Legislature(2021 - 2022)SENATE FINANCE 532
05/03/2022 01:00 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB39 | |
| SB164 | |
| HB281 | |
| HB282 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 39 | TELECONFERENCED | |
| += | HB 281 | TELECONFERENCED | |
| += | HB 282 | TELECONFERENCED | |
| += | SB 164 | TELECONFERENCED | |
CS FOR HOUSE BILL NO. 281(FIN) am(brf sup maj fld)(efd fld)
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; and making capital appropriations,
supplemental appropriations, and reappropriations."
2:44:51 PM
Co-Chair Bishop MOVED to ADOPT proposed committee
substitute for CSHB 281(FIN), Work Draft 32-GH2686\K (Marx,
4/28/22).
Co-Chair Stedman OBJECTED for discussion.
2:45:13 PM
PETE ECKLUND, STAFF, SENATOR BERT STEDMAN, recalled that
the committee previously considered Version L of the bill,
at which time it considered 29 amendments. The amendments
that were adopted had been incorporated into the new CS,
Version K.
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered.
2:46:13 PM
Co-Chair Bishop MOVED to ADOPT proposed committee
substitute for CSHB 281(FIN), Work Draft 32-GH2686\Y (Marx,
5/3/22).
Co-Chair Stedman OBJECTED for discussion.
Mr. Ecklund explained that the proposed CS for CSHB 281
(Version Y) simply merged the previously adopted CS from SB
164 (Version O) and the previously adopted CS from CSHB 281
(Version K). The proposed CS was an omnibus appropriation
bill that had capital items, supplemental items, and
operating items.
Senator Wielechowski asked if the proposed CS contained
only amendments passed in the committee.
Mr. Ecklund answered affirmatively.
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered. The CS for CSHB
281(FIN) Version Y was ADOPTED.
2:47:50 PM
AT EASE
2:49:20 PM
RECONVENED
Co-Chair Stedman explained that the committee had adopted
the omnibus bill and mentioned that copies of the different
versions of the bill were available. Additionally, there
was a spreadsheet entitled "Handout D" (copy on file) that
would show school bond debt reimbursement figures. He
relayed that the Legislative Finance Division (LFD) would
be posting more fiscal reports on the omnibus bill and
other matters to its website.
2:50:17 PM
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
introduced himself. He showed slide 2, "Outline":
? Volatility and Spring Revenue Forecast
? Updated Fiscal Summary with Senate Finance CS (SFIN
budget)
? Operating Budget Growth
? Position Count Growth
Mr. Painter addressed slide 3, "Oil Price Forecast Update,"
which showed a line graph. He cited that the data was
pulled from the futures market the previous day. The spring
forecast was depicted by the red line and called for $101
per barrel (bbl) price of oil for 2023. The futures market
the previous day had shown the price to be about $99/bbl,
while the oil price for FY 22 was running about $2 under
the forecast. He summarized that the fiscal summary was
close to the spring forecast, but currently the futures
were slightly below. He commented on the price volatility
throughout the year.
2:51:33 PM
AT EASE
2:51:51 PM
RECONVENED
Mr. Painter advanced to slide 4, "Oil Prices, FY 22 to
Date," which showed a line graph entitled 'ANS West Coast
Price.' He noted that the brackets on the graph indicated
that the Department of Revenue had done the spring forecast
on the period based on the futures in that week. Since that
time, prices had been extremely volatile, dipping down as
low as $100/bbl and up to $120/bbl. He asked members to
keep in mind that the level of volatility during the year
had been high.
Mr. Painter addressed slide 5, "FY Oil Price Sensitivity
Chart," which showed a graph entitled 'FY23 UGF Revenue by
ANS Price (Excluding POMV).' He summarized that as prices
increased, revenue increased. The spring forecast showed
$101/bbl oil, which was down to about $99/bbl, which
signified a reduction in revenue of about $190 million. He
explained that there were "stair-steps" in DOR's forecast.
He noted that the line was not a fixed curve. He noted that
when the state was trying to balance the budget while
relying on high oil prices rather than savings accounts,
LFD had historically recommended that the legislature use a
sensitivity chart to give a better idea of where the state
would be if prices did not meet the forecast expectation.
He encouraged members to consider a wider span of the line
than just looking specifically at $101/bbl oil.
2:54:07 PM
Mr. Painter spoke to slide 6, "Fiscal Summary: Senate
Finance Budget, Spring Forecast (UGF only)," which showed a
data table. He highlighted that the top showed revenue,
projected to be just shy of $7 billion of Unrestricted
General Fund (UGF) revenue in FY 22, and about $8.3 billion
in FY 23. He pointed out appropriations on line 6, with the
operating budget in FY 22 (including supplementals) at $4.9
billion and a bit over $5 billion in FY 23. He pointed out
agency operations shown on line 8 increasing year to year
by $263.9 million.
Mr. Painter noted that there was a placeholder for the K-12
disparity test. There was still an ongoing concern that the
state might fail the K-12 disparity test, with an ongoing
appeal with the federal Department of Education. If the
state failed the test, it would add $72.4 million to the
state's UGF expenditures in FY 22 and $74.6 million in FY
23. He included the amount in the fiscal summary on line 9.
Mr. Painter continued to address the fiscal summary table
on slide 6. He highlighted that line 10 showed statewide
items, with an increase of $349 million from FY 22 to FY
23, primarily caused from oil and gas tax credits. There
was $54 million paid out in the FY 22 budget, and $349
million in the current budget. The other major increase was
a deposit to the retirement funds to make up for the zero
funding of healthcare by the Alaska Retirement Management
(ARM) Board. He noted that he would discuss the item more
later in the presentation.
Mr. Painter summarized that there was a bit over $500
million of operating supplementals in the budget, the
largest of which referred to school bond debt
reimbursements that paid back past amounts unpaid in
previous years. Similarly, the funds would go towards
paying unpaid amounts for Regional Educational Attendance
Area (REAA) Fund and Community Assistance, and oil and gas
tax credits. He summarized that the primary supplemental
items made up for past years. Three were other increases
relating to fire suppression and the Disaster Relief Fund.
Line 12 showed the capital budget, which was split. The
previous year there had been $242.9 million in capital
appropriations. The current capital budget was split with
$324.6 million in FY 22, and $407.4 million in FY 23. He
summarized that up for consideration was a capital budget
of about $730 million of UGF across the two fiscal years.
2:57:50 PM
Mr. Painter pointed out that line 16 showed the Permanent
Fund Dividend. He recounted that the previous fall there
was an approximately $1,100 PFD paid out, and the current
budget included a dividend of 50 percent of the percent of
market value (POMV) draw, which was estimated to be between
$2,500 and $2,600 per person. Line 18 showed that the
budget included $199 million to deposit past unpaid
royalties into the corpus of the Permanent Fund to make up
for amounts that were not paid in FY 17 and FY 18. There
was a pre-transfer surplus in FY 22 of about $550 million
and about $1.2 billion in FY 23.
Mr. Painter pointed out that forward funding for K-12
education was moved down to the fund transfers on line 23,
in order to be consistent with how LFD treated forward-
funding of K-12 in the previous period when it was forward-
funded. He explained that when the state did not forward
fund, the Public Education Fund behaved like a fund
capitalization and would be in a different part of the
fiscal summary. He thought the method made for a cleaner
fiscal summary than prior versions, because the forward
funding was a form of savings.
Mr. Painter highlighted the bottom line of the fiscal
summary, which showed a post-transfer surplus of $832
million in FY 22. The line above showed $660 million being
deposited into the Statutory Budget Reserve (SBR), and the
combined amounts would result in just shy of $1.5 billion
expected to go into the SBR in FY 22. In FY 23, there was a
post-transfer surplus of $87.4 million that would similarly
go in the SBR. In FY 23, the budget-balancing oil price was
about $99/bbl. If the oil price was above $99/bbl, the
surplus would go into the Permanent Fund as shown on line
22. He qualified that the K-12 forward funding amount would
prorate downward if the revenue was not available. The
budget balancing oil price without forward funding dropped
down to $84/bbl.
3:00:54 PM
Mr. Painter spoke to slide 7, "Fiscal Summary: Senate
Finance Budget, $84 Oil (UGF only)," which showed a data
table. He highlighted changes in the case of $84/bbl oil,
including statewide items on line 10. The oil and gas tax
credit amount would decrease, as it was a formula based on
oil revenue. He highlighted that the deposit to the
Permanent Fund shown on line 22 would not happen, and at
$84/bbl oil there would be $36 million extra put into
forward funding.
Co-Chair Stedman asked if Mr. Painter could discuss
backstop or backfill language from the SBR.
Mr. Painter explained that many times there would be
language in the budget in the case of a deficit that
allowed for the difference to be drawn from the
Constitutional Budget Reserve (CBR) or SBR. He believed the
language was in the budget for the SBR, but the mechanism
would only kick in after the $84/bbl amount.
Co-Chair Stedman asked Mr. Painter to get back to the
committee with information regarding the oil price
threshold that included evaporation of the forward-funding
and the SBR.
Mr. Painter agreed to address the topic.
Co-Chair Stedman explained that there were several issues
with increases in the FY 23 budget that would not be
recurring. He asked for Mr. Painter to get back to the
committee with what FY 24 recurring costs would look like.
He asked Mr. Painter to consider the governor's submitted
budget and wanted to look at the base rate of change for FY
24 in percentages.
Mr. Painter agreed to provide the information.
Mr. Painter referenced slide 8, "Major Increases in FY23
Governor's Budget from FY22":
? $45.0 million for Medicaid
? $33.6 million UGF increases to offset DGF lost in
CBR sweep
? $25.5 million UGF for union contracts, health
insurance, and other contractual items
? $17.4 million combined increases in Department of
Public Safety (adding troopers, VPSOs, and support
positions)
? $12.9 million combined increases in Department of
Corrections (booking and MH unit at Hiland Mountain,
adding non-CO support positions)
? $5.7 million for DEC to take primacy of federal
permitting programs
? $4.0 million for Department of Law for statehood
defense
? $3.8 million for fire suppression preparedness
Mr. Painter explained that the next few slides covered
major increases in the current budget compared to the
previous fiscal year. The governor's budget called for
several major increases (listed on the slide), and the
following few slides would show increases in the Senate
budget that were not in the governor's original budget. He
reviewed the increases on the slide.
3:06:30 PM
Mr. Painter highlighted slide 9, "Many FY23 Increases
Reverse Past Budget Reductions":
? Several increments in the Governor's FY23 budget
request reverse reductions or vetoes made since FY23:
$45.0 million Medicaid increase Medicaid was
reduced by $35.0 million in FY22.
$4.0 million University of Alaska increase UA
was reduced by $54.3 million from FY20-22.
$2.0 million for Legislative per diem vetoed
by Governor in FY22.
$0.7 million GF/MH items vetoed by the
Governor in FY22.
? Several other items reverse reductions made from
FY15-FY19 under previous governors:
$4.9 million for DEC 404 Primacy this was cut
in FY15.
$3.8 million for wildfire prevention and
academy this was cut in FY16.
$2.4 million for Village Public Safety
Officers this was cut in FY16.
$1.2 million for Judiciary for increased hours
this was cut in FY16.
Mr. Painter noted that many of the increases on the
previous slide were reversing past budget reductions from
the previous seven or eight years. He commented that many
of the items were bringing the state back to levels of
service provided before revenue decline starting in FY 15.
Co-Chair Bishop commented that the $4 million increase to
the University of Alaska was in light of a $101 million
reduction since FY 16 to date.
Senator Olson went back to slide 8 and referenced the
Department of Environmental Conservation primacy federal
permitting. He thought the funds had been cut.
Mr. Painter answered affirmatively. He shared that the item
was not in the Senate version of the budget, but was an
increase requested by the governor.
Mr. Painter showed slide 10, "Major Increases in SFIN
Agency":
Operations from Governor Proposal
? $60.0 million K-12 Outside BSA Formula
? $59.4 million for AMHS (Governor eliminated UGF)
? $27.0 million for fuel trigger to offset high oil
prices
? $16.1 million DOH to Increase Personal Care
Attendant Wages
? $14.1 million for University of Alaska
? $5.0 million for ASMI
? $4.3 million for Food Bank pilot program
? $4.3 million for 50% increase to K-12 residential
schools
Mr. Painter explained that both the House and Senate
versions of the budget had an amount of UGF for the Alaska
Marine Highway System (AMHS) that was equal to the amount
of funding the previous year. It was not an increase but
showed as one if compared to the governor's proposed
budget. He discussed the fuel trigger to offset high oil
prices for agencies and particularly the AMHS. He mentioned
that the increase to residential schools did not include
Mt. Edgecumbe High School.
3:11:39 PM
Co-Chair Stedman referenced the AMHS and thought the funds
were put in if the ferries ran the schedule and there were
high oil prices. He did not think there would be crew to
run the AMHS schedule. He mentioned backfill language for
federal funds and expected a lot of the funds would not be
spent.
Senator Olson asked if Co-Chair Stedman was referencing the
$60 million going to the AMHS listed on the slide.
Co-Chair Stedman answered affirmatively. He noted that
there would be $200 million in federal funds coming to
AMHS. He unsure of the timing of when the funds would be
available. He thought there would be a more refined number
during the following year's budget process.
Mr. Painter spoke to slide 11, "Major Increases in SFIN
Statewide Items from Governor Proposal":
? $89.3 million for PERS/TRS pension fund (amount that
would have gone to healthcare fund but for ARM Board
decision to leave it unfunded)
? $1.2 billion for K-12 forward funding (more of a
savings item than an expenditure)
? $199.0 million to PF corpus in FY22 to satisfy audit
finding relating to FY17-18 royalties
? $220.8 million in FY22 to pay past unfunded School
Bond Debt Reimbursement from FY17-21
? $84.0 million in FY22 to repay past unfunded REAA
deposits from FY17-21
? $60.0 million in FY22 to pay oil tax credits at
statutory amount
? $38.9 million in FY22 to bring Community Assistance
distributions to $30 million in FY22 and FY23
3:15:04 PM
Mr. Painter addressed slide 12, "What's the True Operating
Budget Growth Rate?"
? Several changes from FY22-23 give the FY23 agency
operations budget a lower starting point than FY22.
? The Governor's FY23 budget increases agency
operations by $95.6 million (2.5%) over the FY23
baseline.
? However, the Governor's budget uses temporary
federal funds in place of UGF for the Alaska Marine
Highway System. Keeping UGF funding level (as the
House and SFIN budgets do) would result in a $155.0
million (4.0%) over the baseline.
? SFIN Operating Budget is $319.7 million (8.3%) over
the baseline. The House is $266.9 million (6.9%) over
the baseline, although $10.3 million of salary
adjustments were submitted after the House's process
was complete.
Mr. Painter noted that the fiscal summary had shown that
agency operations were up by 6.7 percent, which could be
understating the true level of budget growth due to built-
in decreases before the budget work was started. The
decreases were listed in a small table on the right side of
the slide. He mentioned changes in retirement funds, the
decrease in student count, the removal of one-time items,
and contractual changes. The baseline before starting
budget work was $55.5 million below the previous year's
level with no change in service levels. He summarized that
doing a comparison using the baseline rather than to FY 22,
it would provide a clearer picture of growth.
Mr. Painter explained that the House budget had a growth
rate of 6.9 percent above the baseline, while the Senate
Finance Committee budget had an 8.3 percent growth rate
above the baseline. He noted that there had been some
governor's amendments that may have increased the budget
and exaggerated the difference between the two. He
commented that the proposed budget was a significant growth
rate after years of flat or declining budget, but the
Senate Finance budget was a bit over $300 million beyond
the baseline.
3:18:01 PM
Co-Chair Stedman discussed the timing process after the
governor's budget was submitted on December 15 and noted
that there were quite a few amendments and adjustments
after the House had done its work, and the budget cycle
stayed open until the very last requested changes from the
governor. He noted that the Senate did not have the same
time frame as the House and dealt with the end of the
budgetary cycle.
Mr. Painter showed slide 13, "Full-Time Position Count
Comparison," which showed a table of the position count in
different versions of the budget. He noted that the
governor's budget had proposed to increase the statewide
position count by 260 from the previous year, while the
Senate Finance budget was 43 positions below the governor's
request. There was still a substantial increase of 217
positions higher than FY 22.
Senator Hoffman asked about Conference Committee.
Co-Chair Stedman explained that the following major step
after floor action on the bill would be working out the
budget with the other body.
Co-Chair Bishop MOVED to report SCS CSHB 281(FIN) out of
Committee with individual recommendations. There being NO
OBJECTION, it was so ordered.
SCS CSHB 281(FIN) was REPORTED out of committee with two
"do pass" recommendations and with four "amend"
recommendations.
Co-Chair Bishop MOVED that the Senate Finance Committee
direct the Divisions of Legislative Finance and Legislative
Legal make technical and conforming changes to the bill as
necessary. There being NO OBJECTION, it was so ordered.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 164 work draft version O.pdf |
SFIN 5/3/2022 1:00:00 PM |
SB 164 |
| HB 281 work draft version K.pdf |
SFIN 5/3/2022 1:00:00 PM |
HB 281 |
| HB 281 work draft version Y.pdf |
SFIN 5/3/2022 1:00:00 PM |
HB 281 |
| HB 281 LFD Presentation- SFIN Budget 5-2-22.pdf |
SFIN 5/3/2022 1:00:00 PM |
HB 281 |
| HB 281 School Bond Debt Reimbursement to Communities.pdf |
SFIN 5/3/2022 1:00:00 PM |
HB 281 |
| HB 281 Version Y Agency Summary Packet.pdf |
SFIN 5/3/2022 1:00:00 PM |
HB 281 |
| HB 281 Version K Agency Summary Packet.pdf |
SFIN 5/3/2022 1:00:00 PM |
HB 281 |
| SB 164 version O Agency Summary Packet.pdf |
SFIN 5/3/2022 1:00:00 PM |
SB 164 |
| SB 164 Testimony Lutchansky Anchorage Midtown Park Chalet.pdf |
SFIN 5/3/2022 1:00:00 PM |
SB 164 |
| SB 164 Testimony Hinderman Midtown Park Chalet.pdf |
SFIN 5/3/2022 1:00:00 PM |
SB 164 |
| SB 39 Support Dundore.pdf |
SFIN 5/3/2022 1:00:00 PM |
SB 39 |