Legislature(2025 - 2026)BARNES 124
03/25/2025 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB13 | |
| SB50 | |
| HB133 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 13 | TELECONFERENCED | |
| *+ | HB 133 | TELECONFERENCED | |
| + | SB 50 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 133-PAYMENT OF CONTRACTS
9:08:43 AM
CO-CHAIR HIMSCHOOT announced that the final order of business
would be HOUSE BILL NO. 133, "An Act establishing a 30-day
deadline for the payment of contracts under the State
Procurement Code; establishing deadlines for the payment of
grants, contracts, and reimbursement agreements to nonprofit
organizations, municipalities, and Alaska Native organizations;
relating to payment of grants to named recipients that are not
municipalities; and providing for an effective date."
9:08:56 AM
The committee took an at-ease from 9:08 a.m. to 9:10 a.m.
[Co-Chair Himschoot passed the gavel to Co-Chair Mears.]
9:10:26 AM
CO-CHAIR HIMSCHOOT, as prime sponsor, introduced HB 133. She
paraphrased the sponsor statement [included in the committee
packet], which read as follows [original punctuation provided]:
House Bill 133 seeks to ensure timely payment from the
State of Alaska to parties that provide essential
support under state agreements. The State relies on
nonprofits, municipalities, and tribal organizations
to deliver critical services to Alaskans. Delayed
payments create financial hardships, disrupt crucial
resources, and threaten the financial stability of
service providers statewide for years. HB 133 aims to
bring prompt payment for nonprofits, municipalities,
and tribal organizations that rely on state funding in
their grants, contracts, and reimbursements. This
measure ensures both state and federal pass-through
funds are disbursed promptly to these parties, which
benefits the Alaskans they serve.
Currently, there is no mechanism in place to ensure
prompt payment to nonprofits, municipalities, and
tribes. HB 133 would levy penalties and interest
against the state when payments are delayed. HB 133 is
modeled after AS 36.90.200, which requires the State
of Alaska to pay private-sector contractors performing
construction or public works activities in a timely
manner, including imposing penalties for non-
compliance and interest on late payments. This
reimburses the contractor for opportunity costs or
additional burdens experienced. HB 133 would bring
parity in the payment system to nonprofits,
municipalities, and tribes.
The lack of payment parity is a long-standing,
systemic issue. It affects entities across the state
for payments of all sizes, with delays between three
months to over a year. The impacts are wide-ranging.
For some organizations, delayed payments threaten the
continuity of programs and services, leaving
organizations to pause operations, tap into reserves,
pursue lines of credit, or reduce staff until payments
are received. Municipalities have reported that
delayed payments affect payroll, project funding,
insurance renewals, and critical infrastructure
investments. For tribes and nonprofits, the risk is
even greaterdelayed payments directly impact
vulnerable populations who rely on consistent, high-
quality care and support. The state's failure to pay
in a timely manner not only harms these organizations
but also increases long-term costs due to interest,
lost investment returns, and administrative
inefficiencies.
Prompt payment is a fundamental principle of fair
contracting. Ensuring prompt payments will strengthen
partnerships between the state and the organizations
that serve Alaskans. This legislation will increase
transparency, implement penalties for late payments,
and streamline reimbursement processes. House Bill 133
ensures that funds are distributed efficiently,
equitably, and on time, and upholds the state's
commitment to those who work tirelessly on behalf of
our communities.
9:14:48 AM
ELLA LUBIN, Staff, Representative Rebecca Himschoot, Alaska
State Legislature, on behalf of Representative Himschoot, prime
sponsor, presented the sectional analysis for HB 133 [ included
in the committee packet], which read as follows [original
punctuation provided]:
Section 1 amends AS 36.30 by adding a new section
requiring a state agency to promptly pay a contractor
for satisfactory service. Criteria are established for
acceptable delays in payment and the protocol related
to alerting a contractor to the reason for this delay.
This section provides several timelines for the
accruement of interest on late payments: a late
payment will begin to accrue interest on the thirty-
first calendar day after invoice, and a reasonably
delayed payment will begin to accrue interest on the
twenty-first calendar day after resolution on the
contract has been found.
Section 2 amends AS 36.30 article 4 by adding a new
section to include the prompt payment of grants and
reimbursements for nonprofit organizations,
municipalities, and Alaska Native organizations.
Timelines delineating the accruement of interest on
late payments for state funds and federal pass-through
funds are
established, as are acceptable delays in payment and
the protocol for noticing as such. An agency has
twenty one calendar days from invoice to pay without
interest penalty if using federal pass-through funds
and thirty calendar days from invoice to pay without
interest penalty for all other funds. This section
also defines the terms used throughout this bill.
Section 3 amends AS 37.05.316 by adding a new
subsection (d) which requires a state agency to pay at
least twenty percent of the grant amount within 10
days. This section also specifies how the rest of the
grant must be paid out to a named recipient.
Section 4 provides an immediate effective date for
this measure.
9:17:09 AM
CO-CHAIR MEARS opened invited testimony.
9:17:21 AM
LAURIE WOLF, President/Chief Executive Officer, Foraker Group,
gave invited testimony on HB 133. She said the state relies on
its partnership with the Foraker Group to deliver services
through grants, contracts, and reimbursements; however, the
partnership is broken when it comes to money. Because of the
current process, the Foraker Group is asked to report on money
that has not been received in order to stand in line for the
next payment that will also be delayed. Importantly, this money
has been approved by the legislature, she noted. She explained
that prompt payment must be followed when conducting
transactions with for-profit businesses, as directed by AS
36.90.200; unfortunately, this rule does not apply to
municipalities, nonprofits, and Tribal organizations. She said
the Foraker Group's goal is to ensure that the state is
efficient and that the work organizations provide to Alaskans is
predictable, stable, and available. After surveying Alaska
organizations to demonstrate the severity of the issue, top
impacts of delayed payments include cash flow issues,
operational delays, increased administrative burdens,
uncertainty and financial planning challenges, negative impacts
on staff, strained relationships, and impact on program
continuity. Delayed payments also directly impact economies
around the state because nonprofits cannot pay their bills to
other for-profit and nonprofit vendors. She clarified that the
purpose of HB 133 is to establish a foundation for moving
forward based on prompt payment parity, along with incentives
for timely payments just like the private sector. She
encouraged members to consider the bill favorably.
9:22:11 AM
REPRESENTATIVE RUFFRIDGE, referencing the Foraker Group's
written testimony [included in the committee packet], asked how
many dollars would fall into the category of "behind by thirty
days" in the nonprofits represented by the Foraker Group.
MS. WOLF explained that every department has its own system, so
it's difficult to account for all delayed payments. She added
that the Foraker Group has been asking for the total amount of
delayed payments for many years.
9:24:10 AM
STEPHANIE BERGLUND, CEO, Thread Alaska, gave invited testimony
paraphrased the following written remarks [included in the
committee packet]:
Thread is Alaska's statewide child care resource and
referral organization. We are a private 39-year-old
nonprofit serving families, early educators, early
childhood education programs, businesses and
communities across the state all to increase access
to affordable and high quality child care.
Thread is a grantee of the State, receiving most of
our organizational funding from the State Department
of Health and the State Department of Education and
Early Development. We are proud to be close partners
with the State's early childhood offices regularly
working to execute projects and grants that support
the child care sector, including the distribution of
millions in COVID-19 Relief funds. thread strongly
supports House Bill 133 and Senate Bill 129. As an
organization that relies on State funding to provide
services, pay parity is critical to ensure services
are delivered timely and with intent to meet the
required grant/contracted scopes of work. While we
have seen some important improvements at the
Department of Health, we continue to encounter
significant delays and uncertainty surrounding
payments and reimbursements from the State of Alaska.
Overall, there is inconsistency in how Departments
issue, approve, disperse and pay for
granted/contracted services. This includes
irregularity in following agreement timelines. The
lack of payment parity has been a growing issue and
has persisted across multiple administrations,
affecting organizations statewide including thread
clients.
Many of the child care programs we work with have also
experienced the negative impact of these
inconsistencies and delays. Child Care Assistance
Program payments are issued monthly, and when those
payments are delayed, it creates financial strain on
the small margins that many child care small
businesses operate on. The cost of leases, utilities,
and wages are fixed expenses, regardless of when
reimbursements are processed. Payment delays put the
sustainability of these programs at risk, compromising
the high-quality services they provide to families and
early educators across the state.
HB 133 and SB 129 address a long-standing inequity by
ensuring that nonprofits, municipalities, and tribal
organizations receive timely payments for essential
work. These bills would bring payments to nonprofit
partners in line with the existing statutory
protections for private contractors, ensuring that
critical funding is distributed as intended and
without unnecessary delays. Resolving this issue is
essential to Alaska's nonprofit sector and ensuring
that we continue to effectively serve our communities.
We strongly urge you to prioritize the passages of HB
133 and SB 129 to allow nonprofits like thread to
continue our vital work without the financial
instability caused by delayed payments. Thank you for
your leadership on this issue and your commitment to
supporting Alaska's families and communities.
9:28:21 AM
CAROLE TRIEM, Government Affairs Manager, Alaska Municipal
League (AML), gave invited testimony on HB 133. She explained
that all of AML's 165 members receive payments from the state
either through grants or pass through of federal funds. For
many members, Community Assistance is the most important of
those programs, which remits payments from the state to local
governments, and for several dozen communities, represents
between 40-90 percent of their annual budgets. In communities
without large tax bases, municipal resources are depleted or
stretched thin by the end of the year and local government
operations will sometimes shut down as they wait for new revenue
to come in, which makes prompt payments very important. Without
timely payments, cities face cash flow issues and problems
making payroll, and the delays may cause extra costs in
contracts and purchases. The city of Toksook Bay, for example,
reported that delays in Community Assistance payments resulted
in higher insurance costs due to interest penalties after missed
payment deadlines. She listed other programs through which
communities receive payments from the state.
9:31:47 AM
REPRESENTATIVE RUFFRIDGE highlighted the Department of
Administration's (DOA) zero fiscal note and sought to verify
that the department could implement this bill at zero cost. In
addition, he asked how the interest would be paid and whether
the bill would require that interest be paid.
CO-CHAIR HIMSCHOOT said if the state makes prompt payment there
would be no added expense. She said the desire is for the state
to get out and stay out of arrears with nonprofits, Tribes, and
municipalities. She offered to follow up on the query about
interest payments.
REPRESENTATIVE RUFFRIDGE referred to AS 45.45.010, which
according to the court, does not actually prescribe interest on
anything despite seemingly intending to do so. He asked whether
each department would need to submit a fiscal note to explain
how this goal would be accomplished.
CO-CHAIR HIMSCHOOT pointed out that if all departments were to
provide timely payments, the fiscal note would be zero. With
regard to interest, she said the bill would not change state
requirements when partnering and providing funds to another
private or nonprofit entity.
9:36:56 AM
REPRESENTATIVE RUFFRIDGE asked whether interest had been paid on
late payments for other contractual arrangements and if so,
whether it was 10.5 percent.
CO-CHAIR HIMSCHOOT said she did not know the answer and had been
trying to find that information. She contemplated where the
funding for the extra payment would come from and offered to
follow up with the requested information if there are concrete
examples of late payments.
9:38:08 AM
REPRESENTATIVE HOLLAND expressed appreciation for the bill and
highlighted the importance of Section 3. He recommended
clarifying that payments are not automatic and that civic
organizations must be compliant within the payment system and
submit proper documentation.
CO-CHAIR HIMSCHOOT sought to confirm that Representative Holland
was suggesting that Section 3 should further clarify that
certain benchmarks must be met.
REPRESENTATIVE HOLLAND said he was looking for clarification
that checks would not be automatically sent without the
recipient setting themselves up for payment.
CO-CHAIR HIMSCHOOT shared her understanding that those steps are
inferred but could be made explicit.
9:43:00 AM
REPRESENTATIVE PRAX suggested that the administration should
speak to why they cannot do this without direction from statute
and asked whether the committee would be hearing from
departments.
CO-CHAIR HIMSCHOOT said the problem is widespread and
longstanding and has spanned multiple administrations. She
offered to reach out to department leadership for further
insight.
9:46:01 AM
REPRESENTATIVE RUFFRIDGE referenced the pie chart on a handout
from the Foraker Group [included in the committee packet] and
questioned why the percentages total 128 percent, not 100
percent. He said it can't be assumed that payments would be
made on time and expressed his hope that further conversations
with departments, particularly the Department of Education and
Early Development (DEED) and the Department of Health (DOH),
would be had.
CO-CHAIR HIMSCHOOT deferred to Ms. Wolf.
9:49:54 AM
MS. WOLF said the data is a point in time survey from summer
2024, and not meant to be a representative sample of all 5,600
nonprofits within the state. Similarly, the pie chart
represents organizations' responses and is not meant to add up
to 100 percent. She said she hoped the takeaway is that the
problem is systemic and therefore, a systemic solution is
needed.
9:51:59 AM
TOM MAYER, Chief Procurement Officer, Office of Procurement and
Property Management, Department of Administration (DOA),
confirmed that the dollar impact would be minimal because only a
few forms would need to be modified. He said the Office of
Procurement and Property Management does not process or pay
bills, and that invoices are generally approved by project
managers.
9:52:53 AM
REPRESENTATIVE RUFFRIDGE asked how many grant payments to
nonprofits the Office of Procurement and Property Management is
responsible for.
MR. MAYER said his office establishes multi-agency contracts for
things like office supplies that all agencies use. He explained
that the procurement office does not track payments to allow for
a separation of powers that avoids the responsibility of both
procuring something and approving the payment for that thing.
REPRESENTATIVE RUFFRIDGE asked why then, DOA wrote a fiscal note
for the bill.
MR. MAYER answered, "We were required to write a fiscal note,
and in our case, for my particular section, there was no dollar
cost to it. All we can do is modify forms."
9:54:40 AM
REPRESENTATIVE PRAX asked who is responsible for making and
tracking the payments.
MR. MAYER suggested the accounting team for each department.
9:55:50 AM
REPRESENTATIVE HOLLAND commented that he's stunned that the
procurement process is not tracking payments to contractors.
REPRESENTATIVE PRAX commented that in addition to nonprofits,
employees are not getting paid. He stressed the need to speak
with each department face to face to resolve the issue.
9:57:39 AM
CO-CHAIR HIMSCHOOT reiterated that her intention with HB 133 is
to solve a problem and set a performance standard that is on par
with private contractors.
CO-CHAIR MEARS announced that HB 133 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 13 Sponsor Statement version N.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 version I (CS SS HB 13 (CRA)).pdf |
HCRA 3/25/2025 8:00:00 AM |
HB 13 |
| HB 13 version N (SS HB 13).pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 version A.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 Summary of Changes (version A to N to I).pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 Sectional Analysis version N.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 Fiscal Note - DCCED-DCRA 3.21.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 Additional Documents-Anchorage Assembly Feb 2025 Resolution of Support.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM |
HB 13 |
| HB 13 Additional Documents-Dwelling Unit Definition.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 Additional Documents-Federal low-income family definition and Link.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 133 Sponsor Statement - Version G.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM HCRA 4/8/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM |
HB 133 |
| HB 133 - Version G 3.8.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM HCRA 4/8/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM |
HB 133 |
| HB 133 Sectional Analysis - Version G.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM HCRA 4/8/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM |
HB 133 |
| HB 133 Fiscal Note - DOA-OPPM 3.21.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM HCRA 4/8/2025 8:00:00 AM |
HB 133 |
| HB 133 Testimony - Received by 3.24.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM |
HB 133 |
| SB 50 Sponsor Statement version I.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/1/2025 8:00:00 AM |
SB 50 |
| SB 50 Version I 3.10.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/1/2025 8:00:00 AM |
SB 50 |
| SB 50 version N SCRA CS.pdf |
HCRA 3/25/2025 8:00:00 AM |
SB 50 |
| SB 50 version A.pdf |
HCRA 3/25/2025 8:00:00 AM |
SB 50 |
| SB 50 Explanation of Changes version A to version I.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/1/2025 8:00:00 AM |
SB 50 |
| SB 50 Sectional Analysis version I.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/1/2025 8:00:00 AM |
SB 50 |
| SB 50 Testimony - Received as of 3.24.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/1/2025 8:00:00 AM |
SB 50 |
| HB 133 Research - Impact of Delayed Payment.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM HCRA 4/8/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM |
HB 133 |
| HB 133 Testimony - Prompt Payment Resolution -FINAL 3.25.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM |
HB 133 |
| HB 13 Additional Documents-Girdwood Valley Service Area Board of Supervisors Letter of Support.pdf |
HCRA 3/25/2025 8:00:00 AM |
HB 13 |
| HB 13 Additional Documents-Anchorage Bill of Rights.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |