Legislature(2021 - 2022)ANCH LIO DENALI Rm
11/02/2022 10:00 AM House LEGISLATIVE BUDGET & AUDIT
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| Audio | Topic |
|---|---|
| Start | |
| Approval of Minutes | |
| Proposed Change to the Legislative Budget and Audit Committee Handbook | |
| Presentation on Fy 21 Audit Findings | |
| Executive Session | |
| Final and Preliminary Release of Audits | |
| Revised Programs - Legislative | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
[Contains discussion of HB 281.]
11:22:37 AM
CHAIR VON IMHOF announced that the final order of business would
be consideration of Revised Programs - Legislative.
CHAIR VON IMHOF noted that earlier that day, the Office of
Management & Budget (OMB) withdrew four revised programs -
legislative (RPLs), numbered 08-2023-0130 through 08-2023-0133
and replaced them with two RPLs, numbered 08-2023-0165 and 08-
2023-0166. The other two RPLs on the schedule, relating to the
Department of Natural Resources (DNR) and "the Judiciary
Department" are unchanged.
11:23:37 AM
The committee took an at-ease from 11:23 a.m. to 11:28 a.m.
11:28:30 AM
CHAIR VON IMHOF named those available to speak to the RPLs.
11:29:04 AM
NEIL STEININGER, Director, Office of Management & Budget (OMB),
Office of the Governor, explained that OMB had submitted four
RPLs for the Department of Commerce, Community & Economic
Development (DCCED) in order to distribute grants to seafood
processors. The breakdown into four RPLs was to accommodate the
overall grant amount from the U.S. Government of just over $30
million and ensure this fit under the restrictions provided in
HB 281 limiting RPLs to no more than $10 million per RPL.
Subsequently, it was determined that this manner of dividing the
funds did not align with the standards set under the
legislation; therefore, OMB has provided the two aforementioned
replacement RPLs: one that falls within the Division of
Community and Regional Affairs and one that falls within Serve
Alaska, both entities housed within DCCED. He indicated that
the two new RPLs would provide for at least $21 million of the
approximately $31 million in grant awards to be distributed to
seafood processors. He confirmed that the new two RPLs are
numbered 08-2023-0165 and 08-2023-0166.
MR. STEININGER stated another RPL, [numbered 10-2023-5089], is
for DNR, in the Division of Geological and Geophysical Surveys,
and is related to an award from the Federal Emergency Management
Agency (FEMA); another RPL, [numbered 41-2023-0001], is for the
judicial system and is related to a Fairbanks Wellness Court
enhancement project.
11:30:56 AM
CHAIR VON IMHOF reviewed that the original four RPLs were
related to funds from the U.S. Department of Agriculture (USDA)
Seafood Processors pandemic response due to COVID-19, and the
money has been "trying to get out the door for the last year or
so." She expressed her desire to issue the money sooner than
later. She said the committee is trying to figure out a way to
do this under the parameters of the aforementioned legislation.
She asked Mr. Steininger to explain the delay in issuing the
funds and how the new RPLs work with the parameters set forth by
the legislature "last spring."
11:32:42 AM
MR. STEININGER named factors that led to the delay in
distribution of funds. First, the federal award was delayed "a
month or so" from the anticipated delivery early in the calendar
year. Second, in attempting to issue the grant guidance, "we
had some delays in our ability to actually set up the grant
portal in order to have the grantees apply." Further, during
that process some of the grantees requested an extension in time
to provide their responses. Those factors resulted in OMB being
unable to have the grant applications and determinations by the
close of the fiscal year; this meant the appropriation had
"turned," and it was no longer possible to issue those grants.
He said OMB now has the applications and needs access to the
funds in order to spend federal receipt authority to make the
payments.
MR. STEININGER stated that the first set of RPLs would have
exceeded the $10 million restriction set by HB 281, because
although they were four RPLs each for less than $10 million,
they all addressed the same appropriation item. The two RPLs
replacing the original four address two separate items. They
are the appropriation allocation and the allocation to Serve
Alaska, both within the Division of Community and Regional
Affairs. He said both allocations would be provided by the
division as grant opportunities to fish processors throughout
Alaska.
11:35:25 AM
CHAIR VON IMHOF clarified her wish to have the full $35 million
distributed to the food processors, and that the two replacement
RPLs would get $20 million to them, leaving the distribution of
$15 million a conundrum. She requested Megan Wallace discuss
this issue as it relates to an Alaska Supreme Court decision in
Wielechowski v. State of Alaska and whether the Legislative
Budget and Audit Committee can appropriate however it sees fit,
regardless of statute.
11:36:50 AM
MEGAN WALLACE, Director, Legislative Legal & Research Services,
Legislative Affairs Agency, stated that "the legislature remains
the appropriating body." She continued:
The Legislative Budget and Audit Committee is an
interim oversight committee, and under AS
37.07.080(h), which is also known as "the RPL
process," the governor can submit an RPL asking for
increase of an appropriation item based on additional
federal, or other program receipts. And then LB&A has
the power to review and approve those RPLs. If the
LB&A committee does not approve or does not take
action, there's a 45-day wait period before the
governor can then proceed with expending the
additional federal, or other program receipts
requested in the RPL.
There are several legal issues with ... the two RPLs
that are now before the Legislative Budget and Audit
Committee based on my office's quick review of the two
RPLs sent over this morning. The issues we have
flagged really center on the ... RPL ... that is
associated with the appropriation on page 5, line 18,
of HB 281, and I believe that is RPL 08-2023-0166.
And so, that RPL seeks to increase the appropriation
for the Serve Alaska allocation. In HB 281, ... the
legal issue with respect to that RPL is that while
there are multiple RPLs that were submitted, from the
text of the RPLs themselves, it just appears to be a
singular program, and separating RPLs into multiple
RPLs appears to be an attempt to circumvent that
Section 77(e) of HB 281, which is now Chapter 11 SLA
2022, ... taking the limit of an increase, those two
in appropriation, items FY 23, to no more than $10
million. And so, what this really looks like is a $20
million increase to this program, which was originally
approved as an RPL back in December of 2021 by this
committee using the appropriation authority for the
[Division of] Community and Regional Affairs
allocation, which is the allocation that is used in
RPL 0165.
The other issue that I see with using the Serve Alaska
allocation is that it raises appropriation
constitutional issues similar to the CARES Act RPLs
that came before this committee back in 2020, in that
there is no program for the Serve Alaska allocation
that is currently used for this purpose. And the RPL
statute, under [AS] 37.07.080(h), are arguably not as
tended to be used to create appropriations; it's to be
used to increase appropriations for items that the
legislature has already appropriated for, and the ...
legislature cannot delegate to a singular committee to
make appropriations during the Interim.
11:41:36 AM
REPRESENTATIVE JOSEPHSON asked whether the opportunity would
lapse or whether this matter could be attended to in mid- to
late January.
11:42:13 AM
HANNAH LAGER, Acting Director, Division of Administrative
Services, Department of Commerce, Community & Economic
Development, explained that the division's concern with
distributing the funding is "the continued function of the
seafood processors." She indicated that the division has
received a number of inquiries from processors anxious to
receive the much needed funding. She added, "From the timing of
their inquiries it appears that many of their fiscal years may
end in December, and so that would be our largest concern would
be with January getting the funding in their current fiscal
year."
11:43:11 AM
SENATOR STEDMAN spoke about collateral damage in the last budget
cycle, "when we put the $10 million [cap] on." He noted that
this appropriation was "not even on the radar screen" the
previous year, "so we end up with an issue in front of us
today." He emphasized it is just a matter of sequence and
timing to get the money distributed, and he opined that "we need
to ... move this quickly as we can to disburse these funds like
we have the other COVID relief funds throughout multiple
appropriations, without tripping up litigation or disputes with
the administration to slow it down." That said, he also
emphasized the need to follow statutory guidelines. He
expressed concern about the potential of adding some of these
funds into a supplemental bill, which although intended as "a
fast-track supplemental" is not guaranteed to be quick. He
concurred with Representative Josephson that although it is
technically possible that the legislature can take quick action
once it convenes as a body on an appropriation bill, it is
highly unlikely because of the number of members with varying
opinions and ideas for additions that result in "an out-of-
control appropriation." He stated that he hopes the committee,
collectively with the administration, moves forward today to
"move as much money on these RPLs through the street as
possible." He recommended addressing the "RPL ending in 166"
and talking about how to "deal with the rest of them," and he
emphasized that "the legislature thought this would be gone in
the previous fiscal year, and here it is November, and it should
st
have been sent out by July 1."
11:46:51 AM
MS. LAGER, in response to Representative Spohnholz, proffered
that the difference between the two RPLs is just the
appropriation.
11:48:00 AM
REPRESENTATIVE SPOHNHOLZ expressed concern about the seafood
processor industry facing difficulties because the legislature
is failing to get the funds delivered. She expressed further
concern that the committee may be circumventing statute by
advancing two RPLs that are essentially the same, each with a
$10 million legal limit. She stated, "I think we would be
getting ahead of ourselves by doing that."
11:49:45 AM
MS. LAGER, to a question from Representative Tuck regarding the
total requested, said she does not have the total of the demand,
but award amounts that have been calculated are 28 percent of
each grantee's requested need, so over $90 million has been
identified. In response to follow-up questions, she said the
largest calculated grant amount at this point is $7.4 million
for one grantee, with the smallest being just over $800. She
said the original RPL was passed on 12/15/21, after a delay of
the application process from May. She informed Representative
Tuck that Serve Alaska has a commission responsible for awarding
grants through the program, but those are grants that come
through specific federal funding streams.
REPRESENTATIVE TUCK asked, "Could this be one of those federal
funding streams?"
MS. LAGER answered no.
11:52:43 AM
REPRESENTATIVE TUCK commented that while the legislature has
appropriation authority, the Legislative Budget and Audit
Committee does not. He said because of "poor past practices of
this committee" the legislature has put a limit on how much the
Legislative Budget and Audit Committee can approve during the
Interim. He said he has no problem with "the first" RPL but
that the "second one" is "a bit of a stretch." He spoke further
about timing with the legislature.
11:54:46 AM
SENATOR STEDMAN commented on the cap and reiterated that the
funds did not get out in a timely manner, and indicated that the
Legislative Budget and Audit Committee is "on the front lines
during the Interim."
CHAIR VON IMHOF suggested it would make sense to pass RPL 08-
2023-0165, for $10 million. She said this money has been in
limbo for a while. She pointed out that the committee would
meet again in December 2022 and could address the remaining $25
million then. She said, "This money that we're talking about
was passed ... December 21, 2020, under the Trump Administration
and signed into law on 12/27/20." She said HB 281 specifically
thth
calls out the 117 and 118 Congress in terms of applying the
th
limitations; however, these funds are from the 116 Congress.
For that reason, she suggested the committee may decide it has
the wherewithal to put in the other $25 million through the
original process. She suggested everyone educate themselves
between now and the next meeting in order to make a "timely,
thoughtful decision."
11:57:43 AM
REPRESENTATIVE TUCK spoke to the function of the Finance
Committee in ensuring money goes where needed. He said an RPL
process done on the fly does not allow him to do his homework.
He emphasized the committee had just received the two
replacement RPLs. He indicated that he has a lot of questions,
and he further indicated approval of Chair von Imhof's suggested
process going forward.
CHAIR VON IMHOF remarked that considering the unusual
circumstances, it would benefit the committee to extend the
discussion "30 more days."
11:59:47 AM
REPRESENTATIVE JOSEPHSON agreed with the extension of time but
emphasized that he would "strictly construe this law." He said
the Legislative Budget and Audit Committee has existed for 60
years and has not been challenged in court, but he agrees with
Representative Tuck that its members stand for the other members
of the legislature during Interim. Further, the legislature's
attorney has given two reasons that the RPLs are problematic.
12:00:49 PM
CHAIR VON IMHOF said she thinks it is important to weigh all
evidence between now and the next meeting. She said she thinks
the committee is looking at "a disaster declaration," and the
committee "kicked it forward," and there was some question that
that may have been a violation of statute and authority, but the
committee "went ahead and did it anyway" and then ratified it.
Whether the current situation can have the same circumstances
applied to it is up for debate, she stated.
12:01:46 PM
MR. STEININGER, at the invitation of Chair von Imhof, addressed
the remaining RPLs in the committee packet. He reviewed that
RPL 10-2023-5089 is for the Division of Geological Geophysical
Surveys, within the Department of Natural Resources. The award
is from FEMA for an amount just under $3 million. He further
reviewed that RPL 41-2023-0001 is for the Judiciary in the
amount of $128,300 to work on the Fairbanks Wellness Court
enhancement project.
12:02:56 PM
REPRESENTATIVE TUCK moved that the Legislative Budget and Audit
Committee approve the following revised programs - legislative:
RPL 08-2023-0165, Department of Commerce, Community & Economic
Development, USDA Seafood Processors pandemic response and
safety block grant program, for $10 million for federal
operating receipts; RPL 10-2023-5089, Department of Natural
Resources, Division of Geological and Geophysical Surveys, for
$2.96 million of federal operating receipts; and RPL 41-2023-
0001, Judiciary, Fairbanks Wellness Court enhancement project,
for [$128,300] for federal operating receipts.
12:03:58 PM
REPRESENTATIVE KAUFMAN asked for confirmation on the amount of
the RPL for Judiciary.
REPRESENTATIVE TUCK confirmed it should be for $128,300.
12:04:38 PM
CHAIR VON IMHOF announced that there being no objection, the
RPLs were approved.
| Document Name | Date/Time | Subjects |
|---|---|---|
| RPL Complete Packet LBA 11.2.22.pdf |
JBUD 11/2/2022 10:00:00 AM |
|
| Top Eight Audit Issues November 2022.pdf |
JBUD 11/2/2022 10:00:00 AM |
Presentation |
| 2022 LBAC Handbook DRAFT.pdf |
JBUD 11/2/2022 10:00:00 AM |
|
| Replacement RPL #08-2023-0165 USDA Seafood Processor Block Grant - $10 Million of Grant Need 11.01.2022.pdf |
JBUD 11/2/2022 10:00:00 AM |
|
| Replacement RPL #08-2023-0166 USDA Seafood Processor Block Grant - $10 Million of Grant Need 11.01.2022 - Serve Alaska.pdf |
JBUD 11/2/2022 10:00:00 AM |