental items
the following session, remain as a cushion in the case of
lower-than-expected oil price, or a combination of the
three.
2:04:49 PM
Co-Chair Stedman asked Mr. Painter to give a rough estimate
of a swing in oil prices that could absorb the surplus.
Mr. Painter thought the amount would constitute less than a
$2/bbl swing in oil price. He thought that DNRs estimate
indicated that every additional $1 of oil price above the
spring forecast equated to about $70 million, and every
dollar below the amount equated closer to $50 million.
Co-Chair Stedman reiterated his comment on the tightness of
the budget.
Senator Merrick asked Mr. Painter to explain how or why the
Capital Income Fund was at a negative balance.
Mr. Painter explained that the Capital Income Funds source
of revenue was the Amerada Hess deposit within the
Permanent Fund, which was restricted from the POMV draw.
Instead, the statutory net income from the deposit went
into the Capital Income Fund. He referenced a presentation
from the APFC in recent weeks that had indicated that
realized income had been lower in 2023 than projected for
the Permanent Fund, which resulted in less funding going
into the Capital Income Fund. There was a relatively small
shortfall in FY 22 because of the underperformance of
statutory net income in FY 22, but with the performance in
FY 23 the amount was substantially below the forecast. The
$18.3 million shown on Line 13 was an estimate based on
realized income for the rest of the year. He noted that the
capital budget had a reappropriation into the fund that
somewhat reduced the amount needed by about $600,000.
Co-Chair Olson considered the surplus of $93.4 million and
asked what the chances were that the funds would go to the
CBR.
Mr. Painter explained that the amount would lapse to the
CBR if the funds were not spent in the budget or in
supplementals. He noted that the proposed budget directed
any money above the $73/bbl forecast into the CBR, and any
additional surplus went to the CBR unless directed
elsewhere due to the sweep.
Co-Chair Olson asked about the time frame of the fund
transfer.
Mr. Painter cited that the timeframe would be at the end of
FY 24, which would be June 30, 2024. If the money was
unspent and revenue met projections, the funds would go to
the CBR.
2:08:27 PM
Co-Chair Hoffman referenced line 16, which showed $21.7
million for Conference Committee add-ons. He thought the
total did not include the higher PFD amount that was
proposed in the other body as a 50/50 POMV split. He
estimated that if the Houses number was in play, it would
require an additional $881 million. He did not see how the
funds could be under consideration given the tight budget
restraints mentioned by Co-Chair Stedman.
Co-Chair Stedman thought Co-Chair Hoffman had brought up a
good point, and that if the PFD was a 50/50 split of the
POMV, the amount on line 9 would double. He thought the
scenario would produce a substantially deficit budget,
which the legislature was constitutionally prohibited from
delivering to the governors desk. He thought Co-Chair
Hoffman had brought up a good point. He noted that the
House did not have any additional funding for education in
its budget. He noted that there had been $174.9 million in
the budget from the House, but it had not been funded.
Co-Chair Hoffman pointed out that the proposed budget did
not contemplate using any funds from the CBR, as the
reserve's balance was lower than the $3.5 billion that had
been targeted by the committee. He was glad the committee
has developed a budget that did not require use of the CBR.
Co-Chair Stedman suggested that Mr. Painter include a
footnote on the summary sheet that recognized the PFD
portion proposed by the House in order to recognize the
fiscal impact.
Co-Chair Stedman discussed the meeting for the following
day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 39 work draft version D.pdf |
SFIN 4/26/2023 1:30:00 PM |
HB 39 |
| HB 39 - HB 41 SCS2 amendment summary 4-26-23 Final.pdf |
SFIN 4/26/2023 1:30:00 PM |
HB 39 HB 41 |
| HB 39 Amendment 1 Stedman.pdf |
SFIN 4/26/2023 1:30:00 PM |
HB 39 |
| HB 41 work draft version U.pdf |
SFIN 4/26/2023 1:30:00 PM |
HB 41 |
| HB 39 SCS Agency Summary - All Funds.pdf |
SFIN 4/26/2023 1:30:00 PM |
HB 39 |
| HB 39 SCS Agency Summary - UGF.pdf |
SFIN 4/26/2023 1:30:00 PM |
HB 39 |
| HB 39 - HB 41 Fiscal Picture with Second Senate CS HB 39 and SB 41 updated.pdf |
SFIN 4/26/2023 1:30:00 PM |
HB 39 HB 41 SB 41 |