Legislature(2025 - 2026)ADAMS 519
03/28/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB56 | |
| Adjourn |
* 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 | ||
| += | HB 56 | TELECONFERENCED | |
HOUSE BILL NO. 56
"An Act making supplemental appropriations; making
appropriations to capitalize funds; and providing for
an effective date."
1:33:11 PM
Co-Chair Josephson asked individuals from the
administration to come to the table.
1:33:52 PM
HEIDI TESHNER, ACTING COMMISSIONER, DEPARTMENT OF EDUCATION
AND EARLY DEVELOPMENT, introduced herself.
Co-Chair Josephson noted the sponsorship of the bill. He
asked whether the governor supported the bill.
Ms. Teshner replied in the affirmative.
Co-Chair Josephson asked whether there were changes the
governor wished to see in the bill.
Ms. Teshner replied in the negative.
Co-Chair Josephson asked whether the governor was aware
that the state had no source for funding the bill other
than the Constitutional Budget Reserve (CBR).
Ms. Teshner answered yes, based on how the budget had been
submitted so far this session.
1:34:32 PM
Co-Chair Schrage asked whether there was anything in the
supplemental the governor did not want included in the
supplemental budget bill.
Ms. Teshner answered not to her knowledge.
Co-Chair Schrage asked whether the governor supported
drawing from the CBR to fund the items in the supplemental
budget.
Ms. Teshner replied in the affirmative.
1:35:28 PM
Co-Chair Josephson asked Ms. Teshner to remind the
committee of the most significant items in HB 56, other
than the indebtedness.
Ms. Teshner noted $142 million for Medicaid, $29 million
for the Disaster Relief Fund, $13 million for the Fire
Suppression Fund, additional receipt authority for federal
and University receipts, the orphaned wells in the Capital
Budget, and the Alaska Marine Highway System.
Co-Chair Josephson asked about the orphan wells section and
whether the section pertained to receipt authority to
receive federal dollars.
Ms. Teshner deferred to Ms. Lager.
HANNAH LAGER, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, replied
that the section was for federal receipt authority for
grants received by the Alaska Oil and Gas Conservation
Commission.
Co-Chair Josephson asked whether the line item totaled $65
million.
Ms. Lager replied that there were a series of different
federal awards in the budget for the commission. She said
that they had received $25 million for orphan wells and had
the grant in hand and were applying for different federal
grants.
Co-Chair Josephson understood that there was no cost to the
state.
Ms. Lager replied in the affirmative.
Representative Hannan asked when federal authority was
given so late in the fiscal year if the award would carry
over into the next fiscal year.
Ms. Teshner replied in the affirmative.
Co-Chair Josephson noted that Representative Bynum,
Representative Stapp, Representative Johnson, and
Representative Tomaszewski has joined the meeting.
Co-Chair Josephson queried the impact if the fast-track
items were not adopted.
Ms. Teshner shared that the Disaster Relief Fund was a high
priority item, and the balance was low. She believed that
it needed to be funded to address FY 25 obligations.
1:39:47 PM
Representative Bynum asked about the disaster relief money
and whether there were other items of high importance or
other items that could be excluded from the fast-track
bill.
Ms. Teshner answered that the original fast track items
were the disaster relief fund, fire suppression, and
retirement benefits were of the highest priority.
1:40:51 PM
Co-Chair Schrage asked whether, excluding the original
three items that were not in the fast-track, the
consequences of not passing the bill.
Ms. Teshner replied that there were several items that had
pending obligations. She said that grants could not be
issued without federal receipt authority on the books. She
noted the increased costs departments were trying to
navigate on existing budgets. She said that the hope was
that they would receive the supplemental items to close out
a balanced budget at the years end.
Co-Chair Schrage asked about the impact to departments if
funds were not appropriated. He asked whether the
administration would be forced to claw back action by the
departments.
Ms. Teshner answered that the administration would not be
able to meet some if its obligations. She spoke to the
Alaska Performance Scholarship Grants, which would have to
be revoked from grantees if funding were withheld. She
warned that federal grants might not be issued.
Co-Chair Schrage stated he was trying to get a better idea
of the impacts of not funding the fast-track supplemental.
He was shocked that the Alaska Performance Scholarship
funding was in the supplemental. He believed that it would
be a tragedy if they had to take a promised scholarship
back from a student. He asked what other grants and
scholarships could be at risk if the bill were not to pass.
Ms. Teshner reiterated Ms. Lagers testimony that AOGCC and
food security grants would be in jeopardy. She contended
that OMB had worked with agencies over the budget to only
put forward items that were absolutely necessary in the
supplemental.
1:44:09 PM
Representative Galvin understood that the items in the
budget were absolute must haves.
Ms. Teshner responded that what was before the committee
was what the governor had determined to be a FY25
obligation.
Representative Galvin surmised that delaying funding for
the items in the fast-track would cause chaos because the
state would not meet its obligations.
Ms. Teshner realized that the bill is referred to as the
fast-track supplemental. She said that aside from the
three items originally identified as fast-track items, the
requests were normal supplemental requests; the funding
would be needed before June 30, 2025, to meet current
obligations.
Representative Galvin expressed concern for funding of the
scholarships. She wondered whether the department had been
in talks with the university to craft a contingency plan
for student who may lose those scholarships.
Ms. Teshner replied that conversations had occurred. She
said that there was an agreement that students would
receive the scholarships to attend school under the premise
that the supplemental was forthcoming.
Representative Galvin asked about jail operations being
underfunded. She asked for verification that the jail would
not close.
KEVIN WORLEY, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF CORRECTIONS, asked for a repeat of the question.
Representative Galvin complied.
1:48:15 PM
Mr. Worley responded that the amount was $195,000 for
regional and community jails. Jails in Dillingham and
Seward had been taken out and some funds were added back in
conference committee. He said that the add back had
shorted funding for Dillingham. The department was $195,000
short based on contracts already signed with communities.
Representative Galvin asked what happened to the community
such as Dillingham. She queried the repercussions of the
shortfall.
Mr. Worley replied that the $195,000 would be a shortage on
contracts that would be paid to the communities.
Representative Galvin understood it was up to the community
to decide how the shortfall would be handled.
Mr. Worley replied in the affirmative.
Representative Stapp asked about the difference between the
fast track and the supplemental.
Ms. Teshner replied that the fast-track items were the
items the administration hoped would be passed early in
session and the normal supplemental would come later in the
legislative process.
Representative Stapp cited page 3 of the bill, $50,000 for
subsistence research. He asked about the impact of
separating out the item from the fast-track and back to the
regular supplemental.
Ms. Teshner answered that the item was federal receipt
authority that was needed prior to June 30, 2025.
1:52:30 PM
Co-Chair Foster looked at the budget transaction detail on
page 19, Disaster Relief Fund at $29 million and the Fire
Suppression Fund at $13.1 million. He asked about the third
item.
Ms. Teshner replied that it was the Department of
Administration, Section 8, Corrective Contribution to the
retirement accounts.
Co-Chair Foster asked for the amount.
Ms. Teshner replied that it was not to exceed approximately
$2,679,460.
Co-Chair Foster looked at $3.3 million in UGF for DOC
population management. He asked about the consequences of
not including it in the fast track.
Mr. Worley asked whether Co-Chair Foster was referring to
the authority for supervisory standby pay.
Co-Chair Foster replied affirmatively.
Mr. Worley replied that employees were contractually
granted standby pay.
1:55:05 PM
Co-Chair Josephson asked if the funds should be expedited
or signed into law in June.
Mr. Worley replied they would continue to make payroll
would help meet payment obligations through the fiscal
year.
Co-Chair Foster thought the department needed the money to
pay standby pay for FY25. He asked if the item was not
funded in the fast-track, could the department make it
until the end of the fiscal year.
Mr. Worley responded that the funds were needed during FY25
to cover standby pay needs for correctional officers,
probation and parole officers, and nursing staff. He said
that most was within population management and there were
no extra funds to cover the standby pay.
Co-Chair Foster summarized that without the fast-track
request the department would not be able to fund the finds
to hold them over into the next fiscal year.
Mr. Worley agreed.
1:58:02 PM
Representative Johnson stated it was not unusual to roll
the supplemental in with the regular budget. She did not
think that the funding of supplemental items was unusual.
Co-Chair Josephson restated the question.
Ms. Teshner answered that the fast-track was intended to
fund things quickly in the event of an emergency. She
agreed that supplemental requests were a normal part of the
budget process.
Co-Chair Josephson asked about the states indebtedness. He
asked what happens to the $80 million. He asked whether the
treasury could cover it if the bill did not move. He asked
if checks would bounce or there would be outstanding bills.
Ms. Teshner replied that currently the bills were before
the legislature and the departments were operating within
the authority granted to them. She said that the
administration would have to work within the legislatures
process.
2:00:51 PM
Representative Stapp asked whether the administration was
projecting any lapses on other services in the personnel
services line or other service lines.
Ms. Teshner answered there was a lapse report put forward
by OMB. She stated that there were regular quarterly
projection meetings on the topic and balances were being
monitored.
Representative Stapp stated they had been going through the
budget and it was clear many departments were struggling
with hiring for vacant positions. He said that the OMB
lapse report had not projected many lapses. He felt that
OMBs assumptions were off.
2:03:20 PM
Ms. Teshner responded that there had been supplemental
requests that did not get forwarded to the legislature. She
explained that if an agency had vacant positions, they
would be asked whether they could fund the request through
their vacancies. She relayed that the legislature was only
seeing what was critically needed by agencies to make their
current year obligations.
Representative Stapp stated the situation created another
real problem which was how much money would be needed in a
supplemental if all vacancy positions were filled.
Ms. Teshner replied that money would not be approved if it
was going to cause a department a deficit.
2:06:12 PM
Representative Stapp stated his understanding that if a
department was actively recruiting a vacant position, it
would be removed from the lapse report. He felt that there
was always a lapse in personal services line money.
Ms. Teshner replied that she would not phrase it that way.
She shared that if a position had been vacant for 10 years,
they would question the necessity of the position. OMB had
been working with agencies to review long-standing
vacancies to understand the need and if something could be
repurposed before adding to the budget.
2:07:56 PM
Representative Stapp wanted to understand where the money
was going. He thought that the budgeting for positions
exceeded the number of positions that were filled. He
argued that departments had lapsed funding for vacancies
every year during his tenure.
Ms. Teshner contended that this was not the case for all
agencies. The items before the committee were for things
agencies had determined needed more funding. She stated
there would most likely be a lapse at the end of the year
in personal services, but they did not have that
information yet.
2:10:41 PM
Representative Galvin understood that if a department ran
out of funds for something that was needed, they would
shift personal services funds around.
Ms. Teshner replied that if they had an obligation to meet,
they would look across all budget line items to determine
which funds could be moved.
Representative Galvin asked whether OMB kept track of which
items moved and what that money funded.
Ms. Teshner replied that they did track movements of money.
Representative Galvin asked for verification the bill
included needs the state had after the process of pulling
from other areas in departmental budgets.
Ms. Teshner agreed.
Representative Galvin asked for verification that was what
the bill was.
Ms. Teshner agreed.
2:13:13 PM
Representative Johnson did not know whether she had ever
had so much concern at this point in the process. She asked
about the sense of how accurate the accounting was within
administrative departments. She thought that sometimes more
money than was anticipated lapsed.
Ms. Teshner answered they were confident in the budget
tracking system.
Representative Johnson reiterated that sometime there was
more of a lapse than anticipated.
Ms. Teshner replied there were cases where more than
expected was lapsed.
Co-Chair Josephson recognized that Representative Allard
had joined the meeting. He recognized Representative Julie
Coulombe in the audience.
2:15:12 PM
AT EASE
2:17:27 PM
RECONVENED
Co-Chair Josephson asked whether any of the committee
members had questions about the CBR language. He thanked
Ms. Teshner for her time.
Representative Hannan asked for a repeat of the page.
Co-Chair Josephson cite page 18, section 16, asked for
explanation of section 16.
KEN ALPER, STAFF, REPRESENTATIVE ANDY JOSEPHSON, discussed
the CBR language in the bill:
* Sec. 16. CONSTITUTIONAL BUDGET RESERVE FUND. (a) If,
after the appropriation made in sec. 55, ch. 7, SLA
2024, the unrestricted state revenue available for
appropriation in fiscal year 2025 is insufficient to
cover the general fund appropriations that take effect
in fiscal year 2025 that are made in this Act, as
passed by the Thirty-Fourth Alaska State Legislature
and enacted into law, and the general fund
appropriations that take effect in fiscal year 2025
that are made in ch. 7, SLA 2024, ch. 8, SLA 2024, and
ch. 9, SLA 2024, not including the appropriations
made in sec. 56, ch. 7, SLA 2024, the amount necessary
to balance revenue and general fund appropriations
that take effect in fiscal year 2025 that are made in
this Act, as passed by the Thirty-Fourth Alaska State
Legislature and enacted into law, and the general
fund appropriations that take effect in fiscal year
2025 that are made in ch. 7, SLA 2024, ch. 8, SLA
2024, and ch. 9, SLA 2024, not including the
appropriations made in sec. 56, ch. 7, SLA 2024, is
appropriated to the general fund from the budget
reserve fund (art. IX, sec. 17, Constitution of the
State of Alaska).
(b) If, after the appropriation made in (a) of
this section, the unrestricted state revenue
available for appropriation in fiscal year 2025
is insufficient to cover the general fund
appropriations that take effect in fiscal year
2025, not including the appropriations made in
sec. 56, ch. 7, SLA 2024, the amount necessary to
balance revenue and general fund appropriations
that take effect in fiscal year 2025, or to
prevent a cash deficiency in the general fund in
fiscal year 2025, not including the
appropriations made in sec. 56, ch. 7, SLA 2024,
not to exceed $7,543,900, is appropriated to the
general fund from the budget reserve fund (art.
IX, sec. 17, Constitution of the State of
Alaska).
(c) The appropriations made from the budget
reserve fund (art. IX, sec. 17,
Constitution of the State of Alaska) in (a)
and (b) of this section are made under art.
IX, sec. 17(c), Constitution of the State
of Alaska.
2:23:32 PM
Representative Johnson stated it was great to have the
language in the budget.
2:24:13 PM
Co-Chair Josephson asked whether the $7.5 million was
technically not requested by the administration, but it was
to avoid a second supplemental.
Mr. Alper agreed. He said that the $80 million shortfall in
the previous years budget was an estimate and was covered
by subsection (a).
2:25:54 PM
Representative Bynum asked for verification that subsection
(b) was a buffer and subsection (a) was the potential
shortfall, plus all the additional requests.
Mr. Alper answered in the affirmative.
Co-Chair Josephson discussed housekeeping.
HB 56 was HEARD and HELD in committee for further
consideration.
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