Legislature(2019 - 2020)ADAMS ROOM 519
02/05/2020 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Fy 20 Supplemental Budget Overview | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 234 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HOUSE FINANCE COMMITTEE
February 5, 2020
1:34 p.m.
1:34:17 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:34 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Jennifer Johnston, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Neil Steininger, Director, Office of Management and Budget,
Office of the Governor; Craig Christenson, Deputy
Commissioner, Department of Military and Veterans Affairs;
Sana Efird, Assistant Commissioner, Department of Health
and Social Services; Amanda Price, Commissioner, Department
of Public Safety; Colonel Bryan Barlow, Alaska State
Troopers, Department of Public Safety; Leon Morgan, Deputy
Commissioner, Department of Public Safety; Mike Barnhill,
Deputy Commissioner, Department of Revenue; Dom Pannone,
Administrative Services Director, Department of
Transportation and Public Facilities.
SUMMARY
HB 234 APPROP:SUPP; REAPPROP; CAP; AMEND; CBR
HB 234 was HEARD and HELD in committee for
further consideration.
FY 20 Supplemental Budget Overview
Co-Chair Foster reviewed the agenda for the day.
#234
HOUSE BILL NO. 234
"An Act making supplemental appropriations,
reappropriations, and other appropriations; amending
appropriations; capitalizing funds; making
appropriations under art. IX, sec. 17(c), Constitution
of the State of Alaska, from the constitutional budget
reserve fund; and providing for an effective date."
^FY 20 SUPPLEMENTAL BUDGET OVERVIEW
1:35:15 PM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, introduced the PowerPoint
Presentation: "FY 20 Supplemental Budget Overview." He
began with slide 2 titled Supplemental Bill:
Supplemental bill comprised of two parts:
Urgent/emergency response: $241,931.7 UGF
Regular supplement: $20,615.0 UGF
Total: $262,546.7 UGF, $507,910.4 All Funds
Mr. Steininger explained that the supplemental bill was
broken into 2 parts. The first section dealt with urgent or
emergent responses where the money was needed soon.
1:37:09 PM
Mr. Steininger moved to slide 3 titled UGF Operating and
Capital Budgets with Supplementals from FY 19 to FY 21
that contained a bar chart. He provided some context for
the supplemental bill. The FY 19 budget inclusive of the
supplemental budget totaled $4.9 billion, the FY 20 budget
inclusive of the supplemental totaled $4.67 billion, and
the FY 21 governors request inclusive of the supplementals
totaled $4.6 billion. The budget equated to a reduction of
$238.8 million between FY 19 and FY 20 and a reduction of
$70.3 million between FY 20 and FY 21; both figures
included the supplemental budgets.
Co-Chair Foster asked about the statutory oil tax credits.
He asked Mr. Steininger whether the administration had
considered that a portion of the reduction between FY 19
and FY 20 was due to not paying oil tax credits in FY 19.
He noted that either the statutory or debt service amount
of the oil tax credits would be paid in FY 21. He asked Mr.
Steininger to comment. Mr. Steininger responded that the
total reflected a clear picture of total UGF
(Unrestricted General Fund) spent in FY 19. He was
uncertain about the tax credit payments. Co-Chair Foster
suggested that the total FY 21 UGF spend could increase by
approximately $55 million with the addition of an oil tax
credit payment.
1:39:21 PM
Mr. Steininger turned to slide 4 titled Supplemental Bill
Urgent/Emergency Response Items:
Dept. of Natural Resources
Fire, Land, and Water Resources; Fire
Suppression: $110,500.0 UGF
Dept. of Transportation and Public Facilities
Operating: Highway, Aviation and Facilities.
Northern Highways Dalton Highway/Atigun Pass:
$158.1 UGF
Capital: Knik-Goose Bay Road: $2,000.0 UGF
Reappropriation
Capital: Earthquake Relief Federally
Ineligible: $3,000.0 UGF
Dept. of Military and Veterans Affairs
Capital Mass Notification:
$900.0 UGF Reappropriation
Dept. of Health and Social Services
Medicaid Services; Medicaid: $128,273.6 UGF,
$162,130.9 Fed
TOTAL: $241,931.7 UGF, $162,130.9 Fed
Representative LeBon asked about the timeline for
reappropriation of funds for the Capital Mass Notification
project.
CRAIG CHRISTENSON, DEPUTY COMMISSIONER, DEPARTMENT OF
MILITARY AND VETERANS AFFAIRS, responded that the work
would begin in FY 20 and continue through FY 21.
Representative LeBon asked whether additional staff was
required for completion of the project. Mr. Christenson
replied that the work would be contracted out.
Representative LeBon asked how much was allotted for the
contracted services. Mr. Christenson answered that the
split between the state and federal government was 50
percent, the total cost was approximately $1.3 million to
$1.8 million.
1:42:56 PM
Co-Chair Johnston asked about the figure of $16 million for
fire suppression. She wondered if the amount included the
fires burning underground. Mr. Steininger responded that
the fire suppression dollars in the supplemental would
apply to potential fires in the spring of 2020. Co-Chair
Johnston asked if the amount was the states total cost of
fire suppression keeping in mind the state and federal
governments split the cost. Mr. Steininger affirmed that
the number reflected the total cost.
1:44:02 PM
Mr. Steininger turned to slide 5 titled Medicaid:
Ambitious Goals:
Governor's FY20 budget had ambitious savings targets
for Medicaid based on changes to several elements
Reduced provider payments
Withhold payment inflation adjustments
Elimination of adult preventative dental benefit
Timely filing allowance
Transportation efficiencies
Tribal claiming
Other efforts
Mr. Steininger delineated that the status quo estimate of
Medicaid spending needs made on November 30, 2018 was $683
million. Through the legislative process, the appropriation
was reduced to $574.6 million and further vetoed to $516.3
million. The Department of Health and Social Services
(DHSS) had various plans to achieve the reductions through
adjustments to optional services. Many of the reductions
were difficult to implement and difficulties were
encountered with medical providers and federal approval
resulting in failure to produce the reductions. He noted
that many services the department believed were optional
were not. Mr. Steininger reviewed the chart on slide 6
titled Medicaid: Realized Savings:
FY2020 ambitious savings goal of $166,707.7 UGF was
not realized.
Even after supplemental, FY2020 Medicaid spending is
still substantially reduced
11/30/18 FY2020 Projection $ 683,038.4 UGF
Provider rate reductions $ (17,716.9)
Savings through tribal claiming $ (20,100.0)
Savings thru pharmacy and Medicare Part B
$(5,538.0)
Other utilization changes $ 4,919.9
FY2020 Projected Total $ 644,603.4
Projected Savings in FY2020 $ (38,435.0)
Mr. Steininger reported that savings amounted to $38.4
million instead of the projected $166.7 million.
Co-Chair Johnston asked if the fast-track supplemental
accounted for the lawsuit brought on by the providers. Mr.
Steininger answered in the affirmative. Co-Chair Johnston
asked for the court case amount. Mr. Steininger responded
that the amount was $900 million UGF.
1:47:17 PM
Mr. Steininger highlighted the graph on slide 7 titled
Medicaid: General Fund Cash Flow. He pointed out that
weekly UGF Medicaid spending was $13.7 million, and
contrary to the statement on the slide, it was improbable
there was enough funding for the entire third quarter of FY
20. The statement on the slide was as follows:
Insufficient funding to get through last quarter of
FY 2020 absent supplemental.
Mr. Steininger advanced to slide 8 titled Medicaid
Spending: FY 2004 through FY 2021. He commented that the
slide was included by request. The bar chart depicted the
growth of the program in cost and number of beneficiaries,
inclusive of all funds.
Co-Chair Johnston thanked Mr. Steininger for including the
chart. She relayed that the state was serving more people
at the same cost and believed the slide illustrated the
full picture between UGF and federal receipts. She added
that while the recipients had grown the states cost had
not.
Vice-Chair Ortiz concurred with Co-Chair Johnstons
previously stated observations regarding slide 8.
Representative Wool added that not only were more people
being served, it also positively affected Alaska's economy.
Co-Chair Johnston commented that the state had learned a
valuable lesson which was that the state could not make
reductions in the program without engaging in consultation
and negotiations with its [healthcare] partners and the
Centers for Medicare and Medicaid Services (CMS). The
current supplemental was an acknowledgement that savings
could not be achieved by one-sided budget cuts.
1:51:17 PM
Mr. Steininger discussed the regular supplemental items. He
turned to slide 10 titled Supplemental Bill: Department of
Administration:
Operating Total: $1,700.0 UGF, $550.0 DGF
Legal and Advocacy Services, Office of
Public Advocacy Caseload growth and
operational cost: $1,700.0 UGF
Division of Motor Vehicles
Document security and preservation system:
$50.0 DGF
Anchorage office location move: $500.0 DGF
1:52:08 PM
Mr. Steininger reviewed slide 11 titled "Supplemental Bill:
Department of Commerce, Community and Economic
Development:
Capital Total: $45,526.1 Fed
Housing and Urban Development (HUD) Community
Development Block Grant, Disaster Recovery
Program: $38,856.0 Fed
National Petroleum Reserve-Alaska (NPR-A) Impact
Grants: $6,670.1 Fed
Mr. Steininger addressed slide 12 titled "Supplemental
Bill: Department of Corrections (DOC):
Operating Total: $8,025.7 Fed
Population Management, Anchorage Correctional
Complex Add carryforward language: $8,025.7 Fed
Population Management, Palmer Correctional
Center Extend appropriation for Palmer
Correctional Center efforts (FY20-FY21)
Mr. Steininger reported that additional language regarding
the opening of the Palmer Correctional Facility was
included in the bill.
Mr. Steininger continued to slide 13 titled "Supplemental
Bill: Department of Education and Early Development:
Operating Total: $100.0 UGF, $150.0 DGF, $10,000.0 Fed
Education Support and Administrative Services,
Student and School Achievement Additional
federal receipts for U.S. Dept. of Education
grants: $10,000.0 Fed
Mt. Edgecumbe Boarding School, MEHS Facilities
Maintenance Operational and maintenance costs
for MEHS Aquatic Center: $100.0 UGF, $150.0 DGF
Mr. Steininger turned to slide 14 titled "Supplemental
Bill: Office of the Governor:
Operating Total: $233.4 UGF Capital Total:$3,700.0
Other Operating
Executive Operations, Lieutenant Governor Voter
initiative public hearings: $18.0 UGF
Elections Voter initiative review, certification
and
language translation: $215.4 UGF Capital
Help America Vote Act: $3,700.0 Other
Mr. Steininger continued to slide 15 titled "Supplemental
Bill: Department of Health and Social Services (DHSS):
Operating Total: $15,600.0 UGF
Alaska Pioneer Homes, APH Payment Assistance
Alaska Pioneer Homes payment assistance:
$1,000.0 UGF
Alaska Psychiatric Institute
Add authority to achieve full capacity:
$6,000.0 UGF
Public Assistance, Adult Public Assistance
Restore Adult Public Assistance payment
maintenance of effort requirements:
$8,600.0 UGF
1:55:33 PM
Co-Chair Johnston asked when the Alaska Pioneers Homes
would run out of money in the current fiscal year.
1:55:54 PM
SANA EFIRD, ASSISTANT COMMISSIONER, DEPARTMENT OF HEALTH
AND SOCIAL SERVICES, replied that the funding was
sufficient through May and was not as time sensitive as
other items. Currently, DHSS was spending roughly $2.3
million on average per month from the Payment Assistance
Program to support the residents in need of assistance. Co-
Chair Johnston wondered what the state had budgeted for
payment assistance. Ms. Efird answered that the budget was
$25.9 million, and the current request added $1 million.
The department was being very conservative with the request
of $1 million. Co-Chair Johnston noted that the state
partnered with the federal government for the payment
assistance program. She asked whether the state assumed
extra costs when it attempted to change the maintenance of
effort. Ms. Efird replied that two items within the Adult
Public Assistance (APA) program had changed that would
affect the assistance program. She explained that the
department attempted to change the methodology for the
maintenance of effort amounts through APA, which was the
match for the Medicaid program. The department wanted to
return to the 1983 standard and submitted a plan amendment.
The CMS discovered that the state had made miscalculations
on the payments since 1995 that resulted in a further
reduction in residents assistance payments. The governor
did not want the mistake to impact the residents with a
deeper reduction. Therefore, a cost of living increase was
added to current expenditures. The department was not
currently adding administrative costs and was redirecting
resources via diverting staff to ensure the calculations
for residents were correct. Co-Chair Johnston asked about
time sensitivity for the item. Ms. Efird responded that the
funding was needed by the end of the fiscal year.
2:00:24 PM
Representative Knopp asked if occupancy had dropped with
the increase in rates at the Pioneers Homes. Ms. Efird
responded that 16 residents had left but the rooms had been
filled with people on the wait list. Representative Knopp
was pleased because the supplemental request was less than
he expected. He wondered whether the rate change impacted
the Pioneer Homes revenue. Ms. Efird responded that the
department had seen an increase in revenue. She qualified
her response. She indicated that the exact income status of
a resident entering the Homes was unknown and reflected the
department's best projections. The projections were based
on who would live in the Homes for the reminder of the year
and their ability to pay.
2:02:28 PM
Vice-Chair Ortiz asked about the Alaska Psychiatric
Institute (API) item. He wondered if the request was
associated with the expansion of the contract with Well-
path. Ms. Efird responded that the request was for a
continuation of the contract. She recounted that the
contract began in FY 19 for $1 million per month and was
reduced to $750 thousand per month through March 31, 2020
with an option to renew. Vice-Chair Ortiz asked about
details of the contract with Well Path. He asked if the
contract was based on capacity or facility use. Ms. Efird
was unable to answer and offered to follow up with the
information. She acknowledged that Wellpath was helping the
state stabilize the facility and meet requirements for
certification and licensing. Vice-Chair Ortiz confirmed
that he wanted the information.
Mr. Steininger moved to slide 16 titled Supplemental Bill:
Department of Law:
Operating Total $150.0 Other, $250.0 Fed
Criminal Division, Second Judicial District
Reopening Utqiagvik District Attorney's Office:
$150.0 Other
Criminal Division, Criminal Appeals/Special
Litigation Expand prosecutions in rural Alaska:
$250.0 Fed
2:05:08 PM
Representative Josephson relayed that he had been involved
in reopening the rural office in Utqiagvik. He shared that
recruitment was a problem and wondered what the
appropriation was for. Mr. Steininger responded that the
request reflected a partial year's worth of the
appropriation.
Mr. Steininger reviewed slide 17 titled Supplemental Bill:
Department of Natural Resources (DNR):
Operating Total: $76.1 DGF
Fire Suppression, Land, and Water Resources;
Mining, Land and Water Aquatic farm application
processing: $76.1 DGF
Mr. Steininger directed attention to slide 18 titled
"Supplemental Bill: Department of Public Safety (DPS):
Operating Total: $6,743.4 UGF Capital Total: $605.0
UGF
Operating
Alaska State Troopers, AST Detachments, Alaska
Wildlife Troopers, and Wildlife Troopers Aircraft
Section - Meet FY2020 operating needs and law
enforcement safety equipment: $6,743.4 UGF
Capital
FAA required aircraft equipment: $105.0 UGF
Radio replacement: $500.0 UGF
Representative LeBon asked about the personal services
request and wondered how much of the appropriation was for
overtime.
2:07:12 PM
AMANDA PRICE, COMMISSIONER, DEPARTMENT OF PUBLIC SAFETY,
was unable to answer the specific question. She knew that
overtime costs between FY 18 and FY 19 increased 26 percent
and she expected an increase of 9 percent between FY 19 and
FY 20 due to personnel shortages.
2:07:42 PM
Representative LeBon asked if overtime would be reduced as
the department successfully recruited additional trooper
positions. Commissioner Price responded that
theoretically Representative LeBon was correct. She
believed that a correlation existed and expounded that
common sense told her that as she hired, trained, and
deployed more troopers, there would be a reduction in
overtime hours. She noted that there was a lag time of 18
months between hiring and deployment. The impact of hiring
additional troopers would be known in approximately 18
months. Representative LeBon asked about the shortfall of
nearly $2 million in FY 19. He wondered whether the prior
deficit influenced the current shortfall. Commissioner
Price was unable to answer the question. She was uncertain
whether the shortfall was related to the personal services
line. She revealed that historically, DPS had not
accurately represented how the personal services funding
was spent. She believed that it was much more responsible
to present the actual overtime hours rather than use an
arbitrary number assigned per trooper. She guessed that the
shortfall was an aggregate total reflecting the
departments historic lack of preparation for managing
necessary overtime. Representative LeBon shared that the
DPS subcommittee had been exploring the same questions.
2:10:52 PM
Representative Josephson had heard that the commissioner
had been having great success in recruiting troopers. He
wondered what attributed to the success. Commissioner Price
answered that a significant number of factors contributed
to the success. She identified both recruitment and
retention as problematic. She offered to send the committee
the significant body of work that detailed the
departments comprehensive effort around retention. She
delineated that most of the effort was associated with
information, findings, and recommendations from a survey
undertaken by the departments working group. The effort
identified and addressed issues related to moral.
Certainly, the increased salary compensation created the
opportunity to attract and retain candidates, however, the
focus of the effort addressed moral issues. Currently, the
department had implemented 95 percent of the
recommendations it received. She spoke of a culture change
in the recruitment arena. The department had made many
improvements to inform and communicate effectively with
recruits what DPSs expectations were related to taking
polygraph tests and deployment in rural Alaska. The changes
were successful; the fall hiring cycle included 360
invitations for background checks versus only 70 in 2017.
2:13:38 PM
Representative Wool asked the commissioner whether she had
hired additional people in the DPS recruitment unit.
Commissioner Price replied in the negative. Representative
Wool wondered what percentage of applicants were offered
trooper positions. Commissioner Price answered that it
varied per recruitment cycle.
2:14:42 PM
COLONEL BRYAN BARLOW, ALASKA STATE TROOPERS, DEPARTMENT OF
PUBLIC SAFETY, responded that the percentage was very low.
He did not have a specific number, he estimated that one to
three percent of applicants were hired.
Representative Wool asked whether applicants were paying
testing fees if they did not get hired. Commissioner Price
responded in the negative. She indicated that the
department payed for application and testing fees.
Representative LeBon asked whether the department was
creating a budget shortfall if it hired more positions over
the vacancy factor. Commissioner Price reported that the
department anticipated having 40 Position Control Numbers
(PCNs) filled over the number of PCNs that DPS had
authorized including the 15 PCNs that were requested in FY
21. She commented that the success in hiring meant that the
legislature would need to decide what was the optimal
number of state troopers required for the state and set
limits. However, she hoped a limit was not set in the
current year, due to the desperate need to increase the
number of troopers.
2:17:55 PM
Representative Sullivan-Leonard asked for further
information regarding the radio replacement noted on the
slide [Slide 18]. Commissioner Price deferred the question
to the deputy commissioner.
2:18:10 PM
LEON MORGAN, DEPUTY COMMISSIONER, DEPARTMENT OF PUBLIC
SAFETY, replied that the [$500 thousand] UGF request was
necessary to replace 50 portable and 63 vehicle radios. He
elaborated that 10 percent of the portable radios were kept
on reserve for repairs and replacement. Both types of
radios were 10 to 15 years old and were in a break fix
mode; they were unrepairable if broken.
Co-Chair Foster asked whether the request for aircraft
equipment on slide 18 was for Instrument Flight Rules (IFR)
instruments. Mr. Morgan responded in the affirmative and
elucidated that the request was specifically for aircraft
flying in Class C airspace for Automatic Dependent
Surveillance-Broadcast (ADS-B) compliance.
2:20:26 PM
Mr. Steininger continued to slide 19 titled Supplemental
Bill: Department of Revenue:
Operating Total: $854.4 UGF, ($400.0 Other)
Taxation and Treasury, Tax Division
Tax Revenue Management System maintenance and
support costs: $400.0 UGF, ($400.0 Other)
Tax subject matter experts, economic and legal
analysis (FY20-FY22): $350.0 UGF
Administration and Support, Commissioner's
Office Technology refresh and space utilization
and planning: $104.4 UGF
Vice-Chair Ortiz asked what type of tax subject matter
experts the Department of Revenue (DOR) was hiring. Mr.
Steininger replied that the DOR was looking for economic
and legal experts to assist existing staff in analyzing
areas of taxation that DOR might need to examine in the
coming months. Vice-Chair Ortiz asked whether the state
currently lacked the necessary level of expertise. Mr.
Steininger responded in the affirmative and furthered that
the experts would assist existing staff.
Representative Wool asked why DOR was planning to engage in
tax research and what the administration was anticipating.
2:22:43 PM
MIKE BARNHILL, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE,
spoke candidly. He announced that the department hoped the
legislature would be interested in taking up new tax
measures, specifically a sales tax. Currently, the
department did not have the expertise within the department
to develop or analyze tax measures. He also indicated the
need for economic experts to analyze the impacts taxes had
on the economy.
2:23:51 PM
Mr. Steininger advanced to slide 20 titled Supplemental
Bill: Dept. of Transportation and Public Facilities (DOT):
Operating Total: $7,050.0 DGF
Capital Total: $5,000.0 DGF, $3,155.0 Other
Operating
Administration and Support, Measurement Standards
Replace capital funding with unified carrier
registration receipts: fund source change
Marine Highway System, Marine Vessel
Operations Maintain AMHS vessel operations:
$7,050.0 DGF
Capital
AMHS vessel overhaul:$5,000.0 DGF
DPS patrol vehicles: $3,155.0 Other
2:24:53 PM
AT EASE
2:25:24 PM
RECONVENED
Vice-Chair Ortiz asked what the $7 million in DGF was. Mr.
Steininger responded that both operating, and the $5
million DGF capital appropriation requests were for the
Marine Highway Fund. He explained that system receipts were
deposited into the fund along with occasional deposits from
other sources. Vice-Chair Ortiz asked for the balance of
the fund. Mr. Steininger offered to provide the fund
balance later, when known. Vice-Chair Ortiz asked if the $7
million would facilitate an expanded schedule. Mr.
Steininger responded that the funds would not be used to
expand services but to ensure the published schedule was
met. He noted that there were unforeseen cost increases in
fuel costs and repairs and in chartered vessels. Vice-Chair
Ortiz asked if the capital request of $5 million was for
vessel repair. Mr. Steininger answered in the affirmative.
Vice-Chair Ortiz asked how much the $5 million would help
with needed repairs.
2:28:00 PM
DOM PANNONE, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES, replied that the
capital request represented increased additional costs for
the current fiscal years capital overhaul work.
Representative Knopp asked if the $5 million applied to one
vessel or for several vessels. Mr. Pannone responded that
the M\V Le Conte had a significant amount of unanticipated
rusted steel, the M\V Columbia had rudder, hub, and
vibration issues, and additional repairs were needed for
the M\V Kennecott and M\V Tustumena. Representative Knopp
asked whether the funding would get the vessels back online
and if the vessels would operate in FY 21 after the repairs
were completed. Mr. Pannone responded that the specific
request would help to get the vessel up to speed for the
remainder of the year to meet the already established
schedule. Representative Knopp asked if the vessels would
operate in FY 21. He noted that the FY 21 Marine Highway
funding did not increase. Mr. Pannone replied that the
vessels would operate in FY 21. He notified the committee
that the governors proposed FY 21 budget contained an
increased request of $4.7 million. The department was
working with the legislature to identify the marine
highways capital and operating needs.
Representative Knopp continued his questioning with the DPS
patrol vehicle request. He wondered why the request was so
large. He recalled that replacement was achieved in cycles.
Mr. Steininger responded that the increase corresponded to
the increased number of troopers. Representative Knopp
asked whether the funding was for new vehicles. Mr.
Steininger answered that the money was for some replacement
vehicles as well as new vehicles for the additional
troopers.
Representative LeBon had another question regarding DPS
vehicles. He wondered what the "Other" funding source was.
Mr. Steininger replied that the funding source was the
Highway Equipment Working Capital Fund. He detailed that
agencies contributed to the fund and the Statewide
Equipment Fleet (SEF) tracked how much each agency was
paying for its vehicles, which built up a credit for each
agency. The $3.155 million was additional authorization for
DPS to access more of its credit than was allotted for in
the FY 20 budget. Representative LeBon inferred that DOT
purchased the patrol vehicles for DPS who repaid DOT in
payments. Mr. Steininger responded in the affirmative.
Representative LeBon asked if capital monies were
determined on an annual basis. Mr. Steininger affirmed that
they were amortized on an annual basis from the SEF.
2:34:38 PM
Representative Josephson asked whether the current balance
of the Marine Highway Fund was enough for the operating and
capital DGF request. Mr. Pannone responded in the
affirmative. Representative Josephson surmised that they
were asking for authority to spend from the fund. Mr.
Pannone answered in the affirmative. Representative
Josephson found it frustrating given the status of the
affairs with the state's marine highway vessels that an
open dialogue regarding collecting revenue from the fund
when it was needed did not happen.
2:36:17 PM
Representative Wool asked about patrol vehicles owned by
DOT and used by DPS. He asked whether it was the same for
DPS airplanes. Mr. Steininger answered in the negative. He
clarified that it only applied to patrol vehicles.
Representative Wool asked if airplanes were in a separate
category. Mr. Steininger replied in the affirmative.
Vice-Chair Ortiz asked about the balance of the Marine
Highway Fund. Mr. Pannone replied that the balance was
approximately $23 million. Vice-Chair Ortiz asked for the
historical balance of the fund. He inquired whether the $11
million remaining balance after the deductions of the
supplemental appropriations was typically low. Mr. Pannone
answered that he would follow up with the information.
Co-Chair Foster asked if any of the $7 million operating
request covered revenue lost during the Alaska Marine
Highway System (AMHS) strike. Mr. Pannone answered that
during the strike AMHS refunded $3.3 million for all fares,
even for future fares due to passenger uncertainty. The
department did not lose spending authority in the budget.
He delineated that the strike specific related costs
totaled $2 million and during the strike AMHS saved $1.2
million. The balance of $800 thousand was the portion of
the request for increased authority related to the strike.
Representative Wool had heard that some of the $800
thousand was for the purpose of leasing other vehicles like
barges and other vessels. Mr. Pannone did not have the
figures relating to the costs he was referring to. He was
uncertain whether the monies Representative Wool mentioned
were built into the supplemental request. Representative
Wool asked about how the vessel rentals worked. Mr. Pannone
acknowledged that there had been some ferry runs in which
the AMHS had hired commercial providers but was unaware
that vessel lease costs were part of the supplemental
request.
2:41:30 PM
Co-Chair Johnston clarified that the $7 million request
would be used to pay for a portion of the cost of the
strike and to fulfill the current years schedule. Mr.
Pannone responded in the affirmative. Co-Chair Johnston
asked for a breakdown of the $7 million.
Mr. Pannone listed a breakdown of the $7 million request as
follows:
• $800 thousand in increased authority related to
the strike
• $1.6 million in higher operating cost for the M\V
Columbia related to the M\V Matanuska project
delays (repower and major conversion)
• $1.5 million of additional costs related to the
M\V Matanuska project delays for wages, travel,
and per diem
• $200 thousand was added service to the Northern
Panhandle including costs to operate the Angoon
ramp
• $110 thousand to Haines for the ALCAN 200 event.
• $400 thousand service to Prince Rupert including
10 roundtrips in the current fiscal year. The
amount also included $207 thousand for Royal
Canadian mounted Police for customs. $193
thousand included for fuel terminal staff
Mr. Pannone indicated that roundtrips to Prince Rupert
would occur in May and June of 2020 and two had occurred in
October and November of 2019.
Co-Chair Foster requested a handout of the cost breakdown.
[SEE DRAFT HANDOUT - Change Record Detail - DOT (copy on
file)]
2:44:32 PM
Mr. Pannone continued with the $7 million cost breakdown:
• $1.8 million was for fuel increases. Fuel costs
were projected on average at $2.36 per gallon
which increased to $2.50 per gallon. The AMHS
used 8.5 million gallons of fuel per year on
average.
• $400 thousand related to an underestimation of
the required crew for the M\V Tazlina for per
diem and lodging.
• $250 thousand for the economic reshaping study.
Co-Chair Johnston commented on fuel costs. She guessed that
the service cuts would have reduced fuel costs. Mr. Pannone
answered that the budget cut included fuel costs. The fuel
increases happened during the FY 20 fiscal year.
2:46:33 PM
Representative Josephson deemed that much of the marine
highway revenue was made in the summer via tourism. He
asked whether the administration had a plan to capture the
increased revenue with enough ferry service to bring the
tourists to Alaska. Mr. Pannone responded that the
supplemental request provided the AMHS with the maximum
level of service it could provide for the remainder of the
fiscal year. The service for the following fiscal year was
under discussion. Representative Josephson did not have any
sense of what the funding was going to allow for ferry
service. He deduced that the AMHS budget was suffocated
and caused the current situation and was not just due to a
series of misfortunes, miscalculations, and the strike. He
suggested the events were related to the budget cut. He
asked for comment.
Mr. Steininger responded that many of the factors listed
contributed to the $7 million request, which would be
smaller without them. He relayed that much of the request
was to provide the service that was planned. He countered
the idea that the need was a result of the previous year's
budget reductions. He concluded that the situation had to
do with unexpected items. He added that the capital request
was caused by identifying issues that could only be
discovered during a layup period. Representative Josephson
contended that the ferry service began in 1962 and
unanticipated events were commonplace. He believed that
something different affected the system and he had a
good sense of what that is.
2:49:57 PM
Vice-Chair Ortiz clarified what the money was for. He
voiced that the state went into the current fiscal year
with a $40 million reduction to AMHS after many prior years
of cuts. The significantly reduced schedule of operations
reflected the $40 million reduction. He surmised that Mr.
Steininger maintained that the supplemental request was for
the purpose of meeting the significantly reduced schedule
that had been put forth by AMHS. Mr. Pannone answered in
the affirmative. Vice-Chair Ortiz asked that by adding the
funding, the state would not receive additional services.
Rather, the post budget cut schedule would be restored. Mr.
Pannone responded in the affirmative.
Representative Sullivan-Leonard mentioned the $200 thousand
for the Haines event. She asked for more information. Mr.
Pannone replied that extra trips were made to collect
additional revenue. He offered to provide more information.
2:52:36 PM
Co-Chair Foster determined that some of the AMHS
supplemental requests would recur. He inquired whether some
of the items were added to the FY 21 budget. Mr. Steininger
responded that any items of a recurring nature was added to
the FY 21 budget. He corrected that the balance in the
Marine Highway Fund was $30 million. Co-Chair Foster noted
that the budget detail document Mr. Pannone was citing
included $100 thousand for the ALCAN 200 snow machine race.
Mr. Pannone replied that he mistakenly named the location
of the race and was the same race that Representative
Sullivan-Leonard referred to. He would provide more
information later.
2:54:10 PM
Mr. Steininger moved to slide 21 titled: Supplemental Bill:
Fund Capitalization and Transfers:
Fund Capitalization: Total $600.0 UGF, $3,000.0 Fed
Capital
Election Fund - FY20 capitalization of the
Election Fund with federal receipts: $600.0 UGF,
$3,000.0 Fed
Fund Transfers: Total $1,100.0 deposit into General
Fund
Undesignated Reserve (UGF out), AHFC Subsidiary
Fund Transfer balance of AHCC account to the
General Fund: $1,100.0 fund transfer
Mr. Steininger explained that the election fund
capitalization was related to the election security item he
mentioned on a prior slide [slide 14]. He reported that the
Alaska Housing Finance Corporation (AHFC) fund balance was
relatively small and required administrative costs and
staff time to maintain the fund separately. The
administration wanted to close the fund.
Representative Josephson asked for history of the fund. Mr.
Steininger thought that the simplest way to provide the
information would be in writing. Representative Josephson
perceived that the state was $1.1 million richer.
2:56:26 PM
Representative LeBon asked whether it was conceivable that
the AHFC Subsidiary Fund contained AHFC receipts and
represented cash inflow to the agency and its source was
external. Mr. Steininger understood that the fund was not
comprised of revenue; it contained funds from other
sources. Representative LeBon cited the AHCC account and
asked for clarification that it was not a typo on the
slide. Mr. Steininger specified that the Alaska Housing
Capital Corporation account was an account that existed
within AHFC and was one of its subsidiary accounts.
Representative LeBon asked whether AHFC generated revenue
from its loans. Mr. Steininger responded that
Representative LeBon was correct but, the AHCC account was
not related to loan activity.
Mr. Steininger addressed slide 22 titled Supplemental
Bill: Special Appropriations and Capital Items:
Special Appropriations: Total $131.7 UGF
Judgments, Settlements, and Claims
FY2020 judgments, settlements, and claims: $131.7 UGF
Capital: Total $4,852.9 deposit into General Fund
Capital
Repeals: $4,398.6 UGF
Mr. Steininger noted that there were various capital budget
repeals where remaining balances of finished projects were
identified. The specific project detail was included in the
bill and back up materials.
2:58:45 PM
Vice-Chair Ortiz returned to slide 3. He referred to the
$238.8 million reduction between FY 19 to FY 20 noted on
the slide. He listed the budget reductions amounting to
$273 million. He wondered whether an estimated $35 million
was increased across the budget. Mr. Steininger answered in
the affirmative.
Co-Chair Johnston referred to the Supplemental Bill detail
spreadsheet (copy on file). She requested more detailed
information regarding items on page 9. Mr. Steininger
explained that the items were ratifications where
expenditures were greater than anticipated revenue and
agreed to provide additional information.
Co-Chair Johnston also requested more details regarding the
repealed capital projects. Mr. Steininger responded that
the repealed projects were in the language section of the
bill and backup. He agreed to provide more information.
3:02:17 PM
Co-Chair Foster had a question regarding community
assistance. He remarked that the governor vetoed $30
million in FY 20. He asked if the governor had a position
on a possible inclusion by the legislature of additional
funding for community assistance. Mr. Steininger could not
speak to other items that might be added to the bill.
HB 234 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the agenda for the following
meeting.
ADJOURNMENT
3:03:52 PM
The meeting was adjourned at 3:03 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 02.05.2020 HFC FY20 Supplemental Presentation.pdf |
HFIN 2/5/2020 1:30:00 PM |
HB 234 |
| HB 234 Overview HFIN Supporting Document 2.5.20.pdf |
HFIN 2/5/2020 1:30:00 PM |
HB 234 |
| FY2020SuppSpreadsheet_2-5-20.pdf |
HFIN 2/5/2020 1:30:00 PM |
HB 234 |
| FY2020SuppSummary_2-5-20.pdf |
HFIN 2/5/2020 1:30:00 PM |
HB 234 |
| HB 234 OMB Response Recruitment Expenses021720.pdf |
HFIN 2/5/2020 1:30:00 PM |
HB 234 |
| HB 234 Response OMB AMHS Fund Balance021720.pdf |
HFIN 2/5/2020 1:30:00 PM |
HB 234 |
| HB 234 Response to HFC Qs OMB 2-5mtg 021720.pdf |
HFIN 2/5/2020 1:30:00 PM |
HB 234 |