Legislature(2017 - 2018)ADAMS ROOM 519
03/07/2018 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB285 || HB286 | |
| Amendments | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 286 | TELECONFERENCED | |
| += | HB 285 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 285
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
HOUSE BILL NO. 286
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making supplemental appropriations;
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."
1:37:17 PM
^AMENDMENTS
1:37:21 PM
Representative Ortiz WITHDREW Amendment H HSS 22 (copy on
file) [see discussion in minutes dated March 6, 2018].
There being NO OBJECTION, it was so ordered.
Representative Ortiz MOVED to ADOPT Replacement Amendment H
HSS 22 (copy on file):
Health & Social Services
Appropriation: Senior and Disabilities Svcs
Allocation: Senior/Disabilities Svcs Admin
Title: Companion Services
Wordage Type: Intent
Linkage: Appropriation - Senior and Disabilities Svcs
Offered by: Representative Ortiz
Wordage
It is the intent of the legislature that the State of
Alaska proceed expeditiously to establish companion
services under Section 1915(c) of the Social Security
Act to complement and support the services provided
through the Medicare/Medicaid waiver programs. The
Department of Health and Social Services shall submit
a report to co-chairs of the Finance Committees and
the Legislative Finance Division on the status of the
service no later than January 31, 2019.
Explanation
The Department indicates the process of establishing a
"companion service" category under Section 1915(c) is
lengthy and can stretch from one to two years. With
the reduction in services under the Day Habilitation
program it is vital that the State pursue the
application process aggressively. Families and
communities have been heavily impacted by the 12 hour
per week cap on Day Habilitation services and until
companion services are available to complement and
support Day Habilitation services, these families
struggle to meet the needs of this vulnerable
population.
There being NO OBJECTION, Replacement H HSS 22 was ADOPTED.
1:38:17 PM
Representative Ortiz explained he had withdrawn the
original Amendment H HSS 21 the previous day.
Representative Ortiz MOVED to ADOPT Replacement Amendment H
HSS 21 (copy on file):
Health & Social Services
Appropriation: Senior and Disabilities Svcs
Allocation: Senior/Disabilities Svcs Admin
Title: Service Delivery Models
Wordage Type: Intent
Linkage: Appropriation - Senior and Disabilities Svcs
Offered by: Representative Ortiz
Wordage
It is the intent of the legislature that the
Department of Health & Social Services re-examine
service delivery models to ensure eligible senior and
disabled populations receive appropriate services
irrespective of where they live in Alaska. The
Department of Health and Social Services shall submit
a report to co-chairs of the Finance Committees and
the Legislative Finance Division on the status of the
service no later than February 15, 2019.
Explanation
Service delivery models that work in larger
communities do not necessarily work in Alaska's
smaller communities. It is important to reassess
service needs and delivery models to serve individuals
wherever they live.
Representative Pruitt OBJECTED for discussion. He wondered
if the Department of Health and Social Services (DHSS)
anticipated costs associated with the amendment. He
requested to hear from the department.
Representative Wilson thought Representative Ortiz may want
to explain the replacement amendment first.
Representative Ortiz explained the replacement amendment
included some report back language and eliminated reference
to population densities from any particular community (the
word "community" had been removed). The amendment also
included a report date.
1:40:31 PM
DUANE MAYES, DIRECTOR, SENIOR AND DISABILITIES SERVICES,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, asked
Representative Pruitt to repeat the question.
Representative Pruitt complied. He noted that the amendment
only included intent language and wondered if it would
result in a cost to the department or would be absorbed
within the department's normal scope of work.
Mr. Mayes replied he believed DHSS could absorb any
associated costs. He reported there were several
initiatives currently under way. He had been presenting to
other [legislative] committees on some authorities as a
part of SB 74 [Medicaid reform legislation passed in 2016]
- the department's projection was to go live in May, which
would decrease some of the work the department was
currently doing [as the deadline approached].
Representative Pruitt WITHDREW his OBJECTION.
Representative Guttenberg OBJECTED for discussion. He asked
if any part of the study work would be recoverable through
Medicaid waivers.
Mr. Mayes answered that he believed DHSS already did the
work daily. He elaborated the department worked to find
ways to better serve rural communities and streamline
processes. The division had been flat-funded for some time
and had not brought on additional positions; therefore, the
division had to be smarter about what it did. He reiterated
his belief the department already did the work specified in
the amendment daily.
Representative Guttenberg WITHDREW his OBJECTION.
There being NO further OBJECTION, Replacement Amendment H
HSS 22 was ADOPTED.
1:43:26 PM
Co-Chair Seaton MOVED to ADOPT Amendment H HSS 23 (copy on
file):
Departmental Support Services
Commissioner's Office
H HSS 23
Amend Department Transfer Language and Add Legislative
Intent Language in HB 286
Offered by Representative Seaton
Wordage:
At the discretion of the Commissioner of the
Department of Health and Social Services, up to
$20,000,000 may be transferred between all
appropriations in the Department of Health and Social
Services, except that no transfer may be made to or
from the Medicaid Services appropriation.
It is the intent of the legislature that the
Department of Health and Social Services submit a
report of transfers between appropriations that
occurred during the fiscal year ending June 30, 2019,
to the Legislative Finance Division by September 30,
2019. It is the intent of the legislature that the
operating budgets for the fiscal years ending June 30,
2020, and June 30, 2021, be prepared to reflect the
actual or anticipated transfers between appropriations
for the fiscal year ending June 30, 2019.
Explanation:
30-GH2564O.8
This amendment revises conditional language that
allows the Department of Health and Social Services to
transfer funding across appropriation lines. It
changes the amount from $25 million to $20 million and
excludes the Medicaid Services appropriation from the
transfer authority. It also adds legislative intent
for the department to submit a report of the transfers
that occur during FY19 to the Legislative Finance
Division by September 30, 2019. Lastly, it adds
legislative intent that the operating budgets for FY20
and FY21 reflect the FY19 actual or anticipated
transfers between appropriations for budget clarity.
Representative Wilson OBJECTED for discussion.
Co-Chair Seaton explained the amendment with a prepared
statement:
This amendment revises conditional language that
allows the Department of Health and Social Services to
transfer funding across appropriation lines. It
changes the amount from $25 million to $20 million and
it excludes the Medicaid Services appropriation from
the transfer authority. It also adds legislative
intent for the department to submit a report of the
transfers that occurred during FY 19 to the
Legislative Finance Division by September 30, 2019.
Lastly, it adds legislative intent that the operating
budget for FY 20 and 21 reflect the FY 19 actual or
anticipated transfers between appropriations for
budget clarity.
1:44:29 PM
Representative Tilton spoke in opposition to the amendment.
She explained that the intent of the budget language, which
had been added in the past, had been to ensure Medicaid
providers were being paid. She elaborated that there had
been a problem with the Medicaid Management Information
System (MMIS) and providers had not been paid. The ability
for the department to transfer funding across
appropriations was meant to be temporary. She remarked that
the amendment would exclude Medicaid Services from the
transfer authority. She noted the department was required
to report any transfers to the legislature. She asked DHSS
if it had used the transfer authority in the last fiscal
year. She requested detail.
SHAWNDA O'BRIEN, ASSISTANT COMMISSIONER, FINANCE AND
MANAGEMENT SERVICES, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, asked for clarification on the fiscal year.
Representative Tilton asked for both FY 17 and FY 18.
Ms. O'Brien answered that the transfer authority had not
been used in the current fiscal year [FY 18]. She detailed
the department did not typically see a need in the first
six months of a fiscal year (sometimes the first nine
months). Typically, as DHSS made projections and it saw how
spending was taking place, it evaluated whether there was a
need to move authority. She elaborated that DHSS only had
authority to move general funds in FY 17, which had limited
the department's ability to maximize potential in other
areas where it may have had excess federal authority or
other things that would have allowed more alignment
internally. In FY 17 the department had transferred $15
million in general funds to cover a GF shortfall in
Medicaid.
1:47:50 PM
Vice-Chair Gara noted there were a number of programs
people automatically qualified for under state or federal
law including public benefits, adult temporary assistance,
child care, and other income-based services. He elaborated
that DHSS tried to project the number of people who would
qualify for the benefits. He remarked that people may
qualify for one program and not another. He spoke to the
daily rate the department paid to foster care providers. He
asked if the areas he mentioned were examples of places the
department utilized the authority to transfer funds.
Ms. O'Brien agreed there were some situations that were
unforeseeable due to caseloads or unknown circumstances.
The department had been monitoring its senior and
disabilities general relief program (assisted living)
because of some things going on with the Alaska Psychiatric
Institute (API) and the closure of Beans Cafe in Anchorage.
She explained it would be an area DHSS could use the
transfer authority to offset what may have been a
supplemental budget request.
Representative Wilson asked about the highest amount the
department had utilized to match funds or take care of
programs.
Ms. O'Brien answered that FY 17 was the first year the
department had used the General Fund (GF) transfer
authority since she had been in her current position. The
department was monitoring a couple of places in FY 18 and
had not made supplemental requests because it anticipated
having the ability to address the needs internally.
Typically, the department budgeted close to what it needed;
in most years prior to FY 15 DHSS had sufficient authority
to address most of the needs. Reductions in recent years
made it harder to manage within the budget - there were
some circumstances that took place that were out of the
department's control, which DHSS managed internally. The
department was still pretty good at budgeting closely - the
transfer authority was less than 1 percent of its total
budget.
Representative Wilson remarked that the department could
not use the funds for Medicaid. She wondered if the percent
would change significantly when considering the portion of
the budget the authorization could be used for. She asked
what the money had been used for in FY 17.
1:51:22 PM
Ms. O'Brien answered that in FY 17 the funds had been used
to offset overspending in Medicaid Services. The department
had not transferred the authority into the Medicaid
Services component; however, it had created an interagency
receipt authority to offset the costs using another
component where expenditures had taken place.
Representative Wilson remarked that although the
legislature had excluded Medicaid from the transfer
authorization, the department still had a way to do it. She
surmised the limiting language appeared to be irrelevant.
Ms. O'Brien answered that in FY 17 DHSS had found a way to
leverage the ability to reduce what would have been an
additional cost in the supplemental bill.
Representative Wilson remarked that the department was
still able to use the transfer authority for Medicaid even
though the language specified it could not be used for that
purpose. She did not know whether the legislature had a
problem with the issue or not - whether the $20 million
went through the supplemental or the transfer authority was
a policy call and represented the same pot of money. She
believed the transfer authority had started because of the
Medicaid issue - when the federal dollars would come in and
the number of people who would qualify was never known. She
wondered why Medicaid could not use the money.
Co-Chair Seaton answered that the goal was to avoid giving
DHSS the impression the transfer authority meant it should
not budget tightly going forward. The legislature wanted to
know the department's anticipated costs and the past
history of where the costs were. He wanted to receive a
report showing where the transfers had been made and
whether DHSS anticipated it would need the money for the
same reason the following year. He elaborated that if the
funds were needed the following year, the legislature
wanted the funding to be moved to that specific line item
in the budget. The department should have the ability to
use the authority because the preference was to avoid
supplementals. Yet, the authority should not be so loose
that DHSS did not adjust its budget for anticipated needs.
1:54:15 PM
Representative Wilson agreed it was important to know where
the money was being spent. She had recently learned that
money got spent in places the legislature was unaware of
until it saw budget actuals. She observed that the money
had been spent for Medicaid anyway through a roundabout
method to take care of clients - she was not faulting the
department because it was trying to take care of
individuals in need of care. She reasoned that allowing the
transfer authority for Medicaid could have reduced the
supplemental and may have meant a fast track supplemental
would not have been necessary to ensure providers were
paid. She thought the language was not doing what was
intended if the department was finding a way to use the
funds for Medicaid.
Co-Chair Seaton replied that if the department was able to
move a small amount of money among the line items in order
to prevent a supplemental budget the following year. The
preference would be to know about the cost ahead of time
and ensure the department's budget got adjusted for
anticipated need in the appropriate locations.
1:56:12 PM
Representative Wilson thought she may be misunderstanding.
She surmised it sounded like it was okay for the department
to use the funds for foster care or for the Office of
Children's Services, but not for Medicaid. However, in
reality, DHSS was using the transfer authority for Medicaid
via interagency receipts. She clarified she had no problem
with the use of the funds. She explained she preferred the
department to tell the legislature the funds had been spent
on Medicaid versus interagency receipts because it was more
transparent. She agreed with the goal of avoiding
supplemental budgets. She did not think it made sense to
include language that the authority could be spent on
anything but Medicaid. She thought it would be much clearer
to know the department had spent the money on Medicaid
versus interagency receipts. She thought the language in
the amendment was unnecessary. She believed if the purpose
was to exclude Medicaid the language needed to be tightened
to exclude use interagency receipts for Medicaid purposes.
She understood the department was in a tight spot because
Medicaid was not capped - if a person qualified, the state
was responsible for paying it (whether through the
operating budget or a supplemental).
Co-Chair Seaton noted there were people who were concerned
about transfers to Medicaid. He was amenable to an
amendment that would remove the exclusion for Medicaid.
1:58:43 PM
AT EASE
2:15:12 PM
RECONVENED
Representative Wilson MOVED to ADOPT conceptual Amendment 1
to Amendment H HSS 23 to delete language "to or" from line
4 [after the word "made" and prior to the word "from"]. The
amended amendment would read as follows:
...the Department of Health and Social Services,
except that no transfer may be made from the Medicaid
Services appropriation.
Co-Chair Seaton pointed to the location in the amendment.
Representative Wilson explained her discomfort with giving
any department the ability to transfer funding back and
forth. She explained that the legislature had asked the
department for a report on any transfer activity. She
detailed that no report had been provided for FY 17 because
no transfers had taken place. She continued that there were
issues in DHSS due to growth in Medicaid and Medicaid
expansion. She referenced a $90 million cost. She reasoned
the issue was not a department problem, it was statute and
federal regulations the legislature had yet to address. The
department was merely doing what the legislature had
mandated - if a person was eligible for Medicaid or
Medicaid expansion, the department was required to provide
whatever services it had. She had offered the conceptual
amendment because it was her understanding DHSS was already
[allowing transfer authorization for Medicaid] in a
roundabout way. Additionally, there was a $90 million
supplemental.
Representative Wilson believed allowing the department to
transfer funds to Medicaid would mean a supplemental or
fast track supplemental may not be necessary. She stated
the legislature would pay for the services unless it wanted
to tackle Medicaid reform in the last 40 days of session.
She believed that would not happen. She wanted to ensure
the legislature would look closely at where the money was
spent. She hoped that what the legislature appropriated was
sufficient (barring something unforeseeable) and the
transfer authority would not be utilized.
2:18:13 PM
Representative Guttenberg asked if there were any other
programs that were not able to transfer money out. He
wondered if there were any other places where something was
jeopardized if money was moved in or out.
Ms. O'Brien answered that currently the department could
transfer funding authority across any of its funding
sources. She detailed if DHSS had a shortfall in federal
authority and needed the funds someplace else in the
department, it could transfer the authority and receive the
funds. The amendment would not restrict the department - it
would only restrict DHSS from moving anything out of
Medicaid Services.
There being NO OBJECTION, Conceptual Amendment 1 to
Amendment H HSS 23 was ADOPTED.
Representative Wilson WITHDREW her OBJECTION
to Amendment H HSS 23 as amended. There being NO further
OBJECTION, Amendment H HSS 23 was ADOPTED as AMENDED.
2:20:09 PM
Co-Chair Seaton MOVED to ADOPT Amendment L H SAP 23 (copy
on file):
Language Amendments
L H SAP 23 - Amend section 27, the retroactivity
provision
Offered by Representative Seaton
See 30-GH2564O.10
This amendment adds a new subsection (b) to section
27, Retroactivity, for the FY18-FY19 appropriation
made in sec. 19(l) to the Alaska Gasline Development
Corporation, ensuring that the appropriation takes
effect in FY18.
Representative Wilson OBJECTED for discussion.
Co-Chair Seaton read the amendment (see above). The
appropriation would take effect in FY 18 in case the budget
was not signed before July 1 [2018]. The subsection was
always included in appropriation bills with provisions that
took place in the current fiscal year. He noted that
upcoming Amendment H SAP 27 would change the current
Section 19(l), but even if it was adopted the retroactivity
provision would be technical.
Representative Pruitt wanted to ensure they understood what
the amendment did. He believed that if the legislature
could not complete a budget before July 1, the amendment
meant the Alaska Gasline Development Corporation (AGDC)
would not be prevented from signing an agreement in June.
Co-Chair Seaton agreed.
Representative Pruitt did not see it as a concern. He
reasoned the amendment was precautionary in case "things go
sideways" [with the budget].
Co-Chair Seaton agreed and explained the amendment was
technical to go with any supplemental budget; therefore,
the supplemental would be signed by the governor in the
year the legislature intended the appropriation to be used
for.
Representative Pruitt surmised the language was needed
because they were addressing the overall operating budget,
not a fast track supplemental. He elaborated that the item
addressed by the amendment was unique - most supplemental
items had been pulled out already; therefore, the language
for the specific item needed to remain.
Co-Chair Seaton replied in the affirmative.
2:25:35 PM
Representative Wilson pointed to page 67, Section 19(l) of
the bill. She read from the language in the bill:
The amount of statutory designated program receipts
received by the Alaska Gasline Development Corporation
during the fiscal years ending June 30, 2018 and June
30, 2019, is appropriated to the Alaska Liquefied
Natural Gas Project Fund.
Representative Wilson did not know what the statutory
designated program receipts were and where they currently
resided. She reasoned the funds did not appear to be in the
Alaska Liquefied Natural Gas Project Fund.
Co-Chair Seaton explained that it was the only supplemental
item remaining in the operating budget. The same kind of
language was used for the supplemental budget. He
elaborated that anything supplemental needed to apply to
the current fiscal year. He noted that if a budget was not
signed until after July 1, the appropriation would not
apply to FY 18. The language made sure the supplemental
items the legislature approved would be applied to FY 18,
not FY 19.
Representative Wilson asked for the amount of the statutory
designated program receipts. She wondered if the amount was
open-ended. She questioned whether the amount included
funds AGDC may receive from China or other. Alternatively,
she wondered if it only pertained to the amount in the
supplemental.
Co-Chair Seaton answered that an amendment (Amendment H SAP
27) by Representative Pruitt also involved the supplemental
budget.
JOAN BROWN, STAFF, REPRESENTATIVE PAUL SEATON, answered
that Representative Wilson's understanding was accurate.
The amendment was a technical, legal provision the co-chair
wanted included in all budget bills with any type of
supplemental appropriation. She believed they would take up
Amendment H SAP 27 next, which included an FY 18
appropriation.
2:29:09 PM
Representative Wilson remarked that the amendment
potentially applied to two amounts - the amount in the
supplemental and any statutory designated program receipts
AGDC may find.
Ms. Brown corrected that the amendment only applied to
Section 19(l). She explained that because the section
applied to the fiscal year ending June 30, 2018, the
provision was a supplemental provision. The amounts were
split in the next amendment (Amendment H SAP 27) between FY
18 and FY 19.
Representative Wilson WITHDREW her OBJECTION. There being
NO further OBJECTION, Amendment H SAP 23 was ADOPTED.
2:30:06 PM
Co-Chair Seaton MOVED to ADOPT Amendment L H SAP 24 (copy
on file):
Language Amendments
L H SAP 24 - Restore FY19 inflation-proofing of the
Alaska permanent fund
Offered by Representative Seaton
See 30-GH2564O25
This adds a new section 8(e), the updated FY19
inflation proofing appropriation, which transfers an
estimated $942 million from the earnings reserve
account to the principal of the Alaska permanent fund
to offset the effects of inflation.
Representative Pruitt OBJECTED for discussion. He
appreciated the amendment. He explained that he and
Representative Thompson had been vocal about the importance
of inflation proofing the corpus of the Permanent Fund. He
noted the amendment would move $942 million from the
earnings reserve account (ERA) to the corpus to ensure the
value of the fund would continue to grow for future
generations.
2:31:18 PM
AT EASE
2:31:46 PM
RECONVENED
Vice-Chair Gara supported the amendment. He hoped everyone
would agree to inflation proof the Permanent Fund. He
stated that the number was higher than it had been in other
years, but the fund had not been inflation proofed since
2016.
Representative Wilson stated that it was only for one year,
but there was nothing preventing the legislature from
providing additional funding to cover the lack of inflation
proofing in recent years (once oil prices and production
increased). It was her intent to get the fund back to the
proper level. She remarked that everyone wanted to see the
fund grow and prosper.
Co-Chair Seaton noted that the value of the corpus had
changed, and they wanted to make sure the right amount went
into the fund - the number had changed by $1 million. The
amount in the amendment had been changed to $942 million
instead of the original estimate of $943 million.
Representative Pruitt thanked Representative Wilson and
Representative Tilton for their support. He believed the
amendment was important. He WITHDREW his OBJECTION.
There being NO further OBJECTION, Amendment L H SAP 24 was
ADOPTED.
2:34:10 PM
Representative Pruitt MOVED to ADOPT Amendment L H SAP 27
(copy on file):
Language Amendments
L H SAP 27 - Deletes unlimited SDPR authority for
AGDC. Offered by Representative Pruitt
Limits SDPR authority for AGDC to $500,000.0 for FY18,
and $500,000.0 for FY19. Removes AGDC SDPR authority
from the LB&A RPL process.
Co-Chair Seaton OBJECTED for discussion.
Representative Pruitt explained the amendment pertained to
AGDC. The current budget language allowed for an open-ended
amount to be accepted by AGDC for a natural gas project. He
elaborated that statutory designated program receipts would
go into the Alaska Liquid Natural Gas Fund. He was
concerned about ensuring the legislature had an opportunity
to consider whether it was comfortable going forward with
the project. He found the open-ended language concerning.
The amendment included language that allowed for two
separate amounts in two years. The first was the
supplemental (he referenced the earlier discussion on
Amendment L H SAP 23) that allowed for $500 million to be
accepted in FY 18. The second portion allowed for $500
million to be accepted in FY 19. He acknowledged the large
size of the amounts and explained the increments would
allow the project to move to the next stage. He underscored
the goal was not to stop the project. The amount in the
amendment was sufficient for AGDC to take the next step. He
noted the phase was typically referred to as the FEED
[front end engineering and design] stage. However, the
process moving forward had been changed and the stage gates
were not the same as in the past. He reiterated that the
amendment would allow for more than enough money to move
forward.
Representative Pruitt explained the amendment specified
that any additional funding would go through the
legislative appropriation process within the next year. The
amendment would ensure the legislature would still have a
part in the conversation going forward.
2:37:08 PM
Co-Chair Seaton spoke to the issue AGDC's ability to accept
more without legislative approval. He asked to hear from
the corporation.
GENE THERRIAULT, GOVERNMENT LIAISON, ALASKA GASLINE
DEVELOPMENT CORPORATION, stated that as discussed, the
amendment dealt with two components. One component
authorized a specific amount of money in the current fiscal
year and the next fiscal year, which differed from the
governor's open-ended budget that would allow the funds to
come in over a two-year period.
Mr. Therriault explained that the governor's budget had
come out in December when there had been half of FY 18
remaining - as time had gone by the window for potential
money to come in [during FY 18] had narrowed. The
corporation appreciated the healthy sum included in the
amendment. He remarked on the large size of the project and
the large sum needed for its advancement. He elaborated
that AGDC hoped there was an opportunity to attract outside
funding sources to help with the current process in
anticipation of the bigger deal coming together. He stated
that with the end of FY 18 approaching, breaking the funds
into two $500 million pots [between FY 18 and FY 19] would
only leave $500 million in FY 19. The corporation thought
the current process could cost between $700 million and
$800 million. The governor's language had provided
flexibility over a two-year period, whereas there was some
concern the amendment meant they may bump into the cap. He
stated it would be helpful if there could be some
consideration of raising the amount in both years or the
second year when it was more likely the money would come
in.
Mr. Therriault addressed that the amendment would remove
the Legislative Budget and Audit Committee's (LB&A) ability
to consider a statutory designated program receipt
increment exceeding the allowable amount. He was concerned
about the message it sent to a potential partner who may
come in with a dollar amount outside of the specified
appropriation limit. He furthered that the legislature
would have to convene in special session during the first
half of FY 19 in order to receive the funds. He mentioned
many legislators would be busy with campaigns during the
fall. Alternatively, if the LB&A language was left in, AGDC
could take the dollar amount exceeding the appropriation
limit to LB&A to address the issue.
2:41:16 PM
Vice-Chair Gara stated that his only concern was about the
project moving forward without legislative approval. Under
statute passed by the legislature, legislative approval was
required for any obligations of the state; therefore, AGDC
would not have the ability to obligate the state with or
without the amendment. He considered a funding increment of
$1 billion and reasoned that no one could build the gasline
for $1 billion. Even if the amendment cap was $1 billion,
he did not see a gasline happening, he imagined it would
allow AGDC to bring in investment dollars for very
preliminary parts of a gasline planning process. He asked
if his assumption was accurate.
Mr. Therriault answered in the affirmative. He discussed
that when AGDC had been created the legislature had passed
AS 31.25.240 specifying the corporation could not obligate
the state. If and when a project went forward, as the
corporation partnered with others or statutory designated
program receipt funds came in, the corporation could not
deploy funds in a way that created an obligation for the
state. If the corporation were to issue bonds and a capital
reserve fund was created it would require AGDC to receive
authorization from the legislature. There were a number of
statutory points where AGDC had to come back for
authorization from the legislature. In the corporation's
last semi-monthly report distributed to the legislature, it
had answered questions from Senator Cathy Giessel and
Senator Anna MacKinnon. He specified that question 6 had
asked AGDC to go through a list of anticipated agreements
and to highlight which still required legislative approval
under the new possible structure. A couple of the
agreements would require legislative approval. He addressed
a concern that an open-ended statutory designated program
receipt scenario meant someone could write a $40 billion
check and the project turned into a runaway train. He
explained that was not what AGDC intended and it would not
be allowed.
2:44:10 PM
Co-Chair Seaton spoke to the concern about the amount of
money and whether $500 million bumped against the cap. He
detailed that he and Representative Pruitt had talked about
the issue. He MOVED to ADOPT conceptual Amendment 1 to
Amendment L H SAP 27 to increase the $500 million cap in FY
18 to $1 billion and from $500 million to $1 billion in FY
19.
Representative Wilson OBJECTED for discussion.
Representative Pruitt recognized AGDC's concern about the
ability to get the money prior to the end of FY 18. He
asked Mr. Therriault if he anticipated any statutory
designated program receipt money coming in that AGDC would
need to accept by June 30.
Mr. Therriault answered that the chance was low, but not
outside the realm of possibility. He reported that
discussions were fluid. The corporation would not want to
be precluded if the chance arose.
Representative Pruitt believed the intent was to allow the
$1 billion to be fluid over the FY 18 and FY 19 timeframe.
He was amenable to allowing AGDC the opportunity to receive
up to $1 billion in FY 19.
Co-Chair Seaton clarified that the amendment allowed an FY
18 appropriation of receipt authority up to $1 billion. If
the $1 billion was not completed in FY 18, the FY 19
authority was up to $1 billion. He explained that the
amount was not transferrable from FY 18 to FY 19. For
example, [if no money was used in FY 18] $2 billion could
not be spent in FY 19. The intent was to enable AGDC to go
into negotiations without being limited to an amount below
a potential commitment.
2:47:30 PM
Representative Wilson provided a scenario where AGDC
brought in $700 million in FY 18. She asked for
verification that the remaining $300 million would not roll
over into FY 19. She surmised the corporation would be
limited to $1 billion in FY 19.
Co-Chair Seaton agreed.
Representative Wilson asked who would give $1 billion for
the project that would not have the result of obligating
the state.
Mr. Therriault answered that the funds could come from one
of the potential overseas partners/buyers discussed in the
media. Funds could also come from an EPC [engineering,
procurement, and construction] contractor. The corporation
was speaking with EPC contractors, potential buyers, and
potential financiers. Individuals traveling overseas had
reported significant excitement and interest in the
project. The funds could come from any one of those types
of investors.
Representative Wilson surmised that no one would give funds
without an expectation of receiving something in return.
She wondered if AGDC would be obligated and not the state.
She reasoned if someone gave money there would have to be a
contract somewhere. She wondered if the contracts were only
with AGDC or other.
2:49:04 PM
Mr. Therriault answered it would be a contract between the
entity bringing in the money and ADGC. He furthered that
AGDC's liability as a corporate entity in the state was
limited to the corporate entity.
Representative Grenn spoke in support of the conceptual
amendment and the amendment. He believed the work by
Representative Pruitt and Co-Chair Seaton in collaboration
with Mr. Therriault showed the importance and momentum of
the issue. He believed the limit was responsible.
Representative Wilson WITDREW her OBJECTION to conceptual
Amendment 1. There being NO further OBJECTION, conceptual
Amendment 1 to Amendment L H SAP 27 was ADOPTED.
2:50:12 PM
Representative Guttenberg asked Mr. Therriault to review
LB&A authority and what it meant to remove it [as under the
proposed amendment].
Mr. Therriault referred to standard budgetary language
allowing LB&A to consider program receipt dollars in excess
of the budgeted amount. Funds were allowed to come in under
AS 37.07.080(h), the process where an entity went to LB&A
for approval of extra funds. The committee could choose to
convene and approve the request. The administration had the
authority to receive the money if LB&A chose not to meet;
however, if LB&A met and turned the request down, anyone
bringing funds to the project would think twice about
following through if they did not see legislative support
for a proposal.
Representative Wilson clarified that she could not speak
for other legislators, but her campaign had nothing to do
with her job as a legislator. She believed her colleagues
would be present if there was need to convene to discuss
the project [during a special session]. She was concerned
about transparency to the public. She stressed the
amendment would allow AGDC to take in $2 billion, which was
a substantial amount of money. She elaborated that the
state would not be obligated, but AGDC would be and the gas
would belong to every Alaskan. She understood there had
been concerns about how the gas would be utilized,
including substantial concerns from Fairbanks that it would
be bypassed, and gas would be sent overseas instead. She
understood that $2 billion was not enough to build a
gasline, but it was a large amount. She wanted to know how
far along "could we possibly get" in terms of obligation.
She asked what would happen if Fairbanks and North Pole
were bypassed. She wanted to ensure Alaskans were taken
care of first.
Mr. Therriault answered that the funds would be used to
cover engineering work, contractual structuring of a deal,
leading up to (but not beyond) a final investment decision.
He elaborated that any obligation of the state and other
items specified in statute would require legislative
approval. He noted that fewer agreements than the previous
project structure would require legislative approval. He
believed that if there was a fear about the whole project
going forward, $2 billion was not enough money to get to
that stage. The allocation would be enough to continue
through the regulatory process and structuring contractual
agreements, up to the point where AGDC would be prepared to
consider a final investment decision, but not actually
pulling the construction trigger.
2:55:13 PM
Representative Wilson stated that since AGDC was not
considered a state entity, she asked if there would be any
reporting to the legislature on where any incoming money
had come from and where it would be spent. Alternatively,
she wondered if the information would be private.
Mr. Therriault replied that he believed it would be
information AGDC was excited to share; it would be included
in the corporation's semi-monthly report to the
legislature.
2:55:50 PM
AT EASE
2:58:17 PM
RECONVENED
Co-Chair Seaton pointed to a Legislative Legal Services
opinion dated March 6, 2018 in members' packets (copy on
file). He and Representative Pruitt had wanted to ensure
the amendment did not conflict with any statute. The
memorandum confirmed the legality of placing limitation on
further investment. He believed increasing the cap to $1
billion removed the likelihood of a problem. He recalled
that when AGDC and the governor's office had been
negotiating on Memorandums of Understanding people had
asked where the money was. He remembered that people had
stated the negotiations lacked meaning because there was no
money. He noted that it had come to a point where the
legislature wanted to restrict the ability to take money -
he believed the level should be high enough to communicate
the legislature's support for the project and that it
wanted to see skin in the game from people AGDC was
negotiating with.
Co-Chair Seaton believed the amendment provided the ability
to move forward in FY 18 and FY 19. He provided a scenario
where a deal costing $20 billion arose and expressed that
the legislature would quickly call itself into special
session to approve the appropriation. The endeavor with
AGDC had been done in a way to insulate the process of the
corporation from political whims. He appreciated the
amendment and believed it satisfied ensuring the project
could move forward, while maintaining the legislature's
ability to review the deal.
3:01:48 PM
Representative Wilson did not believe there was anyone who
did not appreciate the project, but she wanted to ensure
Alaskans came first. She stated that some may think $1
billion did not sound like a substantial amount, but it did
to her. She did not want Alaskans to be forgotten during
the course of the project. She stressed the issue was not
about how much the state could sell its gas for, but to
ensure areas that had been hurting for a long time
economically because of energy costs, were not forgotten.
She stated that when people invested they expected
something in return. She reasoned no one would give AGDC
$500 million to $1 billion without a contract designating
they were to recoup the money. She was uncomfortable with
the amount, but she understood the project was not small.
She wanted Alaskans to know the documents would be public,
so they could see who was investing and to understand
Alaskans came first.
Co-Chair Seaton WITHDREW his OBJECTION.
There being NO further OBJECTION, Amendment H SAP 27 was
ADOPTED as AMENDED.
Representative Ortiz MOVED to RESCIND action on the
adoption of Amendment H GOV 2 [the amendment was adopted in
the previous committee meeting, see minutes dated March 6,
2018 for detail] (copy on file):
H GOV 2
Offered by Representative Wilson
FY17 Actuals were $0 and the FY 19 Governor's request
is $550.0. A decrement $100.0 will result in a FY 19
budget request of $400.0 for what is described as
"agency support as needed to meet high priority needs
in the contingency fund".
Co-Chair Seaton pointed to the amendment on page 25 of the
Legislative Finance Division operating budget transaction
detail [amendment packet] (copy on file).
There being NO OBJECTION, the adoption of Amendment H GOV 2
was RESCINDED.
3:03:39 PM
Representative Ortiz MOVED to ADOPT Amendment H GOV 2 (copy
on file):
H GOV 2
Offered by Representative Wilson
FY17 Actuals were $0 and the FY 19 Governor's request
is $550.0. A decrement $100.0 will result in a FY 19
budget request of $400.0 for what is described as
"agency support as needed to meet high priority needs
in the contingency fund".
Representative Kawasaki and Vice-Chair Gara OBJECTED.
3:04:45 PM
AT EASE
3:05:20 PM
RECONVENED
Representative Wilson reported that she had more
information to share regarding Amendment H GOV 2. She had
researched back to 2010 to determine what had been used
from the account. She detailed in 2010 $294,300 had been
withdrawn for personal services of $172,600 and services of
$121,700, which she did not believe constituted an
emergency. In 2011, the balance had been $800,000.
Representative Ortiz asked how much had been budgeted in
that particular year.
Representative Wilson replied that in FY 10 $800,000 had
been in the budget and $294,300 had been expended (personal
services of $172,600 and services of $121,700). In FY 11
the amount had been $800,000 and $5,700 had been spent in
services. In FY 12 and FY 13 the amount was $800,000 and
nothing had been spent. In FY 14, the amount had been
$800,000 and $49,600 had been spent (the details on what
the funds had been used for were not available). In FY 15,
the amount had been $650,000 - at the time former Governor
Sean Parnell had reduced his own budget by $150,000 in the
contingency line. She elaborated that a total of $194,700
had been spent in FY 15, including $67,300 on state travel,
$127,300 on services, and $200 on commodities. In FY 16,
Governor Bill Walker had reduced the contingency line by
$50,000, for a total contingency budget of $600,000. She
detailed that $89,100 had been spent in FY 16 on financial
services agency support as needed to meet high priority
needs. She did not know what the high priority needs had
been for $89,100. In FY 17 there had been a $50,000
unallocated reduction, which she believed had come from the
Senate. The contingency budget was down to $550,000 and no
expenditures had been made in FY 17 or FY 18.
Representative Wilson noted the committee had heard about
three expenditures the previous day related to transitional
costs, redistricting, or the gasline, but she had been
unable to find any information about the items. Her staff
had spoken with David Teal [director of the Legislative
Finance Division] to ensure her numbers were accurate. She
had yet to find any case from FY 10 to present where the
fund had been used for emergency purposes. Her amendment
would decrease the fund by $100,000, which would leave
$400,000 available. She stressed the remaining funds
exceeded expenditures in any year since FY 10. She believed
the pertinent question was whether members wanted a slush
fund or not.
3:08:36 PM
Representative Ortiz asked if there had ever been any
specific action taken by the legislature to reduce the
governor's budget.
Representative Wilson believed the $50,000 unallocated
reduction in 2017 had come from the Senate. She detailed
the information she found specified that former Governor
Parnell had made a reduction in FY 15 and that Governor
Walker had made a reduction in FY 16. She disagreed with
any claim that the governor did not touch the legislature's
budget and vice versa. She had no problem with a
contingency fund for emergencies, but since FY 10 none of
the funds had been used for emergencies. She appreciated
the committee's budget process in the past two years
because of its transparency and the ability for everyone to
participate. She stressed the fund was supposed to be for
emergencies, but she had been unable to locate any instance
since FY 10 where the funds had been used for that purpose.
She a rejection of the amendment indicated that legislators
did not want to touch the governor's budget so that he
would not touch the legislature's budget.
Representative Wilson thought funds should be removed from
the budget when they were not spent the way they were
intended. She did not believe the contingency fund was
being used for emergencies. She detailed that in FY 15 the
fund had been used for the following items: $36,600 for
legal and judiciary services, $5,300 for
telecommunications, $21,400 for advertising and promos,
$3,300 for equipment and machinery, $1,700 for information
technology telecommunications, and $400 on communication
sales interagency services. She reiterated that the money
was not being utilized as intended. The amendment would
leave the majority of the funds intact in case of an
emergency.
3:11:37 PM
Representative Guttenberg spoke against the amendment. He
explained the amendment would not prevent the fund from
being used as it had been in the examples provided by
Representative Wilson. He stressed the amounts had all been
under $400,000. He pointed out there had been an earthquake
in early January that could have been potentially
devastating. He reasoned that $500,000 would disappear
immediately if needed for a similar event. He stressed the
importance of giving the state the ability to respond to
emergencies. He questioned how the legislature would
convene to address an emergency if the Anchorage airport
was destroyed. He believed the amount in the fund was
reasonable. He stressed the importance of emergency
management and the ability to act immediately in the event
of a natural disaster. He continued that the money rolled
over year to year. He did not want there to be any delay in
deploying the funds in the event of an emergency. He noted
that Fairbanks had experienced disasters. He thought about
Southeast, Southcentral, the recent earthquake, volcanoes,
the 1989 Exxon Valdez oil spill, and more. He reiterated
the importance of a contingency fund.
3:13:56 PM
Co-Chair Seaton clarified that the fund was a contingency
fund, not only an emergency fund. The fund could be tapped
for many different purposes by the state's chief executive.
He underscored that the contingency fund was meant for the
unexpected.
Representative Thompson spoke in support of the amendment.
He did not believe an additional $150,000 would mean
anything in the face of a devastating earthquake. He
underscored that the state had emergency response funds and
the National Guard. He reasoned the federal government
would respond immediately in the event of a natural
disaster in Alaska. He did not believe the amount in the
fund would even touch responding to a natural disaster. He
stressed that the remaining $400,000 exceeded spending from
the fund in the past eight years. He did not think it made
sense to argue about the amount. He thought the reduction
was responsible. He wondered why the committee would want
to add more money to the budget when it was not necessary.
Vice-Chair Gara did not like the message the amendment
sent. He stated that the fund had contained at least
$600,000 when former Governor Parnell had been in office
and no one had tried to cut the funds or speculated that
the governor had abused the money. When factoring in the
amendment reduction the fund balance would be 50 percent
less than it had been during the Parnell Administration. He
discussed the fund was intended for high priority issues.
He remarked that the Office of Management and Budget (OMB)
was supposed to be doing work on healthcare cost
containment in 2017 but had gotten wrapped up in a number
of other things. He stated that if OMB decided to do work
on healthcare cost containment and consultants were needed,
he was amenable to using the funds for that purpose. He did
not like the message the amendment sent and did not want
the current governor treated differently than past
governors. He stated that as a Democrat he had never tried
to "do that" to Republican governors and the Republican led
legislature at the time had not tried to reduce funds to
the governor.
Co-Chair Seaton asked members to stick to the budget and
its implications and not what others' intent may be.
3:17:34 PM
Representative Pruitt testified in support of the
amendment. He referenced the amendment sponsor's testimony
that the fund had not really been used [historically]. He
wanted to hear from the administration if there was
something important it wanted to use the funds on. He
recalled testimony from the previous day by the
administration and noted they had not specified there was
anything important [on the horizon]. He had not heard a
strong enough argument about why the cut should not be made
to a fund that had not been used. He did not support
appropriating money without knowing what it could be used
for. He thought members should support the amendment or the
committee should hear from the administration about why
they needed the money and what it expected to use the funds
for.
Co-Chair Seaton underscored that the point of a contingency
fund was for purposes that were unknown. He stressed if
there were known items needing funding they would be
budgeted instead of being funded with contingency funds.
Representative Wilson clarified she was not arguing against
Governor Walker - the issue was not about who the governor
was. She emphasized the amendment was about the numbers.
She stated that the money was not being spent and the
governor's office did not know what the money had been used
for. She had asked the administration the previous day what
the funds had been used for. She stated three items had
been identified, none of which had been in the budget. She
had tried to determine where money had come from for
transition, redistricting, and the gasline. She stressed
that it had not come from the contingency fund. She
believed the contingency fund was an "emergency-type" fund.
She continued that fund did not necessarily need to be used
for that purpose, but it had been allocated to the
governor's office with no restrictions. She could not
believe the fund had been used for advertising and
promotions in the past.
Representative Wilson continued that she appreciated the
need for funds in the event of an emergency. She explained
it was the purpose of a separate amendment [Amendment H SAP
25] that would allocate over $6 million to emergency
response. She could not find any other comparable fund with
no parameters. She stated that earlier the committee had
argued over $20 million that required the submittal of a
spending report to the legislature; most of the money was
to avoid a supplemental. She stressed that no one had come
to her office to explain why the money was needed. She
hoped that an explanation had been given to the co-chair.
She underscored that the funds did not return to the GF if
they were unexpended - the funds went into the capital
fund. She did not know why.
Representative Wilson explained there would be a gap in the
budget and the public would be charged for the $150,000
because it would be in the budget. The legislature did not
know whether the funds would be spent. She would have
preferred to eliminate the fund balance, but she understood
that some of the funds had been utilized in the past. The
amendment would not cut into anything that had been
utilized. She would have offered a cut to the fund under
previous administrations if she had found it. She was not
willing to tell her constituents the legislature was
considering taxes when there was money in the budget that
may or may not be used for an unknown purpose.
3:22:43 PM
The OBJECTION was MAINTAINED.
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Wilson, Grenn
OPPOSED: Gara, Guttenberg, Ortiz, Seaton, Foster
Representative Kawasaki was absent from the vote.
The MOTION to adopt Amendment H GOV 2 FAILED (5/5).
3:23:46 PM
AT EASE
3:24:34 PM
RECONVENED
HB 285 was HEARD and HELD in committee for further
consideration.
HB 286 was HEARD and HELD in committee for further
consideration.
Co-Chair Seaton reviewed the schedule for the following
day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 286 H HSS 22 Replacement.pdf |
HFIN 3/7/2018 1:30:00 PM |
HB 286 |
| HB 286 Pruitt - H SAP 27 Legal Opinion.pdf |
HFIN 3/7/2018 1:30:00 PM |
HB 286 |
| HB 286 H HSS 21 Replacement.pdf |
HFIN 3/7/2018 1:30:00 PM |
HB 286 |
| HB 286 H SAP 27 Amendment Suporting Documents.pdf |
HFIN 3/7/2018 1:30:00 PM |
HB 286 |
| HB 286 HB 285 Amendments with Actions as of 3-7-18.pdf |
HFIN 3/7/2018 1:30:00 PM |
HB 285 HB 286 |