Legislature(2025 - 2026)BARNES 124
02/21/2025 09:00 AM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB60 | |
| HB99 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 99 | TELECONFERENCED | |
| + | HB 60 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 60-PROCURE PREF: AGRIC. & FISH PRODUCTS
9:01:19 AM
CO-CHAIR HALL announced that the first order of business would
be HOUSE BILL NO. 60, "An Act relating to municipal and state
procurement preferences for agricultural products harvested in
the state and fisheries products harvested or processed in the
state; and providing for an effective date."
9:01:25 AM
The committee took a brief at-ease at 9:01 a.m.
9:02:16 AM
ANNA LATHAM, Deputy Commissioner, Department of Commerce,
Community and Economic Development, began a PowerPoint
presentation [hard copy included in the committee packet] on HB
60. She stated that HB 60 was a result of the administration
focusing on food security in Alaska. She explained that the
global pandemic [COVID-19] triggered supply chain disruptions
across the United States that impacted the delivery of food and
other essential goods. She stated that Administrative Order
(AO) 331, ordered in 2022, was a part of the Dunleavy
Administration's initiative to increase food security and
agricultural sector growth. She explained that AO 331 created
the Alaska Food Security and Independence Taskforce. She
reported that the recommendations of the taskforce included
increasing the procurement and use of Alaska-sourced foods in
state & local agencies, institutions, and schools. She stated
that she had met with growers and processers who reported a need
to enter commercial markets. Additionally, she stated that HB
60 aligns with AO 136, the directive from the administration to
create a Department of Agriculture.
MS. LATHAM moved to slide 2 of the PowerPoint, titled
"Procurement Preference: Agriculture and Fish Products House
Bill 60," and gave an overview of Alaska's current procurement
code, which she noted has been in place since 1996. This read
as follows [original punctuation provided]:
AS 36.15.050 and AS 29.71.040 require the use of
local agricultural and fisheries products by state
agencies, school districts, and municipalities that
receive state money
Current statute requires agricultural and
fisheries products harvested in the state:
Shall be purchased if the product is priced
not more than seven percent above a similar product
harvested outside the state
May be purchased if the product is priced
not more than 15 percent above a similar product
harvested outside the state
MS. LATHAM clarified that HB 60 would impact only agriculture
and fish products; it would not impact timber or steel, for
example.
MS. LATHAM moved to slide 3, and gave an overview of the current
purchasing process, which read as follows [original punctuation
provided]:
The DOA Office of Procurement and Property
Management administers a statewide contract with US
Foods (Mandatory for the Department of Corrections and
Non-mandatory for all others)
Local growers register and indicate the products
they can provide
State agencies set up a corporate account with
vendor
Once they've set up an account, there is an
option to select Alaska Grown Products
These are online mobile markets that display
Alaska products
State buyers such as the Department of
Corrections and AMHS purchase products based on price
after the application of preferences
MS. LATHAM noted that, upon checking the US Foods website, there
are only two products available: potatoes and lettuce. She
further noted that there are typically very few Alaska products
available on the website. She gave a list of qualified users,
including state agencies, federally recognized tribes on the
Bureau of Indian Affairs (BIA) list, the legislative branch, the
university, the court system, state boards and commissions,
boroughs, cities, and school districts. She noted that
corporate agencies are exempt from the procurement code, as they
have their own procurement code. She explained that the intent
of the legislation is to bring awareness to local growers and
fishermen and encourage them to ramp up production and become a
vendor with U.S. Foods.
MS. LATHAM moved to slide 4, and gave an overview of the
proposed changes under HB 60, which read as follows [original
punctuation provided]:
Increases allowable price differentials for state
agencies, school districts, and municipalities to
purchase more Alaskan agricultural and fisheries
products
Changes the purchase price differential for
required in-state purchases from seven percent to ten
percent
Changes the purchase price differential for
permissible in-state purchases from 15 percent to 25
percent
Incentivizes more production of Alaska-grown
agricultural and Alaska fisheries products by
providing access to institutional markets
MS. LATHAM added that Alaska producers have cited cost barriers
to institutional markets. She further noted that the 3-percent
increase for required in-state purchases was done so to avoid
adverse effects on school districts and municipalities.
MS. LATHAM, moved to slide 5, drawing committee members'
attention to the table chart, which is representative of state
agencies' procurement of Alaska grown versus non-Alaska grown
food products. She noted that the State of Alaska spent $17
million on food products, with roughly $200,000 spent on Alaska
grown products.
9:08:01 AM
TOM MAYER, Chief Procurement Officer, Department of
Administration, clarified that the $17 million was
representative of all food products purchased by the State of
Alaska through the U.S. Foods contract, not just the agriculture
and fish products.
9:08:16 AM
MS. LATHAM remarked that there is a lot of room for improvement
in Alaska grown markets, noting that the percentage of Alaska
grown purchases was 0.014 percent.
9:08:47 AM
CO-CHAIR HALL invited questions from committee members.
9:08:54 AM
REPRESENTATIVE COULOMBE queried the price differential between
15 and 25 percent. She used potatoes as an example, seeking
clarification that an Alaska agency could choose to purchase
potatoes grown in state that are not necessarily the cheapest
available.
MS. LATHAM confirmed that, under HB 60, if Alaska grown potatoes
are within 10 percent of non-Alaska grown potatoes, state
agencies under the jurisdiction of the proposed legislation
would be required to purchase the Alaska potatoes.
Additionally, she explained that state agencies are allowed to
purchase Alaska grown potatoes up to 25 percent more expensive
than non-Alaska grown potatoes, allowing more money to circulate
in state.
REPRESENTATIVE COULOMBE stated that ultimately, HB 60 could
increase food costs for the agencies under the proposed
legislation's jurisdiction. She asked if agencies would be
required to purchase Alaska grown products under the proposed
legislation or if they could opt out.
MS. LATHAM responded that agencies must buy what's available
through the U.S. Food contracts. Further, she stated that,
under HB 60, if Alaska products are within 10 percent of non-
Alaska products, the agencies would be required to purchase the
Alaska products. She reiterated that [agencies] would be
permitted to spend up to 25 percent more on Alaska grown
products over non-Alaska grown products.
9:10:47 AM
REPRESENTATIVE SADDLER queried the strength of the current
mandate to purchase Alaska grown products.
MR. MAYER responded that he is not sure that there is a way to
measure that.
REPRESENTATIVE SADDLER further queried the potential additional
costs of the proposed legislation.
MR. MAYER, referring to the table chart on slide 5 of the
PowerPoint presentation, noted that the largest buyers of
Alaska-grown products were the Department of Corrections (DOC)
and the Department of Commerce, Community, and Economic
Development-Alaska Seafood Marketing Institute (DCCED-ASMI). He
stated that ASMI bought mostly canned seafood for conventions
and the DOC purchases were for incarcerated individuals. He
estimated an additional cost of roughly $7,000.
REPRESENTATIVE SADDLER questioned why the purchases of ASMI and
DOC were so close in number, $117,667 and $117,643 respectively.
MR. MAYER responded that it was serendipitous.
9:12:30 AM
CO-CHAIR FIELDS asked whether DOC had contemplated purchasing
more seafood.
MS. LATHAM stated [DCCED] had not had conversations with DOC
about inmates' meals.
CO-CHAIR FIELDS offered interest in stronger language mandating
[DOC] purchase Alaska seafood. Additionally, he asked whether
DOC had considered growing food; he noted the department owns "a
lot of land." Further, he asked whether [DOC] had contemplated
long-term purchase agreements with farmers of greater scale,
"given the size of DOC's purchasing power."
MS. LATHAM stated that she would follow up with the committee
regarding DOC. She offered her belief that DOC has capacity for
processing food, but she was unsure of DOC's capacity to grow
food.
9:14:03 AM
REPRESENTATIVE BURKE shared concerns that there would be an
increased cost to school districts, particularly in rural
Alaska. She queried the additional cost of freight. She asked
the reason behind the low procurement of Alaska-grown products,
referencing the table chart on slide 5, and pondered if the low
purchasing was due to limited products. She further queried how
long the vendors have been on U.S. Foods.
9:15:19 AM
MS. LATHAM replied that she found a study between the Alaska
Farm Bureau and the University of Alaska Fairbanks (UAF) that
concluded that buying in-state could decrease costs due to
decreased food waste. She stated she would follow up with that
information for the committee.
9:16:15 AM
MR. MAYER responded that the statutes for the U.S. Foods program
contracts have been in place since 1988. He admitted that the
proposed legislation would increase costs but stated that
purchasing Alaska grown products is already mandatory for school
districts.
9:17:07 AM
REPRESENTATIVE CARRICK offered her appreciation for the intent
of the proposed legislation. She questioned whether a [10]-
percent differential was large enough for rural communities.
She further queried the cost difference of Alaska-grown potatoes
in Utqiagvik, for example, versus "produced out-of-state." She
additionally asked about regional price differences.
9:18:24 AM
MS. LATHAM clarified the proposed legislation would be a 10-
percent differential, from 15 to 25 percent. She stated that
she would follow up with the committee on average prices and the
costs of shipping.
9:18:49 AM
REPRESENTATIVE SADDLER stated that he supports Alaska
agriculture. He wondered whether the change in percentage
proposed by HB 60 would be effective. He queried other
structural impediments in the uptake of Alaska grown products.
MS. LATHAM responded that there is a balance between making
incremental changes and disrupting the market. She stated that
the percentage change was based both on meetings with the Alaska
Farm Bureau and recommendations of the taskforce.
MR. MAYER offered his belief that there are capacity limitations
and storage limitations.
9:20:29 AM
MS. LATHAM, in response to Representative Coulombe's question,
stated that "polisubs" stood for political subdivisions, in the
table chart on slide 5.
9:20:50 AM
CO-CHAIR HALL thanked the invited testifiers.
CO-CHAIR HALL announced that HB 60 was held over.