Legislature(2023 - 2024)DAVIS 106
04/24/2024 06:00 PM House WAYS & MEANS
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| Audio | Topic |
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| Start | |
| HB194 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 194 | TELECONFERENCED | |
HB 194-CONSENSUS ESTIMATING CONFERENCES; BUDGET
6:23:19 PM
CHAIR CARPENTER announced that the only order of business would
be SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 194, "An Act relating
to the duties of the Legislative Budget and Audit Committee;
relating to the Executive Budget Act; establishing consensus
estimating conferences; relating to the development of official
information for use in preparing the state budget; and providing
for an effective date."
CHAIR CARPENTER noted that before the other body is SB 21, which
is not a companion bill to SSHB 194, and which would amend the
Executive Budget Act to require the Executive Branch to provide
information that is far more detailed and useful in the
budgeting process. He said a committee substitute [will be
proposed] that would take sections of SB 21 and combine them
with SSHB 194.
6:24:12 PM
REPRESENTATIVE MCCABE moved to adopt the proposed committee
substitute (CS) for SSHB 194, Version 33-LS0648\R, Klein,
4/18/24, as a working document.
CHAIR CARPENTER objected for the purpose of discussion.
6:24:40 PM
KENDRA BROUSSARD, Staff, Representative Ben Carpenter, Alaska
State Legislature, on behalf of Representative Carpenter, prime
sponsor, gave the sectional analysis [included in the committee
packet], which read as follows [original punctuation provided]:
Section 1
Amends the fish and game fund (AS 16.05.110 (b)) to
conform to changing the section in the executive
budget act regarding budget preparation in this bill.
Section 2
Amends fiscal note requirements (AS 24.08.035) to
allow the sponsor for a bill or a committee to request
a special impact estimating conference to evaluate a
fiscal note.
Section 3
Adds a new section to (AS 24.08.035) that allows a
special impact estimating conference to evaluate
fiscal notes and prepare a new fiscal note to replace
any existing fiscal note for a bill.
Section 4
Adds to the duties to the Legislative Budget and Audit
Committee (AS 24.20.206) to adopt a method of
measuring results for state agencies and to provide
the measures to the Governor's Office of Management
and Budget (OMB).
Section 5
Amends the Statement of Policy for the Executive
Budget Act (AS 37.07.010) to include strategic and
performance plans and setting and measuring program
and financial goals.
Section 6
Adds to requirements for the Legislature under the
Executive Budget Act (AS 37.07.014 (a)) to review the
performance and financial plans approved by the
governor and to organize the budget by service and
program area and to include the service or program
cost and the desired measurements for each.
Section 7
Requires the Legislative Budget and Audit Committee
(AS 37.07.014 (b)) to adopt a method of measuring
results for each agency and to provide the measures it
has set for each agency to the OMB by August 1st each
year.
Section 8
Amends requirements of the Legislature to foster
results-based government (AS 37.07.014 (d)), to
clearly identify service, program, and financial goals
and desired results and to assign service or program
measurements for agencies and to assess progress
toward those goals. LB&A will assign methods for
measuring, reporting, and evaluating results.
Section 9
Amends the requirements of the Governor under Article
III Sections 1 (Executive Power) and 16 (Executive
Authority: responsibility for faithful execution of
the laws) of the Constitution to approve strategic and
performance plans for each state agency and use the
financial goals and desired results to implement and
execute the law. The Governor shall review the
agency's strategic and performance plans and approve
or require the Office of Management and Budget to
revise them. The Governor shall ensure that each
agency complies with the service and program
measurements and achieves the desired results
identified by the legislature.
Section 10
Amends the requirements of the Governor in preparing
the Governor's budget. Requires the budget be
organized by program or service of each agency and
include service and program cost and desired results
for each. Each service and program expenditure request
must include detailed unit cost and performance of the
service or program expenditure. Changes the Governor's
budget submission deadline for a newly elected
governor from December 15 to January 15.
Section 11
Requires the Governor's budget to include projections
for three succeeding fiscal years rather than ten
succeeding years.
Section 12
Requires the proposed expenditures in the budget not
to exceed estimated revenues for the succeeding fiscal
year. Operating expenditure may not exceed official
estimates of recurring revenue. This provision will
allow non-recurring revenue to only be used for
capital projects or for savings.
Section 13
Adds a new section of the Executive Budget Act to
require the Governor to submit an alternative budget
plan for the next fiscal year, and projections for the
next three succeeding fiscal years, based on the
average price per barrel for Alaska North Slope crude
oil for sale on the United States West Coast over the
preceding ten years. Requires the Governor to submit
an alternate budget plan based on $70 per barrel for
Alaska North Slope crude oil.
Section 14
Adds a new section of law that creates a consensus
estimating process. Consensus estimating conferences
are created in the legislature for economic and
demographic forecasts, revenue estimates, and
expenditure estimates for education, criminal justice,
social services, and retirement costs. The membership
of each conference consists of principals and
participants. Principals of the conference are the
director of the legislative finance division or the
director's designee. Participants include staff of the
house and senate designated by the Speaker and
President, and participants appointed by the governor.
Each conference shall develop "official information"
within its area of responsibility that the conference
determines, by consensus, is needed for the purpose of
preparing the state budget. Provides for the
procedures of the estimating conferences, including
public meetings. Conferences develop "official
information" based on current law. Following the
regular session of the legislature, each conference
shall convene in a final session to revise the
official information of the conference to reflect
changes made in law. Adds special impact estimating
conferences that can be requested by the Speaker of
the House or the President of the Senate to evaluate a
legislative proposal. The official information from a
special impact conference will serve as a fiscal note.
Section 15
Adds to the duties of the Office of Management and
Budget in AS 38.07.040 shall assist the Governor in
meeting the requirements of this Act in the
development of performance and financial plans and
coordination and analysis of state agency goals issued
by the legislature. OMB is required to submit a five-
year capital improvements plan to the legislature by
December 15 each year that must include estimated cost
of construction and maintenance, the estimated project
timeline, potential funding sources, and justification
for each project. OMB is required to provide
electronic data used in building its budget to the
legislature at least seven days before the legislative
session. OMB is required to submit to the legislature
by December 15 each year an annually updated five-year
capital improvements program, which must include the
estimated cost of construction and maintenance, the
estimated project timeline, potential funding sources,
and justification for each project.
Section 16
Adds to requirements of state agencies in AS 37.07.050
for each state agency to include in its strategic,
financial, and performance plans progress made toward
achievement of service, program, financial goals and
desired results issued by the legislature, and to
submit these plans to the legislature by December 15
each year. [T]he results of the measures set by the
legislature and achievement of program, service, and
financial goals.
Section 17
Adds a new section of law (AS 37.07.055)[.] Boards and
commissions shall submit a financial plan by December
15th to OMB, Legislative Finance, and the legislature.
Each plan must include the requested budget for next
fiscal year, expenditures made during previous fiscal
year, expenditures authorized for current fiscal year,
explanation of services, need for services, and cost
of services, number of total positions employed or
under contract, including those for capital
improvements. Each board and commission must include a
report of receipts and expenditures for the previous
fiscal year, an estimate of receipts for the current
fiscal year, and an estimate of receipts and
expenditures for the succeeding fiscal year. Each
board and commission must identify any legislation
required to implement financial plans. Boards and
commissions shall submit an annual operations plan by
a date prescribed by OMB. OMB shall review each
operations plan for alignment with statewide
priorities, appropriations, planning methods, and
legislative authority, approve or require revision of
the operations plan. OMB shall assist in preparation
of financial plan and OMB may prepare financial, or
operations plans if a board or commission fails to
transmit either plan by an OMB specified date. OMB
shall compile and submit a summary of boards and
commissions financial plans by December 15th to a
governor elect. Budget requests from boards and
commissions shall include identification of objectives
intended for the program and problem or need that the
program is intended to address, an assessment of
achievement of original objectives of the program, a
statement of costs, performance, and accomplishments
in each of last four fiscal years, a statement of
number and types of persons affected by the program, a
summary statement of the number and cost of personnel
employed or under contract over the last three
completed fiscal years, an assessment of the effect of
the program on the economy of the state, an assessment
of the how the policies meet the objective of the
legislature, an analysis of services and performance
estimated to be achieved over the life of the agency,
a prioritized list of the activities the board or
commission would expect to perform if the life of the
agency were to be continued. Boards and commissions
shall develop methods for measuring agency results.
OMB shall report quarterly to the governor and
legislature on operations of the boards and
commissions.
Section 18
Adds to requirements for the governor's budget
recommendation (AS 37.07.060) for the governor to
identify three to five statewide priorities, include
agency performance plans that implement the service,
program, and financial goals, recommended measures for
determining weather (sic) those goals have been met,
and an assessment of weather (sic) prior year goals
have been met.
Sections 19, 20
Adds to program execution (AS 37.07.080) conforming
language to include strategic plans and service,
program, and financial goals to agency programs
execution requirements.
Section 21 Adds to programs execution to require OMB
to review strategic plans to determine that the plan
is consistent with the goals issued by the legislature
and approve or revise those plans.
Section 22, 23
Conforming language to change agency operating plans
to strategic plans.
Section 24
Adds a new section to this Act (AS 37.07.085) to
create agency Performance Plans and Financial Plans.
Each agency shall develop annual performance and
financial [plans] consistent with the strategic plan.
Plans must be submitted to Legislative Finance, the
Senate, and the House by December 15th of each year.
The Performance plan must include a description of the
agency's program structure and any proposed changes,
identification of each program, constitutional and/or
statutory authority, a program purpose statement which
describes the services provided, the customers served
by the program, the benefit or intended outcome of the
program. Each plan must identify performance measures
which contribute to progress towards the agency's
strategic plan, identify goals and objectives that
each performance measure corresponds, identify results
for each performance measure over the past four fiscal
years, and identify performance targets for each
performance measure for the succeeding fiscal year.
Each plan must include revenue and expenditures for
each program for the prior four fiscal years,
breakdowns of revenue and expenditures for each
program, estimates of revenue and expenditures for
current and next fiscal year, budget requested to
carry out proposed plans of the agency in succeeding
fiscal year, expenditures authorized for current
fiscal year, expenditures proposed for the succeeding
fiscal year, number or positions employed or under
contract, cost of services provided by each program, a
report of receipts of agency for expenditures made
during prior year, estimate for current year, and
estimate for next year, [i]dentification of
legislation required to implement the proposed
financial plan. OMB shall assist in preparation of
financial plan and OMB may prepare financial, or
operations plans if a board or commission fails to
transmit either plan by an OMB specified date. OMB
shall compile and submit a summary of boards and
commissions financial plans by December 15th to a
governor elect.
Section 25
Amends Section AS 44.66.050(a): Legislative Oversight
to include reference to the new requirements of boards
and commissions.
Section 26 Repeals AS 37.07.014 (f).
Section 27
Effective date for Section 7 (LB&A to set program
measures) is July 1, 2025.
Section 28
Provides an effective date of July 1, 2024, for the
remainder of this Act.
6:38:37 PM
CHAIR CARPENTER stated he calls this an Executive Budget Act
rewrite even though that isn't the title nor completely
accurate. He said he thinks of the Executive Budget Act as a
standard operating procedure that defines how the state's
government is supposed to communicate and operate when there are
disagreements between the two branches on data or assumptions
used in financial or budgeting matters and fiscal notes. That
is crafted in the Executive Budget Act currently but it's not
working well currently, he opined. This bill, he continued, is
to help get to a better management framework.
6:40:52 PM
REPRESENTATIVE GROH said he appreciates the sponsor's efforts as
the bill is management oriented, likely to generate more useful
data, will help the state run better, and will help fix the
state's structural deficit. However, he argued, Section 12 is a
statutory spending limit, a limit on what the governor's budget
can propose, not what is appropriated. He argued further that
it is discriminatory it's a limit only on the operating budget
when all the evidence has shown that the things that spurt the
most in high revenue years are the capital budget and permanent
fund dividends.
6:43:47 PM
DONNA ARDUIN, Staff, Representative Ben Carpenter, Alaska State
Legislature, clarified Section 12. Current law, she explained,
says proposed expenditures may not exceed estimated revenues for
the succeeding fiscal year. She said Version R would add to the
balanced budget requirement that the operating budget
expenditures for agency and statewide operations must balance
with recurring revenue sources. The reason that is tied to
operations and not capital, she advised, is that nonrecurring
revenue can be used for capital projects, which is something
that other states do. Version R, she pointed out, would require
that in the case of one-time funds, savings would be used for
capital projects. Revenue estimating conferences in other
states, she related, consider unusually high oil prices as
nonrecurring revenue that cannot be spent on agency operations.
CHAIR CARPENTER stated that rather than a spending limit, he
describes it as a better way to communicate the budget between
the two branches.
6:45:40 PM
REPRESENTATIVE GRAY said he is philosophically concerned that
establishing performance plans, operation plans, financial
plans, and strategic plans for boards and commissions sounds
like death by bureaucracy because somebody would have to be
working on all these plans all the time yet not actually be
doing anything. He submitted that a board or commission might
execute plans but not achieve its goal or a board or commission
might struggle with executing plans but achieve its goal.
CHAIR CARPENTER responded that as a former operations officer
and person who generated the plans within the military, he
understands where Representative Gray is coming from. He agreed
it's possible that organizations can wing it and do well. But,
he maintained, in "our" bureaucracy that is few and far between
and not having a strategy or plan will result in waste and
inefficiency. He said performance measures are done once and
then reviewed periodically to ensure an organization is headed
on the right path. This is already supposed to be done to a
certain extent, he pointed out, but it is hit or miss as to
whether it is being done. Nobody enjoys the budget subcommittee
process, he continued, but if performance measures were being
done and communicated to the subcommittee, it would make that
process much more effective than what it is now. He said he
thinks the [proposed CS] narrows down and focuses the Executive
Budget Act so that it is useable and effective rather than broad
and unclear.
REPRESENTATIVE GRAY inquired about the number of boards and
commissions that this would apply to.
CHAIR CARPENTER answered that he doesn't know the overall number
of boards and commissions, but that the Executive Budget Act
applies to all of Alaska's boards and commissions.
MS. ARDUIN related that when presenting the [Alaska] Sunset
Commission, Ms. Broussard showed 180 entities of the state,
which includes boards, commissions, and divisions of the
departments.
REPRESENTATIVE GRAY drew attention to [Version R], page 24,
Section 25, [lines 6-8], which state, "(a) Before the
termination, dissolution, continuation, or reestablishment of a
board or commission under AS 08.03.010 or AS 44.66.010, a
committee of reference of each house, which shall be the
standing committee of legislative jurisdiction". He expressed
his fear that a couple of standing committees might be the
jurisdiction for a lot of boards and commissions, which at the
beginning of session could mean that those committees are
required to hold many hearings that include testimony by the
public and department commissioners. He inquired whether there
is a mechanism to ensure that one committee isn't going to have
to do 25 boards and commissions.
CHAIR CARPENTER replied that the Division of Legislative Audit
currently does sunset commissions on boards and provides reports
to the committees of jurisdiction. He said two other pieces of
legislation could help improve state government wholistically:
[one bill would establish] a sunset commission that has a
responsibility to periodically review all the departments of the
government, and [the other bill would direct] the "regulatory
review division" within the Legislative Budget and Audit
Committee's purview to help committees of jurisdiction review
changes in regulations over time so that the committees of
jurisdiction would not have to do all the heavy lifting. So, he
continued, getting the standard operating procedures set
correctly so that they're useable and mean something, along with
these other pieces that help with the process, would help with
not being overwhelmed at the committee level.
MS. ARDUIN specified that Section 25 is language that is in
current law. She said the only change in this section is the
reference to the new section of the Executive Budget Act.
6:52:50 PM
REPRESENTATIVE GRAY submitted that since this is required
already, it probably means it isn't being done. He said he
appreciates what the bill is designed to do, but thinks it is
asking members of committees to care and he isn't sure that it
can be legislated to care.
MS. ARDUIN advised that the sections requiring the strategic
plans, performance plans, and financial plans are not the type
of strategic plans seen in other venues. Requirements are in
the bill for what the agencies need to do with these plans, she
said, and [these sections] are designed to provide the
legislature with information for both policy and budget planning
that the legislature doesn't have now.
CHAIR CARPENTER added that an entity that should be influential
in whether [legislators] care is the electorate, and the
electorate must step in and help with this problem.
6:54:00 PM
REPRESENTATIVE MCCABE said he likes Section 2 because it has
long been needed. He said he will have an amendment for that
section because he is tired of having fiscal notes being
weaponized against bills by the departments.
CHAIR CARPENTER asked whether Representative McCabe would object
to the bill being amended in the next committee because the
committee is going to take public testimony and move out the
bill today.
REPRESENTATIVE MCCABE [did not object].
REPRESENTATIVE MCKAY inquired about the next committee of
referral.
MS. ARDUIN answered that it is the House Finance Committee.
6:56:00 PM
CHAIR CARPENTER opened public testimony, then closed it after
ascertaining that no one wished to testify.
6:56:37 PM
CHAIR CARPENTER removed his objection to the motion to adopt the
proposed CS for SSHB 194, Version 33-LS0648\R, Klein, 4/18/24,
as a working document. There being no further objection,
Version R was before the committee.
6:56:56 PM
REPRESENTATIVE MCCABE moved to report the proposed CS for SSHB
194, Version 33-LS0648\R, Klein, 4/18/24 out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSSSHB 194(W&M) was reported out of
the House Special Committee on Ways and Means.
6:57:42 PM
CHAIR CARPENTER noted that without objection, the committee
gives permission to Legislative Legal Services to make any
necessary technical and conforming changes to CSSSHB 194(W&M).
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