03/14/2022 01:30 PM House FINANCE

HOUSE BILL NO. 322                                                                                                            
                                                                                                                                
     "An Act  relating to the  Alaska marine  highway system                                                                    
     vessel   replacement  fund;   and   providing  for   an                                                                    
     effective date."                                                                                                           
                                                                                                                                
1:30:42 PM                                                                                                                    
                                                                                                                                
Co-Chair Merrick invited the testifiers to the table.                                                                           
                                                                                                                                
1:30:56 PM                                                                                                                    
                                                                                                                                
KERRY CROCKER, STAFF, SPEAKER LOUISE STUTES, reviewed the                                                                       
purpose of the bill. He read a portion of the sponsor                                                                           
statement (copy on file):                                                                                                       
                                                                                                                                
     House Bill 322 would  protect the Alaska Marine Highway                                                                    
     System  (AMHS) Fund  and Vessel  Replacement Fund  from                                                                    
     the  constitutional  sweep  under Article  IX,  section                                                                    
     17(d) of the Alaska Constitution.                                                                                          
                                                                                                                                
     Funds subject to  the sweep must be  both available for                                                                    
     appropriation  and  reside  in  the  General  Fund.  In                                                                    
     Alaska Federation of Natives  v. Dunleavythe  2021 case                                                                    
     in which  the Superior Court determined  the Power Cost                                                                    
     Equalization Endowment Fund is  not sweepable under the                                                                    
     State  Constitutionthe   court   considered  the  state                                                                    
     treasury to  be distinct  from the General  Fund. Thus,                                                                    
     by establishing the System  Fund and Vessel Replacement                                                                    
     Fund as a  separate funds in the  state treasury rather                                                                    
     than  in the  General Fund,  it is  not subject  to the                                                                    
     sweep.                                                                                                                     
                                                                                                                                
     On-going,  crucial state  services such  as the  Marine                                                                    
     Highway  System  should  not suffer  the  destabilizing                                                                    
     effects that  result from  the sweep  of funds.  HB 322                                                                    
     will   shield  the   AMHS   System   Fund  and   Vessel                                                                    
     Replacement  Fund  from  the sweep  and  reinforce  the                                                                    
     Legislature's  authority  to   assess  for  itself  the                                                                    
     prudence of appropriations.                                                                                                
                                                                                                                                
Mr.  Crocker  continued  to  discuss  the  benefits  of  the                                                                    
legislation.  He   stated  that  AMHS   warranted  continued                                                                    
support from the  state because it was an  essential part of                                                                    
the  transportation system.  It  benefited many  communities                                                                    
throughout  the state  by enabling  communities to  maintain                                                                    
receipts, operated  in a  manner that  enhanced performance,                                                                    
and allowed spending of the generated revenue.                                                                                  
                                                                                                                                
Co-Chair  Merrick  indicated   Representative  Thompson  had                                                                    
joined the  meeting online  and Representative  LeBon joined                                                                    
the meeting in room.                                                                                                            
                                                                                                                                
Mr. Crocker stated  that it was important to  note that with                                                                    
the recent creation of the  Alaska Marine Highway Operations                                                                    
Board  (AMHOB),  if  the  marine   highway  was  allowed  to                                                                    
maintain its receipts and was  not sweepable, it would allow                                                                    
for a baseline of funding for the next 7 to 10 years.                                                                           
                                                                                                                                
1:33:57 PM                                                                                                                    
                                                                                                                                
Representative LeBon  asked how  the fund would  be accessed                                                                    
for spending.                                                                                                                   
                                                                                                                                
Mr. Crocker replied that the  fund had to be appropriated by                                                                    
the legislature in order to be spent.                                                                                           
                                                                                                                                
Representative LeBon  asked if  the commissioner  would have                                                                    
direct authority to spend from the fund.                                                                                        
                                                                                                                                
Mr.  Crocker deferred  to Mr.  Painter from  the Legislative                                                                    
Finance Division.                                                                                                               
                                                                                                                                
1:34:52 PM                                                                                                                    
                                                                                                                                
ALEXEI  PAINTER,  DIRECTOR,  LEGISLATIVE  FINANCE  DIVISION,                                                                    
responded  that  the  commissioner currently  did  not  have                                                                    
spending authority. He explained  that the legislature would                                                                    
need  to   appropriate  the  funds  to   the  Department  of                                                                    
Transportation and Public Facilities  (DOT) to allow for the                                                                    
funds to be spent.                                                                                                              
                                                                                                                                
Representative LeBon  shared his understanding that  for the                                                                    
commissioner to  be able to  spend money from the  fund, the                                                                    
legislature  had  to  move  money  into  the  commissioner's                                                                    
control  or  authority.  He asked  whether  the  legislature                                                                    
would be  expected to  put "sidebars" on  the ways  in which                                                                    
the money could be spent.                                                                                                       
                                                                                                                                
Mr. Painter  relayed that Alaska's Constitution  stated that                                                                    
no money  may leave  the treasury without  an appropriation.                                                                    
The money  first needed  to have  been appropriated  to DOT,                                                                    
and  then   the  reason  for  the   appropriation  could  be                                                                    
specified.                                                                                                                      
                                                                                                                                
Representative  LeBon  asked  if  specific  intent  language                                                                    
would  be needed.  He  questioned  whether the  commissioner                                                                    
would be permitted  to spend the money however  they saw fit                                                                    
if the  money was  moved from  the AMHS  capital improvement                                                                    
fund into DOT.                                                                                                                  
                                                                                                                                
Mr. Painter  indicated that if the  funding was appropriated                                                                    
to AMHS,  it could  only be spent  on AMHS  related matters.                                                                    
However, if  funds were  appropriated to  the commissioner's                                                                    
office, the commissioner could do  whatever they wanted with                                                                    
the funds.  Appropriating the funds  for the purpose  of the                                                                    
marine highway would limit the use of the funds.                                                                                
                                                                                                                                
1:37:06 PM                                                                                                                    
                                                                                                                                
Representative  Carpenter   asked  if  there   was  anything                                                                    
preventing  the  legislature   from  creating  a  multi-year                                                                    
appropriation with the funds currently on hand.                                                                                 
                                                                                                                                
Mr. Painter responded no, and  if a multi-year appropriation                                                                    
was created  for the current  fund, problems with  the sweep                                                                    
would be avoided.                                                                                                               
                                                                                                                                
Co-Chair  Merrick  indicated  Representative  Carpenter  and                                                                    
Vice-Chair Ortiz had joined the meeting.                                                                                        
                                                                                                                                
Co-Chair Merrick  invited Mr. Steininger with  the Office of                                                                    
Management and Budget (OMB) to speak to the fiscal note.                                                                        
                                                                                                                                
1:37:54 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:38:27 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Merrick  indicated the  committee would  review the                                                                    
fiscal note at the bill's next hearing.                                                                                         
                                                                                                                                
HB  322  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
1:38:49 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:39:51 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Merrick invited  Mr.  Steininger with  OMB to  the                                                                    
table.