Legislature(2025 - 2026)ADAMS 519
03/04/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Adjourn | |
| Start | |
| Overview: Fy26 Department Budget by the Department of Commerce, Community and Economic Development |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 53 | TELECONFERENCED | |
| += | HB 55 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
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."
HOUSE BILL NO. 55
"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."
^OVERVIEW: FY26 DEPARTMENT BUDGET BY THE DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT
1:34:56 PM
JULIE SANDE, COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, introduced herself and
the PowerPoint presentation "Department Overview FY2026
Budget" dated March 4, 2025 (copy on file). She continued
through slide 2 and relayed that the Department of
Commerce, Community and Economic Development's (DCCED)
mission was to promote strong communities, maintain a
healthy economy, and protect consumers throughout the state
of Alaska. She explained that the department accomplished
its work through its seven core divisions and eight
corporate agencies. She continued to slide 3 which
illustrated the department's structure. She pointed out
that the gray boxes on the slide represented the following
divisions: the Administrative Services Division (ASD), the
Alaska Broadband Office (ABO), the Division of Banking and
Securities (DBS), the Division of Community and Regional
Affairs (DCRA), Corporations, Business, and Professional
Licensing (CBPL), the Division of Investments, and the
Division of Insurance. She added that the department also
housed corporate agencies, including the Alaska Seafood
Marketing Institute (ASMI), the Alcohol and Marijuana
Control Office (AMCO), the Alaska Oil and Gas Conservation
Commission (AOGCC), the Regulatory Commission of Alaska
(RCA), the Alaska Energy Authority (AEA), the Alaska
Industrial Development and Export Authority (AIDEA), the
Alaska Gasline Development Corporation (AGDC), and the
Alaska Railroad Corporation (ARC). She clarified that the
ARC was categorized differently because it fell outside of
the Executive Budget Act.
Representative Johnson remarked that there had been
considerable discussion about the gasline and funding that
might be directed through AGDC or another entity, such as
AIDEA. She asked if the department could explain its role
in the process and if it had the resources necessary to
manage the cash flow. She suggested that the department
address the topic throughout the presentation.
1:37:56 PM
HANNAH LAGER, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, proceeded
to slide 4, which provided a broad overview of the
department's budget. She stated that the total operating
budget request for FY 26 was $240 million. She explained
that only a small portion of the total came from the
general fund, which was represented by the blue segment on
the pie chart. The majority of the department's funding
came from receipts of various types, including assessments,
fees, regulatory cost charges, and investment earnings. She
stated that the department was primarily self-funded and
that more information would be provided later in the
presentation.
Representative Galvin asked for clarification on the data
presented in the pie chart. She observed a notable
discrepancy between the amount of federal funds projected
and the amount actually received. For example, there was a
significant difference between the management plan and
actuals and she asked for an explanation of the
discrepancy.
Ms. Lager responded that in FY 22, the department received
a significant influx of federal COVID-19 pandemic-related
funds for a wide range of projects. She stated that one
appropriation of just over $180 million had been placed in
the operating budget as a multiyear appropriation. She
explained that the appropriation had been added in the
first year, reversed out in the second year, and then
updated annually based on what could be spent. She
clarified that not all of the funding was received. The
large increase in the federal portion of the FY 24 budget
was not received in the budget, but the increase simply
reflected the technical authority to receive the funds.
Representative Galvin asked for confirmation that since the
discrepancy was due to pandemic-related funds, the
projections for FY 25 versus the actuals would likely be
better aligned.
Ms. Lager responded in the affirmative. The department had
returned to its usual level of federal funding but there
was always some variability due to the nature of receivable
grants.
Representative Galvin asked if it was the department's
intention for the funding proportions in the governor's
proposed FY 26 budget to closely track with those of FY 24.
She asked if her interpretation was accurate.
Ms. Lager responded that there was very little change in
the department's federal budget between FY 25 and FY 26.
1:41:28 PM
Representative Allard asked what the term "DGF" stood for
on slide 4. She asked for some examples of DGF.
Ms. Lager responded that DGF stood for designated general
funds. She explained that the funds primarily included
licensing fee receipts. The regulatory cost charges from
AOGCC and RCA were categorized as DGF as well as insurance
licensing receipts. She indicated that the "other" funds
category consisted of a mix of sources such as AEA
receipts, which reflected investment earnings, as well as
receipts from the AIDEA. She stated that the department
also had a significant amount of duplicated authority. For
example, ASD was funded by interagency authority which was
considered duplicated authority because the other divisions
paid ASD for its services.
Ms. Lager proceeded to slide 5. She emphasized that DCCED
was the smallest consumer of general funds among all state
departments. She continued to slide 6 and noted that while
the department had the smallest general fund draw, it was a
complex entity. The department had 30 different fund
sources in its operating budget, which was the most of any
department. She explained that the budget included many
specialized funding sources and that the department
operated 17 different divisions or result delivery units
(RDU). She indicated that the presentation would address a
wide range of functions because the agency itself carried a
wide range of responsibilities.
Representative Stapp stated that it would be helpful if the
department could provide a breakdown of the fund source
codes and the corresponding RDUs. He noted that while it
appeared that DGF fund sources were increasing, it seemed
that other receipts were decreasing, such as ASMI's
receipts from the Fishermen's Fund. He explained that he
had no way of determining whether the funds were increasing
or decreasing. He asked which of the department's 30 fund
source codes were showing the largest increases and which
were showing the largest decreases.
Ms. Lager responded that she could provide some general
information but might need to follow up with more details.
She explained that the presentation primarily showed what
the department was requesting authority to expend from each
funding source, rather than the actual amounts collected.
In many cases, the department collected significantly more
than it expended. The largest area of growth in revenue
sources was the insurance premium tax, which the department
collected but did not spend in its budget.
Ms. Lager explained that some of the funds were passed
through the Department of Labor and Workforce Development
(DLWD) to fund workers' compensation programs. She
reiterated that DCCED did not expend the funds itself and
that the funds were deposited into the general fund. She
noted that the department had observed a decline in seafood
marketing assessments collected by ASMI. She clarified
again that the presentation focused on expenditure
authority rather than revenue collections. She offered to
follow up with a report detailing actuals for each funding
source.
Representative Stapp asked what occurred when the
department collected more in receipt authority than it was
authorized to expend.
Ms. Lager responded that a future slide in the presentation
would address the specific issue. Depending on the program,
most of the excess revenue went to the general fund. She
added that the department was permitted to carry funds
forward to the following year in some components. For
example, the intent with professional licensing receipts
was to retain the funds within the same program that
collected the fees so that the revenue would be available
in the following year.
1:46:23 PM
Representative Stapp asked if any RDUs that had the ability
to carry forward DGF were also requesting UGF in the
current fiscal year.
Ms. Lager responded that there were a few areas where the
department had requested general funds. For example, ASMI
had the authority to carry forward revenues, but the
revenues had declined which had prompted the department to
request general funds to backfill the marketing efforts.
She added that another example was AOGCC, which primarily
operated using regulatory cost charges. However, the
department had requested general funds for carbon-related
expenditures to ensure that the work continued while
awaiting the development of revenue sources specific to the
carbon program.
Representative Stapp asked if the RDUs that were requesting
general funds already had more than the requested amount
available in the carry-forward authority for the next
fiscal year. He asked why a unit would request UGF if it
already had sufficient funding.
Ms. Lager responded that the use of revenue depended on the
statutory or regulatory authority under which it was
collected. She explained that funds had to be used for
their designated purpose. For example, the revenue
authority for AOGCC applied to its traditional drilling and
monitoring work, but not to the carbon program. She stated
that the commission was still developing regulations for
the carbon program and that the revenue had to remain tied
to the work for which it was collected.
Co-Chair Josephson asked whether the Division of Motor
Vehicles (DMV) was an exception to the rule.
Ms. Lager responded that she could not provide any
information on the DMV's revenue because it was not under
DCCED.
Ms. Lager moved to slide 7 which detailed major sources of
department revenue generation. She noted that in FY 24, the
department requested authority to spend approximately $16
million in FY 26. However, the department had deposited
over $118 million in FY 24 into the general fund. She
stated that in addition to funding its own operations, the
department had consistently returned a significant amount
to the treasury each year.
Commissioner Sande continued to slide 9 which detailed the
Commissioner's Office and its marketing initiative. She
explained that the Commissioner's Office was involved in
legislative relations, boards and commissions, the Office
of International Trade, economic development, special
projects, and the Marketing Alaska initiative. She
announced that the department was excited that Deputy
Commissioner Anna Latham had recently joined the leadership
team. She explained that the marketing initiative was
brought about as a result of presentations that she had
given to the legislature in the past. She relayed that when
she first began her work as commissioner, she immediately
recognized the value of the work conducted by ASMI,
particularly in global promotion of the seafood industry.
She noted that the Alaska Travel Industry Association
(ATIA) had also been highly effective in promoting tourism.
When she first started working as commissioner, she had
wondered if there were any entities that were marketing
Alaska to investors and promoting other industries beyond
seafood and tourism.
Commissioner Sande stated that the department aimed to
develop a long-term vision for Alaska's business
environment that would appeal to both current investors and
future generations of Alaskans. She explained that the
department had recently released a request for proposals
and successfully offered a marketing contract. The selected
contractor was the Black Rock Group, working in partnership
with Poolhouse and Six7 on the marketing initiative. The
department had hired a project manager, executed the
contract, and was pleased to have the contractor's
expertise supporting the marketing initiative. She reported
that the department was working toward the first
deliverable milestone, which was the launch of a website.
She explained that the department had identified the need
for investors outside Alaska to easily navigate the process
of identifying the appropriate economic development
contacts and obtaining relevant information. She stated
that DCRA had compiled extensive data, including story maps
and other community data, but the data was not readily
accessible to users both inside and outside the state. She
confirmed that the department was actively working to
address the issue and stated that the soft launch of the
website was scheduled for the end of the month.
Commissioner Sande added that one of the department's early
partners in the initiative was the Alaska Chamber, which
had assisted in data collection to establish a baseline for
measuring progress. She stated that the department was
working with stakeholders across various industries and
businesses in Alaska to gather feedback on how best to
represent the state. She relayed that the department would
participate in the SelectUSA Investment Summit in May of
2025, which was the highest-visibility event for foreign
direct investment in the U.S. and would take place in
Washington, D.C. She expressed enthusiasm about the
opportunity to represent Alaska at the event.
1:52:29 PM
Representative Hannan asked how much the department was
spending on the external contracts. She asked if the three
aforementioned contractors [Black Rock Group, Poolhouse,
and Six7] constituted the full scope of the department's
external contracts.
Commissioner Sande responded that the department had
received a $5 million capital appropriation for marketing
two years earlier. She explained that the funds originated
from excess business licensing receipts. The department had
allocated approximately $500,000 to a contract with the
Alaska Chamber for in-state marketing and $3 million to
external contractors for nationwide marketing.
Representative Hannan asked if the department had
established specific deliverables and performance measures
when issuing the requests for proposals. She asked for an
example of how the department would determine whether the
$3 million allocated for marketing had achieved its
intended goals.
Commissioner Sande responded that the first measurable
milestone was the creation of a website that was easily
navigable. She stated that the department had also relied
on the Alaska Chamber to survey Alaskan businesses using
metrics such as job creation and new business formation as
key indicators of success. She understood the importance of
the department being able to demonstrate measurable
outcomes. She did not believe in creating additional
government programs without justification and thought that
a program should not be continued if the department could
not demonstrate that the program was successful. She stated
that the department viewed the marketing effort as an
opportunity to produce long-term value for future
generations of Alaskans. She relayed that her children had
received targeted advertising related to the Willow
Project. Her children had reached out to her after seeing
content online that questioned the project. She stressed
that it was important to be able to respond quickly and
effectively to outside interests that were spreading
disinformation about Alaska.
Representative Hannan asked for clarification if the
website referenced earlier was part of the department's
official website or a separate site dedicated to investment
promotion.
Commissioner Sande responded that the website was a
separate site. She explained that it would have some level
of intersection with the official State of Alaska website
but she did not know the technical details of the
integration.
Representative Hannan asked for the name or web address of
the website. She had searched the names of the three
aforementioned firms but had not found any reference to
Alaska on their websites.
Commissioner Sande stated that the website would not launch
until the end of March of 2025. She explained that nothing
would be online yet because the department had not yet
launched the site. The site was being modeled after similar
easy-to-navigate economic development websites for other
states that offered a significant amount of useful
information and access to external resources. She clarified
that the department did not intend to duplicate work but
instead aimed to create a separate site that was easily
navigable for interested parties seeking information about
Alaska. The department was reviewing which information was
most needed by users and how best to present it. She stated
that North Carolina had initially received a $1 million
grant and it had demonstrated measurable growth in economic
value attributed to the content provided on its website.
The department was using North Carolina as one of its
models for the Alaska website.
1:57:21 PM
Ms. Lager continued on slide 11 and explained that ASD
managed the department's administrative operations and
systems. The division's budget was primarily funded through
interagency receipts, which were collected from other
divisions in the department in exchange for services. She
stated that each division received a different mix of
services from ASD. She explained that the largest budget
change for FY 26 was the restructuring of the department's
facilities rent component. Previously, the department had
one component, but it would now be separated into two: one
for state-owned buildings and one for rented facilities.
She noted that $150,000 in interagency receipt authority
had been added to align with projected expenditures.
Ms. Lager proceeded to slide 12 and expressed that she was
excited about ABO's ongoing work. She reported that the
office was preparing to issue grants and advance projects
across the state. Grant advertisements were currently open
and would remain open through April of 2025. The office
expected to issue grants in FY 26, with deployment
scheduled from 2026 to 2030. She clarified that the grants
would be issued using capital authority that had already
been appropriated. She indicated that ABO's FY 26 budget
included two changes. The first change was the continuation
of funding to maintain the office's current staffing and
operations as the office had previously been funded through
one-time items. The second change was a small amount of
general funds to support core services billing while
federal funds continued to increase. She clarified that the
federal funds were collected based on activity and required
additional authority to ensure the office could pay its
outstanding bills.
Co-Chair Josephson asked whether the federal funds had
flowed in a typical manner since the presidential
inauguration in January of 2025.
Ms. Lager responded that the department's Broadband Equity,
Access, and Deployment (BEAD) grant was a billion-dollar
federal grant program and had likely experienced only
minimal impacts from recent federal changes. She
anticipated that only slight language adjustments and minor
programmatic updates would be needed. She did not expect
significant impacts to the large grant issuances. She added
that the component also administered the Digital Equity
Award and that there might be changes to the program, but
it was a smaller grant program with funding of
approximately $5 million.
Representative Stapp understood that ABO had been operating
for at least two years. He requested more information on
the reported $3.1 million in UGF that was spent on the
office. He asked how many BEAD grants had been deployed
beyond what might have occurred naturally through the bid
process.
Ms. Lager responded that ABO was primarily funded by
approximately $3 million in federal funds appropriated
through the capital budget and collected as capital
improvement project (CIP) receipts. She clarified that the
department was requesting $50,000 in general funds and that
the bulk of the office's funding came from federal capital
receipts. She stated that the grant programs were currently
being advertised and application periods would close in
April. She explained that no BEAD grants had been awarded
yet because the federal grant requirements were specific
and had taken time to implement.
Representative Stapp reiterated that ABO had existed for
approximately two years and asked for confirmation that no
BEAD grants had been deployed during that time.
Ms. Lager confirmed that no BEAD grants had been deployed
yet. She explained that the department was currently
collecting applications for the program.
Representative Galvin asked for more information about the
request for $50,000 in UGF. She acknowledged that the
department had access to other funding but some costs were
not permissible under the grant specifications.
Ms. Lager responded that every state agency received a
number of baseline charges, including billing from the
Office of Information Technology, billing from Risk
Management, and billing from ASD and the Commissioner's
Office sections. She explained that the department had not
historically managed significant levels of federal funding
and did not have a federally approved cost allocation plan.
For example, when the department administered a large
federal program through the Alaska Comprehensive Health
Insurance Association (ACHIA), it intentionally avoided
collecting administrative funds in order to reduce costs in
the health care market.
Ms. Lager explained that due to the absence of a federally
approved indirect cost plan, ABO had been limited to
applying the de minimis rate of 10 percent. She reported
that the rate had not been sufficient to fully cover the
office's core services and operational costs. The office
itself had five staff positions but it also funded
additional personnel in other agencies. She stated that
grant administrators were located in other grant
administration offices and funded through ABO. Similarly,
ABO funded permitting positions in the Department of
Natural Resources (DNR). She explained that as the
expenditures increased, the department expected to collect
more under the de minimis rate or under a future federally
approved cost plan. However, the department did not expect
the collections to fully cover all costs for FY 26 and FY
27.
2:03:11 PM
Representative Galvin asked whether it would be more
appropriate for planning purposes to fund the $50,000 as a
three-year one-time increment instead of using UGF.
Ms. Lager responded that the department had requested the
funds as a two-year temporary increment of $50,000 per year
for FY 26 and FY 27. She stated that the structure was
currently reflected in the budget.
Representative Allard noted that the department had stated
it was currently accepting applications for broadband
funding and asked why it had taken two years to begin
collecting applications.
Ms. Lager responded that she would need to follow up with
detailed information. She explained that ABO was a new
office in the state and the BEAD program was also new at
the federal level. She reported that the department had
spent time developing the required planning documents,
collecting mapping data, and establishing a framework to
appropriately evaluate incoming grant applications. She
stated that she would be happy to provide a summary of the
office's activities over the past two years.
Representative Allard asked how many vacancies the
department had.
Ms. Lager responded that she would follow up. She noted
that the department had recently submitted vacancy
information to the Office of Management and Budget (OMB)
and she would provide it to the committee.
Commissioner Sande added that a significant portion of the
past two years had been spent coordinating with
stakeholders and addressing the mapping component of the
BEAD program. She emphasized that it was a federal program
and that all states had been operating under the same
schedule. She stated that one of Alaska's applications had
been among the first received and that the department had
worked responsively to present Alaska's plan and comply
with federal requirements.
Commissioner Sande added that the mapping requirement had
been particularly complex for Alaska because the department
had needed to demonstrate where the unserved and
underserved locations were throughout the state. Once the
department received federal data showing which areas had
been designated as unserved or underserved, Alaska
communities were given the opportunity to submit rebuttals.
The rebuttals allowed communities to challenge the accuracy
of the federal maps by indicating locations that appeared
served but were not receiving service. She explained that
the maps misrepresented information because the maps had
been created by individuals who were not from Alaska. She
emphasized that ABO had thoroughly addressed the issue and
it had been particularly important to ensure the maps were
accurate for rural Alaska.
Commissioner Sande continued that the department had spent
a significant amount of time and effort on ensuring that
communities in rural Alaska were accurately represented
during the mapping process. For example, a river in Alaska
would not necessarily present the same conditions as a
river in the rest of the U.S. due to challenges such as
weather and barge transportation. She stated that the
department had approached the process with caution and
thoroughness.
2:06:49 PM
Representative Bynum asked whether the BEAD grants included
any requirement for communities to demonstrate the ability
to maintain the infrastructure.
Commissioner Sande responded that she would need to consult
with her colleagues to provide the information.
Commissioner Sande proceeded to slide 13 and explained that
DBS helped regulate the state's financial industries and
served a critical role in supporting Alaska's economic
framework. There were no significant budget changes for DBS
for FY 26; however, DBS had contributed $18 million to the
general fund in the prior year and it managed several other
revenue-generating sources.
Commissioner Sande continued to slide 14, which addressed
DCRA. She stated that the division played a critical role
in the department's work and administered grants under a
wide variety of programs. She noted that the division
housed the grant administrators for ABO and currently
managed a portfolio of approximately $1.2 billion. The
portfolio would increase to approximately $2.2 billion once
broadband was included. She explained that the division's
operating budget included several recurring grants that
were embedded in the base budget. The grants did not appear
in the capital budget as legislative grants and would not
appear as transactions. She relayed that two of the grants
included on the slide had associated budget transactions
and had been marked with asterisks to indicate that the
grants were being adjusted for FY 26.
Representative Allard asked to return to slide 13. She
requested specific examples of what was accomplished by
each grant listed on the slide.
Commissioner Sande responded that the Alaska Legal Services
Corporation (ALSC) provided low-cost legal services to
individuals with limited means. She stated that the Alaska
Marine Safety Education Association (AMSEA) provided
maritime education to professional fishers and their
families. She explained that the Inter-Island Ferry
Authority (IIFA) supported transportation services between
Ketchikan and Prince of Wales Island. She noted that Life
Alaska Donor Services (LADS) conducted donor awareness
activities related to organ donation. She explained that
the Kuskokwim Ice Road (KIR) grant funded the maintenance
and operation of the ice road in the Kuskokwim region. She
stated that the Volunteers of America Alaska (VAA) grant
supported an Anchorage-based program, but she would need to
follow up on the specific focus of the grant.
Representative Allard stated that she had reviewed the list
and understood the general purpose of each grant but wanted
more detailed information about each grant's specific
activities. She requested detailed information about the
use of funds, including who received payments and the
rationale for funding at the current levels. She
acknowledged that collecting the information would require
additional time, but she was interested in a more detailed
presentation.
Co-Chair Josephson interjected to note that he had some
familiarity with the VAA grant. He noted that the
organization was located in Representative Allard's
neighborhood.
Representative Allard agreed and stated that she had
visited the organization. She shared that she had nearly
supported removing the funding for the grant from the
budget the previous year, but had changed her opinion after
visiting the organization. She was grateful that the
funding had not been removed.
Co-Chair Josephson asked if Representative Allard still
wanted the department to provide detailed information about
VAA.
Representative Allard relayed that she was trying to better
understand VAA's mission. She would be happy to discuss the
matter with the department offline.
Ms. Lager responded that she would follow up with
Representative Allard offline with additional information.
She explained that the VAA grant had been added the
previous year as a temporary increment and was included in
both FY 25 and FY 26 as a legislative addition.
2:10:54 PM
Representative Jimmie asked whether Napakiak was receiving
funding through the grant for KIR.
Ms. Lager responded in the affirmative.
Representative Jimmie asked if it would make more sense for
the funding to be included annually in the Department of
Transportation and Public Facilities' (DOT) budget rather
than provided through a grant.
Ms. Lager responded that she could not speak to how DOT
would administer the funding. She explained that from
DCCED's perspective, the funds were granted directly to the
village so that the village could administer and manage the
project itself. She reiterated that she did not know if DOT
used the same process.
Representative Johnson noted that there was a QR code
displayed on slide 14 labeled "View the Grants Dashboard."
She stated that she did not have her phone available and
asked for an explanation of where the QR code would direct
users and what information would be available.
Commissioner Sande responded that she thought that all
Alaskans should be able to access the dashboard and
immediately view the number of live grants. She remarked
that she was a visual person and she liked the idea that
any Alaskan could scan the code and easily see the
communities in which the grants were located and view a map
of each village or community in Alaska. She stated that the
dashboard directed users to the department's online
community database, which she believed was an underutilized
resource. She explained that the department was working to
consolidate the data it collected and distribute the
information more broadly. She noted that the dashboard had
helped inspire aspects of the department's broader
marketing initiative and encouraged committee members to
review it.
Ms. Lager added that the dashboard also included
information about all active grants administered by the
department. The dashboard allowed users to see both the
total amount of each grant and how much money had already
been expended. She explained that the data was updated
daily and was a valuable resource.
Representative Johnson commented that the dashboard
appeared to include over 740 grants.
Ms. Lager proceeded to slide 15 and presented a snapshot of
DCRA's budget. She stated that the budget changes for FY 26
included two technical adjustments related to base grants
for ALSC and AMSEA. She explained that one of the grants
was funded based on a percentage formula, which required a
small annual adjustment. The department was also making
corrections to the funding process for AMSEA to ensure
revenue availability and predictability for grantees. The
division's budget also included a fiscal note that had not
been incorporated into the FY 25 budget due to timing
issues near the end of the legislative session. She
explained that several pieces of legislation were moving
quickly at the end of the previous session and a few fiscal
notes were inadvertently excluded.
Ms. Lager relayed that the final item on the slide was not
within the department's budget but was included under
statewide items. She noted that the item was still relevant
because DCRA administered the funding. The FY 26 budget
included $30 million to capitalize the Community Assistance
Fund (CAF), which would support distributions to
communities in FY 27.
2:14:40 PM
Ms. Lager proceeded to slide 16 and explained that CBPL
managed the administration of 44 professional licensing
programs, 21 regulatory boards, all business licensing,
nicotine endorsements, and corporations' registration. She
noted that CBPL was likely the division with which the
highest number of Alaskans interacted and it served a large
number of residents. She reported that professional
licensing activity had increased by 55 percent over the
past 10 years and had caused CBPL to grow dramatically.
Representative Galvin asked for more information on the
events leading up to the significant increase in business
and professional licenses between 2020 and 2022. She asked
if the spike had been related to the COVID-19 pandemic. She
noted that there had been subsequent tapering off of growth
in more recent years.
Ms. Lager responded that the largest change was in the
business licensing program. She explained that during the
pandemic, licensing fees had been suspended, which allowed
individuals to obtain business licenses at no cost. She
noted that licenses could be issued for either one or two
years, and many individuals had chosen the two-year option.
The department did not have substantial data on why
licenses were not being renewed, but it expected that a
number of the licenses obtained for free during the
pandemic had not been renewed, which contributed to the
downward trend. She added that a similar pattern was seen
on the corporation side, where registration fees had also
been suspended temporarily. She noted that professional
licensing had continued to grow, although there had been a
small decline in FY 24. Some of the change was likely due
to professionals moving in and out of the state during the
pandemic and needing to be licensed, such as traveling
nurses. She stated that the decrease in 2024 did not appear
to be significant and overall activity remained strong.
Representative Galvin asked for an overview of any
particular industry that had shown notable growth or
decline in recent years.
Commissioner Sande responded that there had been continued
growth in nurse licensing. She indicated that the
department had placed significant focus on the nurse
licensure compact, which she viewed as an important step
forward. When she was initially hired, one of the first
issues the governor identified to her was the need to
reduce licensing wait times. She had been well aware of the
challenges as a business owner and health care provider
herself. She had personally experienced the impact of
staffing shortages and the community at large was well
acquainted with the challenges of the timeline. She
stressed that the situation had improved and the department
had made substantial progress since she was first hired.
Commissioner Sande reported that when she began at the
department, wait times for professional licenses had
reached 13 to 14 weeks and the current average was just
over four weeks. The system was not perfect but she was
proud of the team's improvements. She noted that the
department remained honest about its limits. She viewed the
nurse licensure compact as a strategic opportunity that
would help improve wait times. She stated that the
department estimated approximately 30 percent of its
licensing staff time was spent processing nurse licenses.
If the state were to join the compact, the time could be
redirected to other sectors. For example, contractor
licensing was an area in which timeliness was especially
critical, particularly during Alaska's short construction
season. She emphasized that faster licensing helped
businesses and strengthened the economy.
2:19:31 PM
Representative Allard remarked that many military spouses
lived in Alaska and asked why it seemed so difficult to
adopt the military spouses compact. She acknowledged that
it was a policy decision for legislators but asked whether
the department had been working to understand the barriers.
She asked what the department believed was preventing the
compact from being adopted.
Commissioner Sande responded that she would defer to Ms.
Lager to provide more specific information. She had
participated in related discussions but could not currently
recall the details.
Ms. Lager responded that the department would be happy to
follow up with more information.
Representative Allard stated that the committee had
previously discussed the number of vacancies within the
department and the presenters had indicated they would need
to follow up with the information. She asked why it
continued to be difficult for commissioners and deputy
commissioners to provide the number of vacant positions
when appearing before the committee. She asserted that if
she herself were in the role, she would ensure she had the
number readily available. She was concerned that the
repeated delays in providing vacancy data might indicate
that the department would not follow up with the
information at all and that the vacancy dollars were being
used in other areas of the department. She asked if the
department had anyone available online to read the vacancy
number into the record.
Ms. Lager responded that she did not have any other
colleagues online who could provide the numbers. She
offered reassurance that she would follow up with the
information. She noted that the vacancy numbers changed
every day.
Co-Chair Josephson confirmed that the committee would
discuss the information if it was made available prior to
the meeting's adjournment.
Representative Allard stated that some departments had
informed her they had 56 vacancies, including positions
that had remained vacant for the past 12 months. She
thought DCCED likely had more than 56 vacancies and she
wanted to know the exact number of vacancies, how long the
positions were unfilled, and what was being done with the
associated funds. She emphasized that she wanted budget
cuts. She was concerned that the funds might be used for
other purposes and stated that the public deserved
transparency.
Co-Chair Josephson asked Ms. Lager how long she had been
with the State of Alaska.
Ms. Lager responded that she had worked for the state for
18 years and had served within DCCED for just over 10
years.
Co-Chair Josephson asked whether it was correct that unused
dollars typically lapsed back to the general fund.
Ms. Lager responded that it depended on the funding source.
She stressed that the department's personal services line
was never fully funded. The budget included a built-in
vacancy factor, which assumed that some level of staff
turnover would occur due to life circumstances and hiring
timelines. As a result, the department did not fully fund
personal services annually.
Co-Chair Josephson asked if dollars typically lapsed into
the general fund if there were an unusually high number of
vacancies.
Ms. Lager confirmed that any unspent general funds would
return to the general fund.
2:23:20 PM
Commissioner Sande added that her team worked very hard and
explained that the scope of the department made it
difficult to always have immediate access to specific data.
The department was exceptionally broad and its wide-ranging
responsibilities meant she often had shallow depth of
knowledge in many areas. She credited her staff for being
as prepared as possible. She offered reassurance that the
department would follow up with the requested information,
but she emphasized that the question was complex because
vacancy rates could fluctuate based on budgetary changes
and the addition of new positions.
Commissioner Sande stated that when she began in her role
as commissioner, the department was in a "death spiral" in
the aftermath of the pandemic. Some divisions had
experienced a 60 percent increase in workload over the
course of a ten-year period without a corresponding
increase in staffing. The increase in workload had led to
staff burnout and low morale, and employees left for other
opportunities. She reported that the department had
stabilized staffing and received legislative support to add
new positions, but the addition of new positions impacted
vacancy statistics depending on when data were collected.
She explained that the vacancies had decreased, but the
addition of new positions made it appear that there was an
increase in vacancies.
Commissioner Sande emphasized that interpreting vacancy
data without context could lead to misleading conclusions.
She explained that the department's core divisions operated
differently from corporate agencies. Vacancies within the
corporations' side were sometimes intentionally held open,
which could skew totals when all divisions were grouped
together. She stressed that the vacancy rate for the core
divisions would be significantly different than that of
corporate agencies. She stated that the department would
provide more detailed information in the follow up.
Representative Allard responded that the lapsing of funds
was not the core issue. She stated that her concern was why
the state continued to "pro-fund" positions if it did not
fully understand how vacancy-related funds were being used.
She acknowledged the department's hard work but remained
unconvinced that the current funding structure was
justified. She emphasized that the public deserved to know
how much carryover funding was associated with vacant
positions and exactly where the money was being redirected.
Co-Chair Josephson asked what Representative Allard meant
by "pro-fund."
Representative Allard responded that she meant funding
forward. She questioned why future funding should be
allocated without greater clarity on vacancy data.
2:27:20 PM
Ms. Lager moved to slide 17 and stated that the department
was proposing two significant changes within CBPL for FY
26. She explained that CBPL had a large number of licensing
programs and was a major consumer of regulations review
services from DOL. The rate changed going into 2025 and the
department was adding licensing receipt authority to cover
the costs in 2026.
Representative Johnson stated that she had watched many
presentations from the department over the years and had
always been impressed by CBPL's level of expertise and
employee retention. She remarked that CBPL managed
significant financial responsibilities and demonstrated a
strong understanding of its operations despite its small
size. She noted that Director Sylvan Robb often appeared
before the committee and she expressed her appreciation for
the division's professionalism and institutional knowledge.
Ms. Lager thanked Representative Johnson and continued on
slide 17. She stated that the second item on the slide
reflected a fiscal note that had not been included in the
FY 25 budget due to timing issues at the end of the prior
legislative session. She explained that the item pertained
to funding for professional counselors.
Ms. Lager moved to slide 18 and provided an overview of the
Division of Insurance. She stated that the division was
responsible for regulating the insurance market and
identifying ways to reduce costs to consumers. She noted
that the division was a major contributor to the general
fund.
Representative Johnson remarked that she could not refrain
from recognizing Director Lori Wing-Heier when she saw her
photo on slide 18. She expressed appreciation for Director
Wing-Heier's expertise and thanked her for her service.
Commissioner Sande appreciated the comments. She stated
that Director Wing-Heier had been extremely busy but
remained highly effective in her role. She emphasized that
the director's knowledge was exceptional and that she had
saved the state an estimated $700 million through the
Affordable Care Act's (ACA) Section 1332 waiver program.
She thought that Director Wing-Heier had made a uniquely
significant contribution to the state and stated she would
be interested to know if any other Alaskan had saved the
state as much money as the director.
Representative Galvin referred to the second bullet point
on the slide, which mentioned maintaining multi-year
contractual actuarial support. She asked whether there was
a specific dollar amount associated with the item and how
many years the support would cover.
Ms. Lager responded that the department was requesting $1
million over two years from licensing receipts. She stated
that the request mirrored the structure used in previous
years. She explained that the department was currently
receiving actuarial support through contracts, which were
more expensive than maintaining in-house positions and
varied in cost depending on timing. The department
structured the funding as multi-year and overlapping
funding to ensure that approximately $1 million would be
available in any given year when bills were received. She
stated that the structure ensured the department had the
funds to cover the costs when bills were due.
2:31:29 PM
Ms. Lager moved to slide 19 and discussed the Division of
Investments. She stated that there were no significant
budget changes for the division in FY 26, but she still
wanted to highlight the division's ongoing work. The
division administered numerous small loan programs that
supported projects throughout Alaska, including financing
for fishing permits, boat gear, small restaurants, and
forest products. She stated that the division offered a
variety of programs that benefited many Alaskans and that
more information was available on the department's website.
Ms. Lager proceeded to slide 21 and detailed AMCO, which
regulated Alaska's alcohol and marijuana industries. She
noted that the office was almost entirely funded through
licensing receipts from the alcohol and marijuana
industries. The main budgetary change within AMCO for FY 26
was increased authority to pay for regulation review costs.
In addition, the office requested increased licensing
receipts to cover higher legal expenses related to DOL and
the Office of Administrative Hearings due to increased case
volume. The department was excited to revise the
carryforward language AMCO in FY 26 to ensure that
licensing receipts remained with the program. She explained
that in previous years, specialized carryforward language
had been used to ensure the office could repay the general
fund investment made to establish the marijuana program.
The repayment effort had been fully completed by the end of
FY 24 and as a result, all licensing receipts would remain
within the program from FY 26 on.
Ms. Lager moved to slide 22, which covered AOGCC. She
stated that the commission served a quasi-judicial role in
balancing the competing demands of oil production and long-
term resource recovery. The commission had identified
capital funding for orphaned wells and secured additional
federal funds for carbon-related work. The department
proposed aligning federal receipt authority in the
operating budget with the anticipated costs of the grant
awards. She noted that the carbon program was complex and
that the state was in the process of seeking primacy over
it from the federal government. She reported that the
process was taking longer than originally anticipated,
which was why the department had requested an additional
year of general fund support. She stated that revenue from
the permitting process was expected to begin in FY 27.
Ms. Lager moved to slide 23, which discussed RCA. She
remarked that each year she learned something new about the
commission's responsibilities. The only change in the FY 26
budget was the inclusion of a fiscal note that had been
omitted from the operating budget in the previous year. She
reiterated that not all notes were included in the final
budget in the prior legislative session due to timing
issues and the consolidation of multiple fiscal notes.
Ms. Lager advanced to slide 24, which detailed AGDC. She
stated that the department was requesting level funding for
AGDC in FY 26, which was consistent with the previous year.
She noted that while there was project activity for AGDC in
the capital budget, there were no proposed changes to the
corporation's operating budget.
2:34:47 PM
Representative Johnson noted that there had been ongoing
discussions about potential funding for a gasline project.
She understood that such funding might not come through
AGDC, but through direct appropriations or AIDEA. She asked
whether the department would be involved in the process.
She wondered whether the establishment of a separate entity
for a gasline project would require additional funds from
the department or if the department would serve as a pass-
through administrator for grants. She relayed that she was
trying to better understand how the department might be
impacted by future developments.
Commissioner Sande responded that the mechanics of the
process had not yet been discussed. She stated that her
understanding from conversations with AIDEA was that if
funding were provided through AIDEA, it would be standalone
and separate from DCCED. She stated that there had not been
any discussion suggesting that the project would be the
responsibility of the department.
Representative Johnson asked if AIDEA would be able to
receive and use federal funds as a sufficiently independent
organization if federal funds were to come into the state
for a gasline project. She noted that the question was
hypothetical and that there would likely be restrictions
depending on federal requirements. She explained that she
was attempting to anticipate whether any additional
organizational structure would be needed.
Commissioner Sande responded that both AIDEA and AEA were
currently working closely with the developer Glenfarne as
well as with the 8 Star Energy subsidiary. She noted that
the situation was complex. She understood that AIDEA had
not typically received federal funds, but AEA had received
federal grants and retained federal granting authority. She
stated that the department would continue working closely
with both agencies to determine whether DCCED involvement
would be necessary.
Ms. Lager added the department had come forward to request
legislative authorization when AGDC received federal funds
in the past.
2:38:41 PM
Ms. Lager moved to slide 25 which illustrated the budget
overview for AEA. She noted that recent legislation had
allowed AEA to manage its own positions and as a result,
the budget included a number of technical adjustments
reflecting the transfer of positions from AIDEA to AEA. She
explained that the four boxes shown at the top of the slide
represented the end results for AEA's different operating
components. The first component was Owned Facilities and
had experienced minimal changes. The component included
management of assets such as Bradley Lake and the Alaska
Intertie Transmission. The second component was Rural
Energy Assistance and housed AEA's core operations,
including the director and program managers. The Power Cost
Equalization (PCE) component continued to manage the annual
distributions as well as accounting and management costs.
The fourth component was Statewide Project Development,
Alternative Energy, and Energy Efficiency and included
federal positions for new federal programs, such as the
Infrastructure Investment and Jobs Act (IIJA) and Grid
Resilience and Innovation Partnerships (GRIP) personnel
costs. She explained that the positions had been added in
prior legislative sessions.
Ms. Lager stated that AEA's FY 26 request included three
major items. First, the department requested general funds
to cover AEA's rent costs. She explained that AEA shared
facilities with AIDEA and the request represented half of
AEA's actual costs in 2024. She noted that AEA was working
through its federally approved cost allocation plan to
include building costs, and the department did not expect
the request to recur beyond one year. Second, the
department requested an additional $3.1 million in CIP
receipts which was considered duplicate authority. She
clarified that duplicate authority allowed AEA to collect
funds from capital projects and use the collections to
support its positions and operations. She stated that the
request was essentially a true-up to ensure all positions
could be properly funded. The third item was a request for
a fund source change of $710,000 from federal receipts to
PCE program funds to maintain the circuit rider program.
She explained that the circuit rider positions had
previously been funded through federal grants administered
by the Denali Commission, but the federal funding had
declined over time and the department needed an alternative
source to continue the program.
Co-Chair Josephson asked Ms. Lager to elaborate on the
third request involving the Denali Commission.
Ms. Lager responded that the Denali Commission had
previously provided federal funding to support the circuit
rider program. The circuit rider employees traveled to
rural communities, assisted with local powerhouses, and
helped ensure continuity of electrical services. The Denali
Commission had funded the positions over the past three
years; however, the level of support had declined from
$700,000 to approximately $75,000 in the current fiscal
year. The department had attempted to bridge the funding
gap by piecing together funds from related capital projects
such as bulk fuel or rural power system upgrades, which
allowed circuit riders to work on multiple issues during
community visits. An ad hoc approach was no longer
sustainable because CIP funding had also decreased due to
reduced federal investment. The requested fund source
utilizing PCE program funds was intended to provide
consistent and reliable support for the circuit rider
program.
Co-Chair Josephson asked whether the department had
received any objections to the proposed fund source change.
Ms. Lager responded in the negative. She reported that
nearly all of the communities that received PCE funds were
also served by the circuit rider program. The funding shift
aligned with the interests of the communities and directly
supported the PCE program's objectives.
Co-Chair Foster noted that there was typically an annual
surplus of funds within the PCE program. He stated that
once distributions were made to communities, any excess
could flow into the waterfall mechanism. He asked whether
the circuit rider funding qualified under the waterfall
structure. He asked for more information on the governing
statute.
Ms. Lager confirmed that the excess would flow into the
waterfall mechanism. She was not certain of the exact
statute, but the circuit rider funding qualified as a
program operations expense, which was the first category
funded from available PCE surplus. She added that the
waterfall also allowed excess funds to be allocated toward
other rural energy priorities, such as renewable energy and
rural system upgrades.
2:43:13 PM
Representative Johnson stated that she had heard reports
that federal grant funding for charging stations and the
direct current (DC) transmission line from the Kenai
Peninsula might have been paused or changed. She did not
expect full details immediately but asked if she could be
provided with an update. She asked how much the department
had needed to adjust in recent weeks due to federal funding
developments.
Ms. Lager responded that AEA Director Curtis Thayer had
been heavily engaged in managing the issues. She confirmed
that the federal Electric Vehicle Infrastructure (EVI)
funding had been impacted and that the charging station
initiative was not moving forward at the moment. She stated
that IIJA funding and Inflation Reduction Act (IRA) funding
had been temporarily paused. She added that the DC
transmission line project had not been impacted.
Ms. Lager advanced to slide 26 and explained that AIDEA
remained co-located with AEA, but legislation from the
prior year had formally separated the two entities'
personnel. The separation resulted in several technical
changes in the FY 26 budget to reflect the reorganization.
She stated that AIDEA's FY 26 budget included the removal
of $8.9 million in duplicated receipts, which had
previously been required because AEA paid AIDEA for shared
services. The duplicate authority was no longer necessary
due to the shift of the positions directly to AEA, and it
was therefore removed. She indicated that AIDEA's budget
added receipt authority to accept rent from AEA and
included $110,000 in AIDEA receipts derived from investment
earnings to align the building component's expenditures
with projected operating costs. She noted that the
adjustment related to both intent language and statutory
requirements to clearly demonstrate facility costs.
Ms. Lager proceeded to slide 27 and relayed that ASMI's FY
26 budget reflected two main changes. First, it included
the continuation of a $10 million multi-year seafood
marketing appropriation, which began in FY 25 and would
continue over three years. The second change was a
reduction in ASMI's appropriated seafood marketing
assessment receipts. She relayed that ASMI's revenue had
been declining over time as the seafood industry faced
economic struggles. The two requested changes would help
ASMI maintain a relatively stable marketing program over
the next three years as it planned future marketing
strategies.
Co-Chair Josephson asked if the administration wanted the
legislature to pass the appropriation increase promptly to
ensure that some of the funding could be spent in FY 25.
Ms. Lager responded in the affirmative. She confirmed that
the appropriation had been included as a supplemental item
for FY 25. She explained that ASMI conducted much of its
marketing activity during the spring and the sooner ASMI
could be notified of funding availability, the more
effectively it could secure favorable marketing contracts.
Co-Chair Josephson commented that the committee had learned
a great deal about the wide-ranging responsibilities of the
department.
2:46:57 PM
Representative Hannan remarked that it was significant that
Commissioner Sande and Ms. Lager were graduates of
Ketchikan High School and Juneau-Douglas High School and
were leading the department. She praised Commissioner Sande
for her success in recruiting high-potential Alaskans to
serve on her team. She noted that when she was first
elected, Ms. Lager had stood out as someone with a deep and
trusted knowledge base. She stated that RCA was complex and
that the department approached it with calmness and
professionalism. She was impressed with the department's
knowledge.
Co-Chair Josephson thanked the presenters and stated that
the meeting marked the conclusion of the FY 26 departmental
operating budget overviews.
HB 53 was HEARD and HELD in committee for further
consideration.
HB 55 was HEARD and HELD in committee for further
consideration.
Co-Chair Josephson reviewed the agenda for the following
day's meeting.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HFIN DCCED Department Budget Overview 03.04.2025.pdf |
HFIN 3/4/2025 1:30:00 PM |
HB 53 HB 55 |
| Attachment 1 - DCCED FY24 Actuals by Fund Source with Description.pdf |
HFIN 3/4/2025 1:30:00 PM |
HB 53 |
| Attachment 2 - Vacant Positions Greater Than 6-Months as of 2-13-25 OMB.pdf |
HFIN 3/4/2025 1:30:00 PM |
HB 53 |
| HFIN DCCED Follow-up 03.04.2025.pdf |
HFIN 3/4/2025 1:30:00 PM |
HB 53 |