Legislature(2023 - 2024)SENATE FINANCE 532
02/08/2023 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB25 | |
| SB38 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 25 | TELECONFERENCED | |
| + | SB 38 | TELECONFERENCED | |
SENATE BILL NO. 25
"An Act relating to inactive state accounts and funds;
relating to the curriculum improvement and best
practices fund; relating to the fuel emergency fund
and fuel emergency grants; relating to the special
Alaska Historical Commission receipts account;
relating to the rural electrification revolving loan
fund and loans from the fund; relating to the
Southeast energy fund and grants from the fund; and
relating to the Exxon Valdez oil spill unincorporated
rural community grant fund and grants from the fund."
9:04:01 AM
Co-Chair Olson read the short title of the bill.
9:04:20 AM
SENATOR JAMES KAUFMAN, SPONSOR, read from the Sponsor
Statement (copy on file):
SB 25, in its current form, is intended to improve
performance by reducing administrative cost and
complexity associated with of maintenance and tracking
of accounts that are no longer needed but are still
open.
The state of Alaska at various times creates special
accounts to receive and hold money for certain
purposes, but over time some of those funds become
dormant and are no longer needed.
This can include filled funds that are not supporting
active programs, empty funds that are not supporting
active programs and funds held in trust.
Reducing the administrative burden of maintaining
unneeded funds is a prime example of the type of
incremental continuous improvement that is needed as
Alaska faces new fiscal challenges. Alongside this
important reduction, SB 25 creates a simple feedback
loop which provides decision-makers with the necessary
tools to reduce other funds as recommended.
To find candidates for this reduction, we performed an
initial screening for inactive funds. This led to an
analysis of the financial and statutory basis for 39
existing funds. The analysis and deliberative process
revealed six funds which are no longer needed for the
originally intended purpose and can therefore be
closed. Any proceeds can then be forwarded to the
Unrestricted General Fund. The specific funds for this
action are listed below:
AS 41.35.380 Alaska Historical Commission
Receipts Account
• AS 26.23.400 Fuel Emergency Fund
• AS 44.33.115 Exxon Valdez Oil Spill
Unincorporated Rural Community Grant Fund
• AS 42.45.020 Rural Electrification Revolving
Loan Fund
• AS 42.45.040 Southeast Energy Fund
• AS 14.07.182 Curriculum Improvement and Best
Practices Fund
9:07:08 AM
MATTHEW HARVEY, STAFF TO SENATOR KAUFMAN, addressed a
Sectional Analysis (copy on file):
Section 1:
Amends AS 24.20.020 to add a requirement for the
Legislative Finance Division to conduct a review of
inactive state accounts and funds at the beginning of
each new legislature and to submit an electronic
report including recommendations regarding which
inactive state accounts and funds should be repealed.
The report distribution list is included in this
section.
Section 2:
Adds a new subsection to AS 37.07.020 stating that the
governor may act upon the Legislative Finance Division
report in Section 1 of SB 25 by submitting legislation
in accordance with the report.
Section 3:
Repeals the statutory authority for the following
funds not supporting current or active programs.
• AS 14.07.182 Curriculum Improvement and Best
Practices Fund
• AS 26.23.400 Fuel Emergency Fund
• AS 41.35.380 Alaska Historical Commission Receipts
Account
• AS 42.45.020 Rural Electrification Revolving Loan
Fund
• AS 42.45.040 Southeast Energy Fund
• AS 44.33.115 Exxon Valdez Oil Spill Unincorporated
Rural Community Grant Fund
9:08:37 AM
Co-Chair Stedman mentioned the re-establishment of account
balances through the reverse sweep, which was common
practice in previous years. He pointed out that certain
funds listed were holding accounts. He thought that there
was sometimes a political endeavor to do an energy
enhancement capital investment and the statutorily
established energy funds were used to make enhancement
equitable throughout the state. He used the example of a
new dam or power line extension. He shared concern that the
proposed policy could inadvertently put rural Alaska at a
disadvantage.
Co-Chair Olson shared Co-Chair Stedman's concern and
mentioned funds that had been used in the past to provide
energy to areas not on the Railbelt.
9:11:01 AM
Senator Kaufman relayed that the intent of the bill was to
reduce funds that were not needed. He explained that there
had been a long list that had been worked through. He
highlighted that the initial piece of the bill was to
comprise a list of funds for review and then delete
accounts that were not needed or no longer required. The
impetus for the bill had come from a discussion with the
Office of Management and Budget.
Co-Chair Olson thought Senator Kaufman was not opposed to
adding to or taking away from the funds previously listed.
Senator Kaufman answered affirmatively.
9:12:46 AM
Senator Wilson asked whether the sponsor knew the amounts
sitting in each of the funds and how long the funds had
been active.
Senator Kaufman stated that of the accounts listed, the
Fuel Emergency Fund had $22,523.74.
Co-Chair Olson asked about the amounts of other listed
funds.
9:13:40 AM
Senator Kaufman did not recall the entire list. He said
that work had been done to determine the 6 funds listed in
Section 3.
Co-Chair Olson asked whether there were any of the 6 funds
listed that had significant balances.
Senator Kaufman replied that the most significant balance
had been in the Fuel Emergency Fund.
9:14:17 AM
Senator Wilson asked whether there was a certain criterion
as to how long the funds were inactive before they were
removed.
Senator Kaufman relayed that that detail had not been
established. He thought it would be difficult to create a
useful criterion, the funds would be reviewed to determine
whether they were necessary.
9:14:56 AM
Senator Kiehl had a question about the bill structure. He
thought the bill suggested that the Legislative Finance
Division (LFD) make recommendations to the legislature
about funds to delete. He noted that LFD did not generally
provide opinions to the committee as a rule. He wondered
whether there was criterion that LFD should use in their
recommendations to the committee.
Senator Kaufman said that the funds that had been selected
by the assessment had been determined to be obviously
unnecessary. He said that there had been a range of
reasons. He thought that LFD would be providing
observations about the funds and not an opinion.
9:16:43 AM
Co-Chair Stedman expressed concern about the potential for
inequity and energy projects being concentrated in one area
of the state to the detriment of another. He mentioned the
Power Cost Equalization fund. He thought that the inability
to protect the funds from the sweep would prove problematic
in the future.
Senator Kaufman reiterated that the list was a result of
the assessment, and he would welcome any additions or
deletions. He stated that the bill would create a review
cycle to delete unnecessary accounts. He described the bill
as a bookkeeping and cleanup tool.
9:19:09 AM
Co-Chair Hoffman agreed with the concept proposed in the
bill. He addressed the Fuel Emergency Fund, which he
considered to be a "tool in the toolbox," that may not be
utilized for several years but would still be important to
fund emergencies in rural communities. He echoed the
concerns expressed by Co-Chair Stedman and Co-Chair Olson.
Senator Kaufman relayed that the bill had started with a
long list, and after review had been paired down to 6
funds. He suggested that any amendments that came forward
would be welcome.
9:21:34 AM
Senator Merrick wanted to hear from LFD. She wondered
whether there was another account where the funds could
reside that would serve the same purpose.
Co-Chair Olson added that LFD would be called up later in
the meeting.
9:22:08 AM
Senator Kaufman thanked the committee for hearing the
legislation.
9:22:43 AM
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
relayed that he would address some questions. He cited that
the Fuel Emergency Fund had not been used since 2000, when
the Disaster Relief Fund statute had been modified to allow
for fuel emergencies. He mentioned the Rural
Electrification Revolving Loan Fund, which had been
supplanted by the Electrical Service Extension Fund in the
1990s. He said that the use of that fund since then had
been to repay past loans, which had all been settled. He
mentioned the Southeast Energy fund, which was originally
capitalized as part of the Four Dam Pool project. He
continued that the PCE statute had been amended in 1999 to
divert the revenue into the PCE fund.
Mr. Painter continued to address the genesis of some of the
funds listed, noting that he had once worked at OMB and was
aware of the funds. He said that one of the criteria had
been to seek out funds that had no source of ongoing
revenue. He noted that there were still repayments being
made decades after the genesis of some funds, which meant
that the funds could not be repealed even after they had
been rendered obsolete. He thought the funds listed were
identified as having no ongoing source of revenue, no
current program, or likely future program that would
recreate them. He supposed that a committee or legislature
could add money to a fund outside of the original statutory
revenue flow, but they would be subject to the CBR sweep.
9:26:42 AM
Senator Wilson asked whether there was a time frame that
Mr. Painter recommended for deletion of funds.
Mr. Painter was not sure that there was a single answer to
Senator Wilson's question, but rather LFD would work
towards determining whether there was any ongoing activity
in the fund or prospect for replenishment. He thought that
there could be funds that were created by appropriation
that the legislature could want to fund again.
9:27:53 AM
Senator Bishop asked whether the Exxon Valdez Oil Spill
Unincorporated Rural Community Grant Fund was fully
expended.
Mr. Painter replied in the affirmative. He explained that
there had been two funds related to the spill: the civil
fund, which was still active, and the fund related to
criminal penalties, which was used to pay unincorporated
communities impacted by the spill and was completely
granted out.
9:28:45 AM
Co-Chair Stedman asked whether Mr. Painter had any
recommendations for a similar fund to use as a parking
garage for funds to assure equity in energy projects.
Mr. Painter thought one option would be to amend a fund to
create a new source of revenue. He stated that if there
were investment in a new project a portion of that revenue
could be diverted in the spirit of equity. Another option
would be to put the funds in a non-sweepable account
without a designed purpose, but there was a risk that the
funds could be unavailable from year to year. He
recommended statute modification in regard to maintaining
statewide energy equity.
9:30:46 AM
Co-Chair Olson thought it was unusual to have a
recommendation from LFD regarding the funds. He asked
whether his concern was misplaced. He thought Mr. Painter
had institutional knowledge, which added to his credibility
on the matter.
Mr. Painter clarified that he worked for OMB in 2020 and
not when the funds were created. He mentioned the Indirect
Expenditure Report, which gave the division the duty to
make recommendations on indirect expenditures and whether
they should be repealed. He thought that the idea behind
the legislation could fall under that purview.
Co-Chair Olson asked whether Mr. Painter was comfortable
with the duty.
Mr. Painter replied that LFD was not comfortable making any
kind of policy recommendation. He described that reviewing
the funds was something that the division could do in a
limited fashion, only looking at whether items were
following legislative intent. He thought that the divisions
scope would be limited and would be conservative in their
determinations in order to maintain a non-partisan stance.
9:33:21 AM
Senator Merrick asked what determined which funds were
sweepable, and whether the list of sweepable funds was
subject to change.
Mr. Painter relayed that the statute that determined which
funds were sweepable had been deemed unconstitutional in
the 1990s. Since that time, the matter has been interpreted
and executed by the administration. He said that the
interpretation of sweepability of funds had changed as new
legal opinions had been penned as there was no current
statute.
9:34:28 AM
Co-Chair Olson asked whether Mr. Painter wanted to address
the fiscal note.
Mr. Painter discussed a fiscal note from the Legislature
with an allocation for Legislative Finance, OMB Component
774. He explained that the bill had a zero fiscal note, as
the new duty created by the bill could be absorbed by the
division.
9:35:16 AM
AT EASE
9:36:09 AM
RECONVENED
Co-Chair Olson OPENED public testimony.
9:36:33 AM
Co-Chair Olson CLOSED public testimony.
9:36:47 AM
Senator Kaufman thanked the committee and expressed
appreciation for the members' questions. He reiterated that
amendments to the legislation were welcome.
SB 25 was HEARD and HELD in committee for further
consideration.
9:37:17 AM
AT EASE
9:38:40 AM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 25 - Sponsor Statement Version A.pdf |
SFIN 2/8/2023 9:00:00 AM |
SB 25 |
| SB 25 - Sectional Analysis Version A.pdf |
SFIN 2/8/2023 9:00:00 AM |
SB 25 |
| SB 38 Supporting Document - Letters Received as of 1.23.23.pdf |
SFIN 2/8/2023 9:00:00 AM |
SB 38 |
| SB 38 Sectional Analysis v. A 1.17.2023.pdf |
SFIN 2/8/2023 9:00:00 AM |
SB 38 |
| SB 38 Sponsor Statement 1.17.2023.pdf |
SFIN 2/8/2023 9:00:00 AM |
|
| SB 38 PSEA lettter of support SB 38 Senator Wilson.pdf |
SFIN 2/8/2023 9:00:00 AM |
SB 38 |