Legislature(2025 - 2026)ADAMS 519
02/27/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB53 || HB54 || HB55 || HB56 || HB85 | |
| Overview: Fy 25 Governor's Supplemental Budget by the Office of Management and Budget | |
| HB78 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 53 | TELECONFERENCED | |
| += | HB 54 | TELECONFERENCED | |
| += | HB 55 | TELECONFERENCED | |
| += | HB 56 | TELECONFERENCED | |
| *+ | HB 85 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 78 | 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. 54
"An Act making appropriations, including capital
appropriations and other appropriations; making
reappropriations; making appropriations to capitalize
funds; 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."
HOUSE BILL NO. 56
"An Act making supplemental appropriations; making
appropriations to capitalize funds; and providing for
an effective date."
HOUSE BILL NO. 85
"An Act making supplemental appropriations,
reappropriations, and other appropriations; amending
appropriations; capitalizing funds; repealing
appropriations; and providing for an effective date."
1:37:01 PM
^OVERVIEW: FY 25 GOVERNOR'S SUPPLEMENTAL BUDGET BY THE
OFFICE OF MANAGEMENT AND BUDGET
1:37:05 PM
LACEY SANDERS, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, provided a PowerPoint presentation
titled "FY2026 Governor Amended Budget: House Finance
Committee," dated February 27, 2025 (copy on file). The
presentation provided an overview of the amendments
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transmitted on behalf of the governor on February 18 per
AS 37.07.070 that required requests to be submitted to the
th
legislature by the 30 day. She began with an updated FY 26
fiscal summary that incorporated the amendments submitted
the previous week (slide 2). The amendments included FY 25
supplemental requests and the FY 26 budget. FY 25 operating
supplementals totaled $40 million in all funds, including
$36.2 million in unrestricted general funds (UGF), for an
operating supplemental total of $453 million. The submitted
capital supplementals totaled a reduction of $1.9 million
with an overall increase of $500,000 UGF. The supplemental
total was $522.5 million of which $84.2 million was UGF.
The total brought the overall deficit to $157.8 million.
Ms. Sanders explained that the total numbers in the
presentation were a combination of the supplementals
presented earlier to the committee as well as the ones
presented the past week. The operating amendments in the FY
26 budget totaled $300 million in all funds, including
$32.3 million UGF. The capital supplementals totaled $12
million, including $11.6 million UGF, for a grand total of
$312 million in all funds and $43.9 million UGF. The
overall deficit was $1.56 billion (shown at the bottom of
the table on slide 2).
1:40:11 PM
Ms. Sanders moved to slide 3 titled "Operating Governor
Amend Requests" by agency. She noted there were detailed
spreadsheets in the back of members' packets with
additional information (copy on file). The amended budget
incorporated changes for the implementation of a department
of agriculture in FY 26 established in Executive Order (EO)
136. Two pieces had been submitted, including the transfer
of 37 existing positions and $7.2 million from the
Department of Natural Resources (DNR); and an addition of
$2.7 million for new positions and startup costs. She noted
there had been changes in the past several days and the
$2.7 million would be backed out to result in a neutral
cost for EO 136. The administration was reevaluating vacant
positions that could be utilized instead of adding to the
budget.
Ms. Sanders moved to operating amendment requests for the
Department of Administration (DOA) on slide 3. There were
two projects related to artificial intelligence (AI)
initiatives. The first was to offer Microsoft Copilot 365
to 2,000 state employees, allowing them to be more
productive in their work. The second was two short-term AI
projects for the Department of Environmental Conservation
(DEC) and DOA. The first was for DEC to improve its forms
and permitting processes through the use of AI and the
second was for DOA to utilize AI for payroll processes and
forms improvements. There were two significant adjustments
within the Department of Corrections (DOC).
1:42:45 PM
Representative Stapp asked about the Microsoft Copilot AI.
He remarked he had the free app on his phone. He imagined
the cost to the state would not be free. He referenced the
stated goal of improving performance and efficiency. He
asked if the administration was looking to eliminate
positions that would be unnecessary due to AI.
Alternatively, he wondered if the idea was to enable
employees to be more productive in their current
employment.
Ms. Sanders replied that the goal was to improve
performance for employees to ensure they could be more
productive. She elaborated that there were a lot of needs
in the state and things took time; therefore, it would be
beneficial if the timeliness of processing things could be
improved.
Representative Stapp asked what the employees would be
doing with the program.
Ms. Sanders responded that she could provide general
examples. One thing was processing paperwork. She
elaborated that currently people were filling out forms or
spreadsheets manually. She detailed that if the use of AI
could improve the processes and timeliness, it would be a
benefit to employees. She explained that it could slow down
processing time backlog.
1:44:34 PM
Representative Stapp asked where he could find the version
of the program the state would be paying for. He was
interested in looking it up and reviewing the capabilities.
Ms. Sanders replied that she did not have an answer on
hand. She would have DOA follow up with a response. She
continued with slide 3 and highlighted two significant
adjustments in the DOC budget. The first was related to
community residential centers (CRCs). She detailed that the
CRC contracts were recently finalized, resulting in an
increase of $1.4 million for FY 26. Additionally, there was
a technical correction throughout the budget that hit DOC
with a larger impact reflected as a $5.5 million change in
the "Other" column. When the budget was submitted there
were fund source changes associated with the Restorative
Justice Account or "felon funds" (incarcerated felons that
were no longer eligible to receive their Permanent Fund
Dividend (PFD)). The calculation used in the budget only
accounted for individuals who had actually applied instead
of individuals who were eligible to receive the PFD. The
technical correction fixed the amount of Restorative
Justice funds appropriated in the budget. The item showed
up in several places in the budget including the
legislature's budget or fund capitalizations for the Crime
Victim Compensation Fund. The correction ensured the budget
followed the statutory formula on the amount available for
appropriation.
1:46:49 PM
Representative Bynum referenced the AI component that would
cover 2,000 employees under the [Microsoft] licensing. He
stated that AI was a new space and a very powerful tool if
an employee was trained to use it effectively. He asked if
there was anything done prior to specify the program would
be launched with 2,000 employees as opposed to a smaller
group to determine if the investment increased
productivity. He pointed out that if an employee did not
understand the capabilities of the technology or did not
use the program, it would be something the state was paying
for that sat on a desktop and did not get utilized.
Ms. Sanders stated there were individuals currently using
the AI program to see what capabilities existed. She stated
that whether it was being documented in terms of the number
of users and how it was being used were "one off cases."
She explained that the increment would provide a tool and
resource to agencies to start the pilot project type
initiative to determine who could use it and where it could
be used effectively and efficiently. She stated there were
15,000 state employees and not every employee would need
Microsoft Copilot. She stated that a specific group of
individuals would be utilizing the program as a tool to
automate.
Representative Bynum asked if it would be available for
2,000 employees and departments would have the ability to
purchase the program or if it would be deployed out to
2,000 people without request.
Ms. Sanders answered that the Office of Information
Technology would have 2,000 licenses to work with agencies
to determine who would receive them. She continued to
review slide 3 and highlighted increments for DEED. The two
primary items were similar to supplementals submitted
related to the Alaska Performance Scholarships and the
Alaska Education grants to ensure there was sufficient
authority based on the passage of law in 2024 that
increased the number of eligible applicants and the dollar
value. She moved to an addition for the Department of
Environmental Conservation (DEC) to assume federal
authorization of the state program and administer and
enforce the dredge and fill permitting program allowed
under the Clean Water Act. The request was the first of a
phased approach and would provide five positions necessary
to develop the application process and start the
development of the regulations and guidance. The
administration recognized that five positions would not be
able to fully operate the program and it would be back in
the future years to discuss what the next steps would look
like under a fully developed plan.
1:50:43 PM
Ms. Sanders addressed the Department of Health (DOH) on
slide 3. The most significant change was under the Medicaid
program. She elaborated that Medicaid projections were
thth
provided on December 15 and February 12. There was an
addition of $19.6 million in match and $220.6 million in
federal receipts to bring the budget in line with current
projections. There were several items adding funding to the
base for the Division of Public Assistance (DPA) to
continue its efforts processing applications and ensuring
individuals receive timely application responses. There was
$8.2 million split between $4.1 million in match and $4.1
million in federal receipts to continue the virtual contact
center. The center handled approximately 20,000 to 24,000
eligibility calls per month. Additionally, there was a
request to add 15 permanent full-time eligibility
technicians to the base budget to continue processing
applications, renewals, and reports of change to public
assistance. The Department of Natural Resources (DNR) line
on slide 3 showed the transfer funding from DNR to the new
department of agriculture.
1:52:33 PM
Representative Stapp asked about the 15 permanent full-time
eligibility technicians. He asked if it was a lateral
transfer from the long-term non-permanent positions that
had been in the budget the last couple of years. He asked
for the current vacancy rate above the factor for DPA
technicians. He thought it had been on the high side.
Ms. Sanders answered it was an addition of 15 positions in
the base budget, not non-permanent positions moving
forward. The department had seen more success in filling
full-time long-term positions because of the job security.
The department had 14 vacant eligibility technicians and
the increment would bring the number to a total of 30 the
department would be attempting to fill in the next several
months. The hope was that the department could fill the
remaining 14 positions in the current fiscal year and the
next 15 in FY 26.
1:53:44 PM
Ms. Sanders moved to the Department of Public Safety (DPS)
on slide 3. The governor's amend request included a $1.6
million increase for the Village Public Safety Officer
(VPSO) program for the Northwest Arctic Borough. The
department had taken steps in the past several months to
fill and retain its VPSO position including arming
officers, providing increased salaries, addressing housing
needs, and costs associated with equipment. She noted the
request was included in the FY 26 budget and the FY 25
supplemental budget.
Ms. Sanders continued on slide 3 and reviewed the
University of Alaska line. The professional teaching
program was transferring from the University to DEED. She
noted that the slide did not show several pages included in
members' backup documents (copy on file). She explained
that the University submitted many transactions to align
with intent language submitted by the legislature in 2024
under AS 37.07.020(e) and had to do with reflecting annual
facility and maintenance operation and repair costs
separate from the other costs within their budget. She
noted that the items had a net zero cost. Lastly, under
debt service and fund capitalizations there were two
technical adjustments. The first was $1.3 million for the
school fund to align the budget with the revenue forecast.
The second was funding from the Power Cost Equalization
(PCE) fund provided to the Community Assistance Program.
Due to a miscalculation, the amount available was incorrect
by $163,700. The governor's amendment provided a technical
correction to the error.
1:56:12 PM
Ms. Sanders moved to slide 4 showing the FY 26 capital
budget amendment requests. There were two items for
Department of Commerce, Community and Economic Development
(DCCED) including a $2.7 million increase in federal
authority for the Alaska Energy Authority's Statewide Grid
Resilience and Reliability Project. There was also a
request for $600,000 to provide three organizational
grants. Alaska statute allowed organizational grants to be
provided when a new borough or municipality was created.
There was a pending election for the Hoonah Borough that
would receive the grant if it was certified.
Co-Chair Josephson asked Ms. Sanders to repeat the name of
the borough.
Ms. Sanders replied, "Hoonah." She noted there was
contingency language specifying that the money would not go
out if the certification was not complete.
1:57:29 PM
Ms. Sanders addressed a $1.5 a $1.5 million capital project
under DEED for the Mount Edgecumbe High School. The project
would provide for an elevator on the campus to bring a
facility up to ADA compliance. She moved to an increment
for DNR that was not included in the governor's original
budget for the Natural Historic Preservation Fund federal
grant program. She detailed it was a $2 million federal
grant program with a $1.3 million match. There was a phase
2 request for DPS for the Fairbanks trooper post renovation
completion. She elaborated that DPS received about $5
million to begin the two-phase renovation project. She
detailed that the requested $6.2 million was needed to
complete the project. There was a $2 million project under
DOT for the state managed seaplane base and harbor facility
maintenance. She explained that seaplane bases and harbors
were not covered under the state's deferred maintenance
program and significant electrical work needed to be
completed at several harbors in addition to other repair
needs.
Representative Stapp asked why the seaplane harbors were
not under the deferred maintenance umbrella.
Ms. Sanders answered that deferred maintenance included
things like buildings and things like state runways,
seaplane bases, and harbors were typically excluded. She
stated there could be a conversation about including those
items, but currently deferred maintenance was limited to
physical facilities. She noted that the list could grow if
the other things were added.
Representative Stapp asked if there were any other things
the state owned that were technically not facilities that
needed preventative maintenance and deferred maintenance.
Ms. Sanders answered state owned runways. She thought they
could come up with additional items as they worked through
agencies needing to do maintenance to their facilities.
2:00:53 PM
Ms. Sanders addressed FY 25 operating supplemental requests
on slide 5. The first item fell under DCCED and was a
reversal of $50 million requested in the fast track
supplemental to AIDEA. She explained that when the
appropriation was first submitted, timing on the final
investment decision (FID) was uncertain and anticipated it
could occur within the fiscal year. The timeframe was
revised and expected to take up to 24 months, which removed
the urgency surrounding the appropriation.
Representative Stapp asked if the legislature was still
supposed to backstop the funding or if the cost was being
pushed out into the future a couple of years.
Ms. Sanders responded that AIDEA had $50 million set aside
for the intended purpose. She stated her understanding that
the backstop was still in place based on what AIDEA had.
Representative Stapp asked if the state was not reimbursing
AIDEA anymore because AIDEA could use its own receipt
authority.
Ms. Sanders replied that no backstop would be provided at
the present time.
Representative Hannan understood the AIDEA reversal but
observed there was $225,000 remaining in other funding. She
asked what the increment pertained to.
2:03:12 PM
Ms. Sanders answered there was a separate item related to
AEA. She explained that when the budget was submitted, it
included a project submitted as a reappropriation for data
library administration hosting, expansion, and
digitization. After talking with LFD, it had been
determined the item was not a reappropriation and it should
have come from an emerging energy technology fund. The
increment was a $225,000 direct appropriation instead of a
reappropriation.
Representative Hannan asked if the fund lived within AIDEA
or AEA.
Ms. Sanders answered that it was AEA and separate from
AIDEA.
2:04:24 PM
Ms. Sanders advanced to the operating supplemental
increment for DOC on slide 5. There was a $7.5 million fund
source change from federal receipts to state general funds.
The change was also reflected in the FY 26 budget. A change
made by the U.S. Marshals resulted in fewer federal mandays
reducing federal collections in both fiscal years. The item
brought the budget in line with expectations of what would
not be collected. There was a $3 million request Department
of Family and Community Services (DFCS) similar to the FY
26 budget, to ensure continued operations at the Alaska
Psychiatric Institute (API). She detailed that the Centers
for Medicare and Medicaid Services (CMS) reduced the
disproportionate share hospital (DSH) allocations
nationally, which reduced the federal funds the state could
collect and required an increase of $3 million to continue
operations. She addressed items for the Department of
Health (DOH). The first was $5.9 million within DOH and the
second was $5.9 million under special appropriations. She
explained that DOH was officially notified by the U.S.
Department of Agriculture (USDA) regarding the state's FY
23 error rate for the Supplemental Assistance Nutrition
Program (SNAP). She detailed that the situation resulted in
a penalty of $11.9 million. There was an option for the
state to pay half of the penalty and invest the remaining
half in new investments to improve the state's processes.
The increment shown on the DOH line on slide 5 reflected
the investment for one-time technology improvements to
target increased efficiency, improve accuracy, and
streamline processes. She stated there was an appropriation
under the Department of Law (DOL) to pay the penalty of
$5.9 million. She elaborated that in May of 2021 the
Department of Health and Social Services experienced a
cybersecurity attack. As a result, the department reviewed
all lapsing balances to identify $10 million that could be
encumbered in the accounting system to address any
potential liability for fines incurred due to the event.
There was no longer a potential for a fine and the request
was to reappropriate the $10 million to meet a portion of
the reinvestment cost as well as the penalty due. The
proposal required $1.9 million to make up the difference
between the $11.9 million and the $10 million available in
the reappropriation.
2:08:08 PM
Representative Galvin stated it was the first time she had
heard about the state being fined by the federal government
for not being an efficient passthrough of federal funds for
SNAP.
Ms. Sanders agreed.
Representative Galvin asked when the state had learned
about the fine.
Ms. Sanders answered that she had learned about it one
month back. She stated it covered the applications for the
FY 23 time period.
Representative Galvin recalled that in 2022 and 2023 the
legislature had heard about the significant backlog from
the department and the legislature had asked what it could
do to help. She stated there was very little other than a
few positions that had been requested and a little help
with an old computer software system. She stated that she
was befuddled by the situation because the legislature had
made an earnest ask about how to address the situation. She
remarked that it was one thing to be worried about getting
fined by the federal government, but it was another thing
to know that children and families were needing food. She
understood the governor offered something through the Food
Bank that was helpful in an emergency situation. She noted
it was one-tenth of the funding going out through SNAP. She
stressed that it was the legislature's job to make sure
systems were fully funded in order for the implementation
to be thorough and efficient and certainly, so the state
did not get fined $11 million. She asked if they were
accomplishing what was needed. The legislature had recently
been told there was still a backlog. She was concerned that
the $6 million [going to new investments] was not enough
and that the state was getting fined. She was upset the
legislature was unable to do its job because it did not
have sufficient information to do it well and now the state
was getting fined. She found it deeply concerning.
Co-Chair Josephson shared the concern.
Ms. Sanders answered that there were investments made and
30 non-permanent positions added. There had been
significant adds in 2024 to stand up the virtual contact
center. Additionally, there were IT improvements and
funding, and the department was working hard to get the
changes implemented and available to residents. She
understood the concern with an $11.9 million fine. She
recognized it was a big number.
2:12:41 PM
Representative Galvin knew there were some options the
state could have taken to give out SNAP cards instead of
going through the backlog line. She highlighted that the
state had some options that other states were doing to
avoid getting fined. She wondered why Alaska had not made
the same decision, which would have avoided the current
situation.
Ms. Sanders answered that there were steps taken by the
state. She was not an expert in the area and did not want
to make inaccurate statements on the record. She deferred
the question to DOH.
PAM HALLORAN, ASSISTANT COMMISSIONER, DEPARTMENT OF HEALTH,
replied that the department shared the concerns. She
explained that the situation started prior to COVID-19 when
a previous director decided against doing all of the steps
required to certify, including the interview. In 2004
[2024] the department reported to the House Finance
Committee that it had opted to waive the interview process
in order to get food into people's hands. She elaborated
that it was a decision made by the department's leadership.
A couple of months after that time, the department had been
able to get caught up. In the meantime, there were a number
of improvements the department had made. She could follow
up with more detail.
Representative Stapp thought it was necessary to clarify
what was being discussed. He stated that the fine was due
to a payment error rate that occurred because the state
gave out food stamps to people who were not eligible (i.e.,
because there was a backlog, food stamps had been given out
to everyone, which was the reason the state was being
fined). He asked if his statements were accurate.
Ms. Halloran answered that they continued food stamps for
people who were already receiving food stamps. She
clarified that there had not been a free-for-all of handing
out food stamps. She elaborated that the stamps had gone to
eligible Alaskans. The department was required to recheck
eligibility and it opted not to in order to renew their
benefit.
Representative Stapp stated his understanding that the
state was required to check eligibility, but because of the
backlog the department had waived eligibility to ensure
people received food stamps. He asked for verification it
was the reason the state was being fined.
Ms. Halloran answered affirmatively.
2:16:38 PM
Co-Chair Foster thought it went back to his point that
there were not enough people processing the papers. He
stated that the fines went back to 2023 and his office was
receiving calls daily in 2024 and 2025 and there were not
enough people working in the division to process the
papers. He considered that if the fines were from 2023, he
foresaw there would likely be more fines coming in the
future. He was glad Representative Galvin had highlighted
the issue because it was likely one of the biggest things
his office had been dealing with. He provided history of
the positions. In 2021, the governor proposed cutting 101
positions in public assistance. The House had funded all
101 positions, the Senate had cut the funding back to 50
positions, and the governor vetoed all 101 positions. He
noted that 30 positions had been added back in the past
several years. He believed the FY 26 budget included a
proposal to cut $8 million and 30 positions. He asked Ms.
Sanders for detail.
Ms. Sanders answered that the $8 million was one-time
funding added in the budget the previous year. She
explained that one-time items were reversed out of the
budget. There was a request to add 15 permanent positions
back to the base.
Co-Chair Foster was glad to hear it. He had a meeting with
the commissioner about the topic and he understood she was
very supportive of trying to get it taken care of. He
stated that his heartstrings went out to the individuals
who had gone weeks and months [without food assistance]. He
shared that he had received an email from a constituent the
previous day stating that she had kids and had been unable
to get assistance for good. The constituent had asked how
they were going to eat. He felt like he wanted to send
money to the woman.
2:19:21 PM
Ms. Sanders continued addressing operating supplemental
requests on slide 5. She moved to the Department of Law
(DOL) and highlighted a $1 million multiyear appropriation.
She detailed that labor relations moved from DOA to DOL.
Formerly, there had been a multiyear appropriation to DOA
to contract for assistance with negotiations in the
bargaining unit agreements. The prior appropriation had
been expended. As labor relations was implemented in DOL
there was a request to bring back the $1 million
appropriation in order to move forward with getting
bargaining agreements done timely. There was a $1.6 million
request under DPS for the Northwest Arctic Borough's VPSO
program.
Co-Chair Schrage referenced the DPS supplemental and the
fact that the state had already hired VPSOs in the
Northwest Arctic Borough. He asked why the increment was in
the supplemental.
Ms. Sanders answered that it was a grant to the community
beyond the standard VPSO program. She explained that the
community had taken steps to expand the costs needed within
their VPSO program including increasing salaries, arming
VPSOs, and increasing the number. The grant provided
additional funds to the community due to its success in
growing the program and retaining officers.
Co-Chair Schrage thought the grant was generally given
first before communities hired officers and other
improvements. He was confused about why the community had
hired the VPSOs and the state was retroactively providing
the grant. He trying to understand the process better, but
he also expressed concern and asked if a community was able
to act on behalf of the state and obligate state funds
without the legislature having to appropriate the funds
ahead of time.
Ms. Sanders answered that the community took actions to
increase its program and it had an associated cost. The
community had asked for support in providing the program
and the increased cost was a result.
Co-Chair Schrage asked if the community communicated its
intent to do so ahead of time or if the state was only
notified after the action had been taken.
Ms. Sanders replied that she could not speak to what the
community did or did not do. The request had been brought
forward and public safety was a priority of the governor.
The administration wanted to see the VPSO program succeed
to ensure the needs of communities could be met.
2:23:00 PM
Representative Hannan asked if there would be an FY 26
amendment in the same amount.
Ms. Sanders replied there was an identical amount in the FY
26 budget.
Representative Bynum referenced the VPSO program and timing
for funding. He referenced Ms. Sanders's statement that
public safety was a priority of the governor. He asked
about the measure of success. He wondered if it was hiring
and retaining people or some other metric.
Ms. Sanders responded that the efficacy was evidenced by
the successful retaining and recruiting in the VPSO
program. She shared that the last she had heard from the
VPSO program and DPS was that all of the public safety
officer positions were filled. She highlighted it was a big
feat, especially in some of the rural communities across
the state. There had been a history of a lot of turnover in
the positions. She stated it was a success and public
safety was a priority of the governor.
2:24:52 PM
Co-Chair Schrage understood public safety was a priority of
the administration and that the Northwest Arctic Borough
had been successful in increasing VPSOs, which he believed
was a great thing. He voiced concerns about the way the
increment transpired. Given that public safety was a
priority of the governor's, he asked if the administration
was encouraging all communities to hire everyone they
could. He asked if there was an increment in the FY 26
budget to account for the hiring of some unknown number of
VPSOs. He asked how he was supposed to predict the costs
for the coming year if the legislature was informed of new
hires after the fact. He noted that public safety was also
a priority of his and he was encouraged to hear there were
new VPSOs; however, in a constrained fiscal environment he
was concerned the state was allowing action to take place
with no appropriation from the legislature and the
legislature was expected to foot the bill for the cost
after the fact. He stated his understanding that if the
legislature rejected the increment, the individuals would
be fired. He asked how to deal with it moving forward.
Ms. Sanders answered that it was a grant to the community.
She remarked that the legislature had the power of
appropriation and if the funds were not provided it would
be incumbent on the community to determine what moved
forward. She stated she would not say people were going to
get fired. There was a request in the FY 26 budget for an
additional 15 VPSOs across the state. The administration
was addressing the growth in the next fiscal year and was
continuing to see increases in the program. She clarified
that the request for FY 26 was either 10 or 15 positions.
Co-Chair Josephson recognized Representative Chuck Kopp in
the room. He asked about an Alaska Vocational Technical
Center (AVTEC) issue under the Department of Labor and
Workforce Development (DLWD).
Ms. Sanders answered that the increment pertained to a
recalculation of the Technical Vocational Education Program
(TVEP). There were additional receipts available for
distribution and the item showed up in DEED, DLWD, and the
University. She moved to fund capitalizations at the bottom
of slide 5. The first item added an additional $11 million
to the Disaster Relief Fund, bringing total requests for FY
25 to $29 million. The request for FY 26 was $13 million.
There were two significant increases and notifications
received recently including $15 million associated with the
Merbok storm on Alaska's west coast and an additional
increase for the Mat-Su winter storm. The total request
covered the costs associated with the storms and provided
$5 million to address any disasters in the next couple of
months. The second item was under the fire fund and
included $7 million to address the upcoming fire season and
$3 million for the closeout of the FY 2024 fire season.
2:28:38 PM
Ms. Sanders turned to capital supplemental requests on
slide 6. The two increments included a named recipient
grant to the Blood Bank of Alaska to finalize the
certification of the donor testing laboratory that would
flow through DCCED and a technical correction for the
Alaska Oil and Gas Conservation Commission (AOGCC) data
management project to break the project into two phases to
address receipts collected in the current year and receipts
utilized in a future year.
Co-Chair Josephson remarked that the state was not in a
position to afford the increments in the governor's amended
budget. He noted the total including the indebtedness was
about $150 million. He could think of one way to fund the
items. He realized the legislature was the appropriating
body and ultimately decided funding sources. He asked if
the administration had any other guidance or wanted to
participate in finding funding sources to pay the bills.
Ms. Sanders answered affirmatively. She stated that the
current proposed budget drew from the Constitutional Budget
Reserve (CBR). She relayed that the governor was willing to
have conversations about what the future may look like
recognizing that the current fiscal situation was not
looking great and there were limited resources to address
the various needs.
Representative Hannan referenced that the supplemental
capital request for the Blood Bank. She stated that the
entity had received state funds for the specific purpose
several years in a row. She asked if there were cost
overruns. She wondered why the item was a supplemental
request as opposed to an FY 26 capital request.
Ms. Sanders answered that it was to get funding to the
Blood Bank as quickly as possible in order to finalize the
project.
Representative Hannan asked if the Blood Bank had
underestimated the cost by $500,000 or exceed their
expected cost by $500,000. She highlighted that the
legislature had provided funding for the item for the past
three years.
Ms. Sanders answered it was the last piece of the total
request that was broken into three phases.
Representative Hannan stated it was a little frustrating.
She stated the legislature had been generous with the Blood
Bank, but no information was being provided about the
reason for the additional increment. She elaborated that
there had been numerous funding requests and the
legislature kept being told the facility would be open soon
and there would be testing in Alaska instead of paying to
ship [blood samples] out. She was confused about the reason
for a supplemental item. She underscored that it had not
been a year since the legislature appropriated money for
the final total cost of the project and now there was a
request for another $500,000.
2:32:33 PM
Representative Allard asked how to explain doing an $83.6
million supplemental in times of a deficit.
Ms. Sanders answered there were urgent needs to be
addressed such as the Disaster Relief Fund and the ability
to respond [to disasters]. There were currently reserves
available in the CBR to address the urgent needs of
Alaskans. She stated that trying to prioritize the needs
was not an easy task.
Representative Stapp was curious about the manday dispute
with the DOC and U.S. Marshals. He stressed that $7.5
million was a substantial number of mandays to not be able
to be billables. He asked whose responsibility it was when
related to federal prisoners. He would take the question
offline.
HB 53 was HEARD and HELD in committee for further
consideration.
HB 54 was HEARD and HELD in committee for further
consideration.
HB 55 was HEARD and HELD in committee for further
consideration.
HB 56 was HEARD and HELD in committee for further
consideration.
HB 85 was HEARD and HELD in committee for further
consideration.
2:34:03 PM
AT EASE
2:35:19 PM
RECONVENED