Legislature(2009 - 2010)HOUSE FINANCE 519
03/24/2009 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HCR13 | |
| HB199 | |
| HCR13 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HCR 13 | TELECONFERENCED | |
| *+ | HB 199 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 199
"An Act making supplemental appropriations and capital
appropriations; amending appropriations; and providing
for an effective date."
KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR introduced her staff. She reviewed
documents in the bill packet.
Co-Chair Hawker listed the items in the bill packet: a
supplemental spreadsheet of items included in the bill and
another spreadsheet of items not included. Ms. Rehfeld
informed of additional included documents known as "change
records."
8:49:05 AM
Ms. Rehfeld recalled the February 24, 2009 presentation of
the Department of Transportation and Public Facilities
Transportation (DOT) appropriation bill. She mentioned the
submitted second appropriation bill containing the non
transportation elements for economic stimulus. She noted the
submitted amendments incorporating the federal reimbursement
rate under Medicaid.
Ms. Rehfeld stated that the governor had not rejected any
stimulus funds. The governor is interested in a dialogue
with the committee, as well as with the public. She
mentioned that there are a number of requirements in the law
including significant federal government oversight.
8:51:08 AM
Ms. Rehfeld turned to a handout entitled "American Recovery
and Reinvestment Act (ARRA)" (copy on file). She informed
that ARRA is a very complex piece of legislation. The bill
totals over $787 billion with a portion of $288 billion
designated for tax relief and the remaining portions
designated for a number of programs in the budget. She
highlighted several areas targeted by the federal government
including tax relief, state and local fiscal relief,
infrastructure, protection of vulnerable citizens, health
care, education and energy.
Ms. Rehfeld noted the objectives of the legislation. The
objectives include the preservation of jobs and the creation
of new jobs while stabilizing state and local economies. The
reinvestment piece concerns infrastructure, with long term
goals of addressing energy and research.
Ms. Rehfeld detailed the timelines revealed for the
programs. The federal government desires that twenty percent
of the stimulus funds be spent between now and October of
2009, an additional 30 percent spent by October 2010, and 80
percent of the dollars spent by October of 2011.
Ms. Rehfeld mentioned the primary distribution measures
incorporated into the stimulus act. The first two formula
areas and demand programs will come to the committee in the
form of request for appropriation authority. Existing
formulas such as the highway transportation program and
Medicaid do not require new administrative structures.
Demand programs are caseload or workload driven. The
competitive grants do not have requests included, because it
is unknown which agencies will compete for the grants. The
automatic disbursements and federal agencies include
appropriations that are directed to federal agencies.
8:54:21 AM
Ms. Rehfeld mentioned unprecedented accountability. She
noted that the Act contains specific appropriations for
inspector general activity in each one of the federal
agencies along with a board, application timelines for
obligations of funds, tracking and reporting requirements,
and certifications and assurances required for the programs.
8:55:01 AM
Co-Chair Hawker discussed the one required certification
date of April 3, 2009. He inquired about other deadlines.
Ms. Rehfeld agreed that there were a number of timelines
mandating that state agencies submit pre-applications for
funds. The department is working to meet preliminary
timelines. Following the decision regarding the acceptance
of funds, the department will have necessary applications
completed.
8:56:43 AM
Ms. Rehfeld addressed the governor certification deadline of
April 3, 2009. She noted that this requirement certifies
that the individual states will apply for and utilize the
funds to create jobs and promote economic growth. She opined
that the governor has remained consistent about her concerns
about the stimulus package, even before it was signed into
law. The governor believed that it was important for the
public and the legislature to analyze the bill and answer
some of the large looming questions.
Ms. Rehfeld reported on other certifications and timelines
already addressed. She noted that the administration has
remained proactive in these areas. She explained the process
of meeting these certifications. She noted that a delegation
to the commissioner of transportation was signed as there
are assurances in the law requiring that any projects funded
by the stimulus dollars meet the federal highway program
requirements providing an appropriate use of taxpayer's
dollars. She noted the specific assurances in the energy
program as part of the policy discussion planned for this
presentation.
8:59:08 AM
Co-Chair Hawker pointed out the interpretive differences in
the energy policy. He hoped to dispel myths regarding
interpretive differences of energy assurances. Ms. Rehfeld
agreed to discuss the challenges regarding energy
assurances.
8:59:45 AM
Ms. Rehfeld referred to the graph on Slide 10 to explain the
estimated allocation for state government of $930.5 million.
These are the only items identified to date from those
preliminary allocations from the federal agencies. The
capital bills equal 55 percent of the proposal. The Medicaid
portion equals approximately 14 percent of the total
proposal.
Representative Austerman asked if the 14 percent portion of
Medicaid came from FY 09 budget. Ms. Rehfeld explained that
the portion arrived from the FY09 and FY10 supplemental
operating budgets. She explained that the federal
participation rate will increase and the general fund
participation lessening over FY09, FY10, and a portion of
FY11.
Representative Austerman asked if the same criteria apply to
this bill as the capital transportation, where you cannot
supplement general funds. Ms. Rehfeld reported that there
are many requirements stated in ARRA. The Medicaid portion
was part of the state fiscal stabilization component
included in the act to help states dealing with budget
shortfalls and areas the federal government was extending or
increasing their participation rate.
9:02:01 AM
Ms. Rehfeld noted that the total ARRA request to date is
$642.0 million with $262.9 for transportation (HB 154/SB
123), $251.5 for non-DOT economic stimulus (SB 161), and
$128.5 for Medicaid FY09 and FY10 amendments.
Ms. Rehfeld discussed the pie chart on Slide 12 highlighting
the requests before the committee. She noted that
transportation represents 42 percent of the items requested.
Water and sewer projects under the Department of
Environmental Conservation (DEC) represent eleven percent of
the items requested. A research vessel funded through the
stimulus act for the University from the National Science
Foundation equals 18 percent of the total.
Co-Chair Hawker asked about the 18 percent dedicated to
University. Ms. Rehfeld reported that the 18 percent would
be directed entirely to the research vessel.
Co-Chair Hawker noted that the project has been underway
since 2005. Ms. Rehfeld concurred.
Representative Austerman asked if the percentage is an
earmark in the bill specifically for the vessel. Ms. Rehfeld
stated that the percentage was not technically an earmark.
Co-Chair Hawker asked if the vessel is identified as a
dedicated application of the science funds or is it within
the latitude of the science foundation to pick and choose
and they prioritized the research vessel. Ms. Rehfeld
responded the latter.
9:05:27 AM
Vice-Chair Thomas wondered why the funds are requested by
the legislature if the research vessel is funded by another
agency. Ms. Rehfeld explained that the funding must be
authorized by the legislature.
Co-Chair Stoltze recalled a previous research vessel of the
University's that was since sold. He cautioned about such
purchases. Co-Chair Hawker pointed out that each component
can be rejected or accepted.
9:08:00 AM
Ms. Rehfeld discussed policy issues equaling $73.2 million
of the pending items before the committee. These policy
issues encompass statewide policy and code changes that
affect individuals and/or businesses, statute changes that
impact the way a state agency does business, and permanent
increased liability for the state and employers.
Ms. Rehfeld continued with operating and capital issues
totaling $214.4 million. She highlighted the onetime nature
of the funds, the necessity of managing expectations, and
opportunities to benefit Alaska, but will not increase long
term costs to the state.
Ms. Rehfeld discussed the governor assurances energy. She
explained that additional information is now available about
the programs. She listed the program amounts as $28.6
million for the state energy program, $18.5 for the
weatherization program, and $8.5 million for energy
efficiency grants. She did not know if all three programs
are subject to the assurances. She explained that the
department is attempting to sort out the requirements and
future costs.
9:11:08 AM
Co-Chair Hawker asked if Ms. Rehfeld has received advice
from DOE as to whether the assurances are limited to the
State Energy Program.
9:11:49 AM
JO ELLEN HANRAHAN, ANALYST, OFFICE OF BUDGET AND MANAGEMENT,
reported that the assurance applied to all three programs.
She informed that OMB is awaiting a legal response. Co-Chair
Hawker added that his office has spoken to program leaders
and he believes there is a distinct difference between the
programs. He expected to see ongoing clarity. Ms. Hanrahan
agreed and is seeking written guidance from the department.
9:14:05 AM
Representative Joule commented on the energy assurances. He
asked about prior conversations with Alaska Housing Finance
Corporation (AHFC). Ms. Rehfeld reported that the department
has communicated with AHFC. She emphasized the importance of
written advice regarding the energy code.
Representative Joule asked about a potential timeline for
the written request. Ms. Rehfeld replied that the
administration is engaged in obtaining the written guidance.
9:16:03 AM
Representative Austerman asked about the May 12 date. Ms.
Rehfeld informed that she was advised that the March 23
deadline was not important, but the May 12, 2009 guideline
must be adhered to.
Co-Chair Hawker commented that once the guidance is received
regarding the applicable topics, the interpretation must be
made regarding constraints and compliance requirements. It
has been characterized that Alaska would have to adopt a
statewide building code. He maintained that the state
already has a building code. He voiced concerned about the
myth and stated that it is not true.
Ms. Rehfeld maintained that the requirement is a statewide
energy building code, which is specific to energy
requirements. She opined that the debate is about the
application of the energy code on a statewide basis. The
public debate on energy building code includes cost versus
potential savings to homeowners, cost to enforce at state
and local levels, local control concerns, and cost to the
state to continue funding renovation programs for buildings
that are not built to energy efficiency standards.
Co-Chair Hawker wanted to dispel the myth that this entire
component of the stimulus package is contingent upon
adopting a statewide building code. Ms. Rehfeld believed
that significant decisions must be made prior to the
acceptance of the energy dollars on a statewide basis. Co-
Chair Hawker wanted to be very clear about what the
constraints are.
Co-Chair Stoltze thought the myth had repercussions in his
district. He expressed interest in dispelling the myth.
9:19:29 AM
Ms. Rehfeld noted that the Unemployment Insurance (UI)
statute change requires policy discussion. The change
including an estimated increase in the number of individuals
that are potentially eligible for UI would result in: $2
million annual impact on UI trust fund, $10 per worker cost
to the employer, and .03% employer rate increase. Co-Chair
Hawker asked if the $2 million impact to the trust fund was
on the state, a single employer, or the universal aspect of
the statutory changes.
Ms. Hanrahan reported the $2 million impact on the UI trust
fund creates a liability for the state and employers that
affects the calculation of the employer rate. Co-Chair
Hawker asked who the employer rate affects. Ms. Hanrahan
answered all employers subject to UI taxes.
9:21:47 AM
Co-Chair Hawker summarized that the $10 per worker rate is
the estimated cost to the employer based on the $2 million
amount. He asked if UI rates are expected to increase or
decrease this year. Ms. Hanrahan stated that the UI rates
would decrease even with the addition of the incentive money
because of changes to the law that shifted some tax share
from the employer to the employee. The reductions are
implemented in 2009 and 2010. The employer rates will
continue to decrease even with the addition of the stimulus
funds.
9:23:14 AM
Co-Chair Stoltze requested a comprehensive list of the
legislation necessary to complete the application process.
Ms. Rehfeld reported that three areas were identified as
requiring legislation: statewide area code, UI base change,
and environmental conservation funding would require
granting authority.
Co-Chair Stoltze asked if the legislature would be tasked
with the issues. Ms. Rehfeld acknowledged that there is a
great deal to accomplish in a short amount of time. She
noted that the debate about the acceptance of the funds was
the priority today.
9:25:41 AM
Representative Crawford questioned the $2 million match. He
wondered what the benefit from the federal government for
the match would be. Ms. Rehfeld explained that the impact of
changing the base rate would be in the unemployment payments
out of the UI trust fund. The $2 million is an estimate of
the requirement.
9:26:47 AM
Ms. Hanrahan clarified that $15.6 million was available for
modernization of the UI system. Representative Crawford
concluded that if employers come up with $2 million over the
next year, the state receives $15.6 million in additional
funds from the federal government. Ms. Hanrahan explained
that the change would be permanent and estimated a $2
million annual impact on the UI Trust fund resulting in a
permanent increase in employer taxes. Representative
Crawford assumed that there would be more leeway regarding
the benefits. He recalled raising unemployment benefits in
Alaska recently. He did not see how the increase could be
permanent. Ms. Hanrahan thought that DOL could answer the
question.
9:29:19 AM
Representative Fairclough asked about the decline in the UI
employer and employee benefits. Ms. Rehfeld deferred to Mr.
Bell in DOL. Co-Chair Hawker suggested placing the question
on hold as this hearing is simply an overview.
9:30:11 AM
Ms. Rehfeld referred to the pie chart on Slide 18 and
focused on the education stabilization funds estimated at
$93 million. The ARRA items are pending discussion. The
largest chunk is available for education funding, divided
into two pieces. The money would be available to school
districts based on Title I qualifications. A subpart of the
stabilization fund was not allocated to any specific
project. The governor has not rejected, only put forth $20
million. She listed requirements the governor and sub
recipients would have to certify to the use of these funds.
9:33:24 AM
Ms. Rehfeld spoke of allocations for special education
funds, technology grants and the arts in addition to those
currently in the FY10 budget. Co-Chair Hawker returned to
the topic of education fiscal stabilization funds. He noted
that one portion of the issue is the "mandatory toward
education" fund, which is not included in the proposal. The
second portion is the fiscal stabilization fund at 18.2
percent, which has been included. He wondered if they can be
split or must all be used.
Ms. Rehfeld agreed that if the decision was to accept the
$20 million instead of the $93 million. She expected that
the state would have to work with the United States
Department of Education to further understand the
requirements. The bigger question is asking school districts
how they intend to manage the money.
9:36:10 AM
Representative Austerman asked about the administration's
hesitancy to receive the $78.5 million for education. Ms.
Rehfeld responded that the programs included in the 27% or
$78 million represent existing ongoing federal education
funding. She noted talk of doubling the allocation that
annually goes through to school districts. She expected that
the school districts could report on the intentions to use
the funds, as well as the plan for the future when the funds
are no longer available.
Representative Austerman asked if the programs are formula
driven and would cost the state additional money. Ms.
Rehfeld explained that the formulas exist on the federal
level and do not impact state funding. The question is how
to manage the expectation at the end of two years. Future
implications must be clarified. Co-Chair Hawker reminded
that the topic is better suited for a future conversation.
9:38:34 AM
Ms. Rehfeld continued to discuss the pie chart and revenue
portion. Child support enforcement is an area that is
somewhat similar to Medicaid where the state can count
federal incentive payments as match under child support
helping relieve general fund pressure on the state. In the
case of FY10 budget the administration arrived at a $1.9
million general fund increment to continue to operate the
child support enforcement division. This item was not rolled
into the operating budget.
Co-Chair Hawker noted that there are several similar
programs. Ms. Rehfeld reported that most items would be
included in the regular budget process.
9:42:12 AM
Ms. Rehfeld talked about items in the Department of Labor
(DOL) such as employment services and independent living
services. The Department of Health and Social Services
(DHSS) encompasses approximately 3 percent. She listed the
items. The health and social services portion exists in
addition to that currently in the operating budget.
Ms. Rehfeld addressed one concern about future expectations
that the state will begin to fund these items in two years
when the federal money is spent. Co-Chair Hawker shared the
concern about the long term consequences that the acceptance
of the federal funds might have.
9:44:25 AM
Ms. Rehfeld listed items in the Department of Public Safety.
The department would be applying for competitive projects.
The discussion is about continuing general fund support for
the additional troopers. Co-Chair Hawker responded that the
state will increase the number of public safety officers in
the next five years to meet Alaska's needs.
9:45:57 AM
Ms. Rehfeld reported on the Department of Commerce (DOC)
additions. She talked about Department of Environmental
Conservation (DEC) and the $2 million available for diesel
emission program. The DOT has received funds but does not
have granting authority. Ms. Rehfeld mentioned the $1.5
million for the Consolidated Omnibus Budget Reconciliation
Act (COBRA).
Co-Chair Hawker asked for a definition of COBRA. Ms. Rehfeld
explained that COBRA provides for people who have been laid
off and require health insurance. She noted that the federal
government has offered to provide a portion of the program
funding. She mentioned additional funds available for the
violent crimes compensation board.
9:48:09 AM
Ms. Rehfeld summarized that the onetime nature of these
funds is the priority for discussion. She noted that if the
funds are used for salaries, layoffs may be delayed but not
prevented. She stated that the expansion of services will
abruptly end. She noted that public safety capacity
increases will create on-going position costs. She stated
that permanent changes in programs may create expectations
for continuing programs once the federal funds are no longer
available.
9:49:06 AM
Ms. Rehfeld highlighted that significant responsibility is
incumbent upon the state for pass through funds as well. She
commented on the discussion about making funds available to
various sub-grantees through agencies, they should be held
to the same assurances that the state must make. All of
these assurances are attached to the governor. Decisions to
receive these funds along with moving them to the correct
recipients, must meet the same assurances, allowing Alaska
to report proper use of the funds including tracking of
expenditures and reporting requirements.
9:50:26 AM
Representative Joule asked about accountability and the
impacts of spending the money.
Ms. Rehfeld replied that budget preparation must be result
driven. She asked if the state is fully utilizing the
federal funds that are currently available. She asked if the
state is ready and willing to accept these as onetime funds
or will there be an expectation that the state will backfill
the hole when federal funds are gone. She insisted that the
public understand the decisions made by the administration
and the legislature. She welcomed discussion about the
potential opportunities for funds targeted one time for the
benefit of Alaska.
9:52:46 AM
Representative Joule concurred that the public must be fully
informed. He wondered if the state would provide the
information regarding the money available to non-profits or
other entities.
Ms. Rehfeld recommended ample discussion for sources of
information for individuals and other organizations wishing
to apply for funds available from federal agencies. She
mentioned the OMB website as a source of information.
9:54:44 AM
Co-Chair Hawker stated that his office has received an
ongoing stream of inquiries for stimulus fund information.
He commended OMB for their heavy work load.
9:56:16 AM
Representative Joule commented that another agency or
organization such as the Denali Commission might be
determined as the necessary "clearing house." Ms. Rehfeld
agreed with Representative Joule's suggestion. She referred
to the ARRA Web Site at Alaska.gov/Recovery as a source for
Alaska Federal Economic Stimulus Information including links
to Federal Recovery.Gov web site, grant information, Alaska
legislation, and department fact sheets.
Co-Chair Hawker wished to discuss the possible uses of the
federal funds without incurring long term costs. He
recognized that much discussion was necessary. He expressed
interest in utilizing the funds without incurring long term
costs or unreasonable public expectations. He shared the
anxiety over incurring unsustainable long term commitments.
Ms. Rehfeld agreed that the committee process will reveal
opportunities to benefit from ARRA. The overall discussion
centers on whether ARRA was designed to preserve and create
jobs.
Co-Chair Hawker commented that the history of the package
dictates that the stimulus package relieve the financial
burden for the states. He wished to avoid the false
impression that if the stimulus package does not create a
new job then it is not part of the federal intent.
10:00:10 AM
Ms. Rehfeld referred to the ARRA web site
Alaska.gov/Recovery. She offered to address individual
agencies in regard to HB 199. Co-Chair Hawker wished to
defer the detailed discussion to a future meeting.
10:01:29 AM
Representative Kelly commented on the various opinions
regarding ARRA. He preferred jobs rather than welfare
programs. He asked about potential consequences for denying
the federal funds.
Co-Chair Hawker asked about surface transportation money
being available for redistribution to other states. He asked
if the redistribution concept applied to other programs.
Ms. Rehfeld reported that there are other existing programs
that fall into that category. She stated that she was
unprepared to inform about specific programs whose funds are
available for redistribution. She noted that under existing
programs, unused dollars are made available to other states.
10:06:10 AM
Co-Chair Hawker requested additional information.
Representative Kelly spoke of placeholders allowing
Legislative Budget and Audit (LB&A) to add to the list of
proposed programs for the stimulus funds, following the
legislative session. He expressed concern about releasing
the authority because it may be difficult for LB&A to deny
requests leading to an increased operating budget.
10:08:05 AM
Co-Chair Hawker noted he has had discussions about the
authority of LB&A. LB&A is a screening process and cannot
appropriate funds. The legislature must appropriate the
money first. If the legislature does not want to
participate, they should not appropriate the funds. He
agreed that the mechanism was undesirable.
Representative Kelly expressed concern about running out of
time to vet all of the attractive uses for the funds. He
stated that the public should understand as much as
possible. He compared the stimulus plan to the introduction
of credit card debt to an ailing family.
10:11:36 AM
Representative Austerman asked if the additional items in HB
199 would be rolled into a new Committee Substitute (CS).
Co-Chair Hawker supposed that HB 199 would be the vehicle or
the companion Senate bill. He emphasized the time factor.
HB 199 was heard and HELD in Committee for further
consideration.
10:12:58 AM
| Document Name | Date/Time | Subjects |
|---|---|---|
| Economic Stimulus Not Included Op and CIP items 3-22-09.pdf |
HFIN 3/24/2009 8:30:00 AM |
HB 199 |
| CSG Final Analysis of ARRA 02-20-09.pdf |
HFIN 3/24/2009 8:30:00 AM |
HB 199 |
| Economic Stimulus Program Funding Summary March 20 2009.pdf |
HFIN 3/24/2009 8:30:00 AM |
HB 199 |
| Economic Stimulus Sectional March 19, 2009.xls |
HFIN 3/24/2009 8:30:00 AM |
HB 199 |
| House Finance March 24 2009OMB Presentation.ppt |
HFIN 3/24/2009 8:30:00 AM |
HB 199 |
| OMB Economic Stimulus Summary As of March 22 2009.pdf |
HFIN 3/24/2009 8:30:00 AM SFIN 3/23/2009 9:00:00 AM |
HB 199 SB 161 |
| New HCR13-LEG-COU-3-23-09.pdf |
HFIN 3/24/2009 8:30:00 AM |
HCR 13 |