03/08/2019 01:30 PM House FINANCE

HOUSE BILL NO. 53                                                                                                             
                                                                                                                                
     "An  Act making  supplemental  appropriations for  fire                                                                    
     suppression   activities   and   restoration   projects                                                                    
     relating  to earthquake  disaster relief;  capitalizing                                                                    
     funds; and providing for an effective date."                                                                               
                                                                                                                                
2:40:19 PM                                                                                                                    
                                                                                                                                
LACEY  SANDERS, BUDGET  DIRECTOR, OFFICE  OF MANAGEMENT  AND                                                                    
BUDGET, highlighted  that the administration  had introduced                                                                    
two  supplemental   bills  on  January  28   (the  statutory                                                                    
deadline). She indicated she would  first speak about HB 53.                                                                    
She  introduced a  PowerPoint presentation  titled "HB  53 -                                                                    
Disaster Relief  Supplemental Overview" dated March  8, 2019                                                                    
(copy on  file). The items in  the bill were related  to the                                                                    
2018 Cook  Inlet earthquake  and included  capitalization of                                                                    
the  Disaster Relief  Fund,  Federal Highway  Administration                                                                    
(FHWA) funding  within the Department of  Transportation and                                                                    
Public  Facilities (DOT),  and  state  facilities costs  not                                                                    
covered  by  insurance.   Additionally,  the  bill  included                                                                    
funding  for  FY  19 fire  suppression  activity  under  the                                                                    
Department of  Natural Resources  (DNR). The total  bill was                                                                    
$139  million,  comprised  of   $102  million  in  requested                                                                    
federal  receipt  authority  and $37.3  million  in  general                                                                    
funds  (matching  funds   and  direct  unrestricted  general                                                                    
funds).                                                                                                                         
                                                                                                                                
Ms. Sanders  advanced to a  bar chart  on slide 4  showing a                                                                    
historical summary  of disaster  supplemental appropriations                                                                    
from  FY 14  to  FY  19. She  reported  that disasters  were                                                                    
unpredictable,  and  the  funding needed  from  year-to-year                                                                    
varied  depending on  events and  the  Disaster Relief  Fund                                                                    
balance. The administration was  concerned about the current                                                                    
level of the  disaster fund. As of March 5,  the balance was                                                                    
currently an  unobligated $362,900,  which was  projected to                                                                    
be  fully  expended   by  April  1,  2019   (slide  5).  The                                                                    
Department   of  Military   and  Veterans   Affairs  (DMVA),                                                                    
Division  of  Homeland  Security  and  Emergency  Management                                                                    
managed   the  fund   and  was   diligently  analyzing   the                                                                    
outstanding  disasters to  make  funding  available for  the                                                                    
Cook  Inlet   earthquake  response.   The  urgency   of  the                                                                    
legislation was due to the low fund balance.                                                                                    
                                                                                                                                
2:43:44 PM                                                                                                                    
                                                                                                                                
Ms. Sanders looked at a high  level overview of items in the                                                                    
bill (slide 6).  The first item of $7.9 million  was for DNR                                                                    
fire suppression.  The amount that had  historically been in                                                                    
the   operating  was   low  and   not  sufficient;   it  was                                                                    
anticipated that approximately $7.9  million would be needed                                                                    
heading  into  the  fire  season. The  second  item  was  an                                                                    
appropriation to  DOT totaling  $65 million in  FHWA federal                                                                    
receipts  with  a match  requirement  of  $6.5 million.  The                                                                    
funding  would be  used  to  work on  roads  damaged by  the                                                                    
earthquake;  it   was  a  multi-year  appropriation   -  the                                                                    
supplemental request  would allow  the work to  occur sooner                                                                    
and would  enable the state  to continue to  collect federal                                                                    
receipts for the work into FY 20.                                                                                               
                                                                                                                                
Ms. Sanders reviewed  a $1 million UGF  appropriation to DOT                                                                    
for  costs not  covered  by insurance  for state  facilities                                                                    
(item  3,  slide  6).  She   elaborated  that  DOT  and  the                                                                    
Department of  Administration (DOA) were working  with DOA's                                                                    
Division  of Risk  Management to  address  all the  facility                                                                    
damages.  There were  some things  deemed  not coverable  by                                                                    
insurance.  For example,  part of  the funding  would go  to                                                                    
repair  damage  to  a  correctional  facility  parking  lot.                                                                    
Additionally,    administrative   costs    associated   with                                                                    
buildings and broken items in  buildings were other examples                                                                    
of items covered by the appropriation.                                                                                          
                                                                                                                                
Ms.   Sanders   addressed  the   last   item   was  a   fund                                                                    
capitalization of the Disaster  Relief Fund for $21,901,700.                                                                    
She detailed the fund balance  was anticipated to reach zero                                                                    
in the  near future. The  department was asking  for federal                                                                    
authority  related  to  what was  allowed  by  the  disaster                                                                    
declaration. The  administration recognized  the redundancy;                                                                    
the operating  bill allowed any receipts  received on behalf                                                                    
of  a disaster  to  be deposited  into  the Disaster  Relief                                                                    
Fund, but HB 53 was  an opportunity to clarify the necessary                                                                    
amount.  She  noted that  the  numbers  were estimates.  The                                                                    
$21.9  million  was  based  on an  estimate  that  had  been                                                                    
revised after  the signing of the  disaster declaration. The                                                                    
amount  specific  to  the Cook  Inlet  earthquake  had  been                                                                    
reduced to  $12 million.  The administration  was requesting                                                                    
to continue  the $21  million appropriation  in anticipation                                                                    
of any  potential spring disasters.  The goal was  to ensure                                                                    
there  was  money  available  in the  fund  to  allow  quick                                                                    
response time to any disasters in the near future.                                                                              
                                                                                                                                
2:48:03 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  asked what  the fund  balance had  been the                                                                    
previous April.                                                                                                                 
                                                                                                                                
Ms.  Sanders did  not  have the  balance  from the  previous                                                                    
year, but  offered to provide the  information. She detailed                                                                    
there  had  been  several  appropriations  to  the  Disaster                                                                    
Relief  Fund to  try  to increase  the  balance because  the                                                                    
amount  appropriated over  several years  was very  low. She                                                                    
believed  $10 million  had  been deposited  in  2018 and  $2                                                                    
million had been deposited in  2019. She noted the funds had                                                                    
all been utilized.                                                                                                              
                                                                                                                                
Vice-Chair  Johnston requested  a  10-year  lookback of  the                                                                    
fund balance.                                                                                                                   
                                                                                                                                
Ms. Sanders  replied that DMVA  had the information  and OMB                                                                    
would provide it.                                                                                                               
                                                                                                                                
Representative  Josephson  asked  whether  school  districts                                                                    
were eligible for any of the funds.                                                                                             
                                                                                                                                
Ms. Sanders deferred the question to DMVA.                                                                                      
                                                                                                                                
2:49:42 PM                                                                                                                    
                                                                                                                                
BRYAN   FISHER,   STATE   COORDINATING   OFFICER,   HOMELAND                                                                    
SECURITY,  DEPARTMENT  OF  MILITARY  AND  VETERANS  AFFAIRS,                                                                    
answered  that  school  districts,  local  governments,  and                                                                    
certain  nonprofits were  all eligible  for disaster  relief                                                                    
funding.                                                                                                                        
                                                                                                                                
Representative   Carpenter   referenced   insurance   claims                                                                    
related to the earthquake that  had been denied. He wondered                                                                    
about the state's process for  scrutinizing whether a denial                                                                    
to pay was legitimate.  He remarked that insurance companies                                                                    
liked to not pay when possible.                                                                                                 
                                                                                                                                
Ms.  Sanders  replied  that  the   items  addressed  by  the                                                                    
proposed funding  increment were not eligible  for insurance                                                                    
coverage. She  clarified that it  was not a  situation where                                                                    
claims had been  denied. She reported that  the DOA Division                                                                    
of Risk Management  worked on insurance claims  and may have                                                                    
additional information to provide.                                                                                              
                                                                                                                                
Ms. Sanders moved to slide  7 and addressed two supplemental                                                                    
amendments  that had  been submitted  to the  legislature on                                                                    
March  6.  She  relayed  that OMB  was  still  working  with                                                                    
agencies  to  work  through  the  needs  and  on  the  costs                                                                    
identified  related   to  the   Cook  Inlet   disaster.  She                                                                    
elaborated   that  DOT   was  requesting   $1  million   for                                                                    
administrative    activities    associated   with    surface                                                                    
transportation; the  costs were not  covered by FHWA  or the                                                                    
Federal  Emergency  Management  Agency. For  example,  funds                                                                    
would go towards costs  associated with administrative staff                                                                    
working to support  any engineers or surveyors  that may not                                                                    
be  covered by  FHWA.  The  second item  was  $1 million  in                                                                    
federal funding  for the Department  of Labor  and Workforce                                                                    
Development related to  the Disaster Unemployment Assistance                                                                    
Program.   She   elaborated   that   individuals   who   had                                                                    
interruption to  work could apply for  individual assistance                                                                    
or   self-employment  funding.   The  department   had  some                                                                    
existing authority  but needed the additional  $1 million to                                                                    
ensure the funding was provided to eligible individuals.                                                                        
                                                                                                                                
Co-Chair  Foster remarked  that the  committee would  try to                                                                    
get the bill passed quickly.                                                                                                    
                                                                                                                                
HB  53  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.