Legislature(2025 - 2026)BUTROVICH 205
02/07/2025 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SB67 | |
| SB75 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 75 | TELECONFERENCED | |
| *+ | SB 67 | TELECONFERENCED | |
SB 67-PROCURE PREF: AGRIC. & FISH PRODUCTS
3:31:02 PM
CHAIR GIESSEL announced the consideration of SENATE BILL NO. 67
"An Act relating to municipal and state procurement preferences
for agricultural products harvested in the state and fisheries
products harvested or processed in the state; and providing for
an effective date."
3:31:35 PM
PAULA VRANA, Commissioner, Department of Administration (DOA),
Anchorage, Alaska, introduced SB 67 on behalf of the Department
of Administration, the [Dunleavy] administration, and the
Department of Commerce, Community and Economic Development
(DCCED). She said SB 67 strengthens Alaska's commitment to
supporting local agriculture and fisheries industries by
enhancing procurement preferences for state agencies,
municipalities and school districts that receive state funding,
by raising the required in state purchasing preference from
seven percent to ten percent and expanding discretionary
purchasing from 15 percent to 25 percent SB 67 ensures that more
Alaska grown and harvested products are prioritized in
procurement decisions. SB 67 aligns with the recommendations of
the governor's Food Security and Independence Task Force and has
received broad support from industry stakeholders by enabling
more flexibility to select Alaska grown products. SB 67 bolsters
the state's economy and food security and helps to ensure a
stronger, more self-reliant Alaska. She introduced Deputy
Commissioner of the Department of Commerce, Community and
Economic Development (DCCED), Anna Latham, and Chief Procurement
Officer for the State of Alaska, Department of Administration,
Tom Mayer to continue with the presentation.
3:33:25 PM
ANNA LATHAM, Deputy Commissioner, Department of Commerce,
Community and Economic Development (DCCED), Juneau, Alaska,
noted the role of the global [Covid] pandemic to bring attention
to Alaska's food security situation. She said one of the
Dunleavy administration's initiatives was to increase food
security and agricultural sector growth in the state.
Administrative order 331 in 2022, established the Alaska Food
Security and Independence Task Force, which recommended
increasing the procurement and use of Alaska sourced foods
within the state and local agencies, institutions and schools.
MS. LATHAM stated that Alaska currently imports 95 percent of
its food supplies at a cost of $2 billion a year.
3:34:44 PM
MS. LATHAM moved to slide 2 and reviewed Alaska's current
procurement code in relation to Alaska grown fisheries and
agricultural products. She emphasized that SB 67 addressed only
agricultural and fisheries products:
[Original punctuation provided.]
Current Procurement Code
• AS 36.15.050 and AS 29.71.040 require the use of
local agricultural and fisheries products by
state agencies, school districts, and
municipalities that receive state money
• Current statute requires agricultural and
fisheries products harvested in the state:
• Shall be purchased if the product is priced
not more than seven percent above a similar
product harvested outside the state
• May be purchased if the product is priced
not more than 15 percent above a similar
product harvested outside the state
SB 67: Procurement Preference: Agriculture and Fish
Products
Department of Commerce, Community and Economic
Development (DCCED)
3:35:34 PM
MS. LATHAM moved to slide 3 and sought to familiarize the
committee with the current purchasing process used by the
Department of Administration for state agencies:
[Original punctuation provided.]
Current Purchasing Process
• The DOA Office of Procurement and Property
Management administers a statewide contract with
US Foods (Mandatory for the Department of
Corrections and Non-mandatory for all others)
• Local growers register and indicate the products
they can provide
• State agencies set up a corporate account with
vendor
• Once they've set up an account, there is an
option to select Alaska Grown Products
• These are online mobile markets that display
Alaska products
• State buyers such as the Department of
Corrections and AMHS purchase products based on
price after the application of preferences
SB 67: Procurement Preference: Agriculture and Fish
Products
Department of Commerce, Community and Economic
Development (DCCED)
3:36:30 PM
MS. LATHAM noted that a recent review of the current list
contained only three products available for purchase, indicating
room for growth. She said entities qualified to use the US Foods
vendor website included, state agencies, federally recognized
tribes (those included on the Bureau of Indian Affairs list),
the legislative branch, the university, the court system, state
boards and commissions, municipalities and school districts.
3:37:10 PM
MS. LATHAM moved to slide 4:
[Original punctuation provided.]
What Does Senate Bill 67 Do?
• Increases allowable price differentials for state
agencies, school districts, and municipalities to
purchase more Alaskan agricultural and fisheries
products
• Changes the purchase price differential for
required in-state purchases from seven percent to
ten percent
• Changes the purchase price differential for
permissible in-state purchases from 15 percent to
25 percent
• Incentivizes more production of Alaska-grown
agricultural and Alaska fisheries products by
providing access to institutional markets
SB 67: Procurement Preference: Agriculture and Fish
Products
Department of Commerce, Community and Economic
Development (DCCED)
MS. LATHAM said Alaskan producers often face cost barriers to
market access and have advocated for increased institutional
purchases to scale up their production and keep dollars
circulating in the Alaska economy. She noted SB 67 made an
incremental change [in the required in-state purchases] from
seven to 10 percent in order to avoid an adverse effect on
school districts, municipalities or state agencies.
3:38:07 PM
MS. LATHAM moved to slide 5, Discussion of State Procurement
Data, a chart comparing procurement by state agencies. She
explained that the Department of Administration (DOA), Office of
Procurement, recently completed a survey of all the state
agencies that purchased Alaska grown agricultural and fish
commodities in 2024. She noted from the chart there's a lot of
room for growth [to meet in-state procurement requirements]. Out
of the $17 million the state spent on food items, only $236,000
was spent on Alaska grown.
MS. LATHAM offered to walk through the agencies' purchasing in
greater detail.
3:38:47 PM
CHAIR GIESSEL affirmed a walk-through would be helpful. She
expressed curiosity about the three items available for purchase
that were mentioned earlier in the presentation.
3:38:55 PM
MS. LATHAM answered that the three items were potatoes, lettuce
and sprouts.
3:39:08 PM
MS. LATHAM detailed the 2024 Alaska grown purchases by
department:
• Department of Commerce, Community and Economic Development
(DCCED), Alaska Seafood Marketing Institute purchased $117,000
worth of scallops and canned salmon for marketing displays at
conferences and for nutritional testing.
• Department of Corrections (DOC) exclusively purchased potatoes
for a variety of their correctional facilities.
• Department of Labor and Workforce Development (DOLWD) spent
seven dollars on sprouts at their culinary institute, Alaska
Vocational Technical Institute (AVTEC) in Seward.
• The Department of Transportation spent $1,000 on the marine
highways, on the Aurora and Tustemena [ferries] food service
for potatoes.
3:39:59 PM
SENATOR DUNBAR asked whether it was the opinion of the
Department of Commerce, Community and Economic Development
(DCCED) that SB 67 would increase the amount of Alaska grown
food the state would purchase.
3:40:14 PM
MS. LATHAM said that was the intent of SB 67.
3:40:20 PM
SENATOR DUNBAR asked whether there would be additional fiscal
notes for SB 67. He noted only one zero fiscal note from
Department of Commerce, Community and Economic Development
(DCCED), Division of Community and Regional Affairs (DCRA). He
asked whether more fiscal notes were anticipated.
3:40:43 PM
MS. LATHAM said Department of Administration (DOA) also
submitted zero fiscal notes which they were prepared to speak
about.
3:40:55 PM
SENATOR DUNBAR asked how more money would be spent [for Alaska
grown products] and have zero fiscal notes.
3:41:06 PM
MS. LATHAM said she would not speak on behalf of DOA, but she
expected the change in spending by DCCED would be very small.
She deferred to the Chief Procurement Officer for DOA.
3:41:34 PM
TOM MAYER, Chief Procurement Officer, Department of
Administration (DOA), Juneau, Alaska, referred to the chart on
slide 5. He pointed out that the increase from seven to ten
percent is only three percent or approximately $7,000 [based on
2024 procurement]. He noted the increase would be split between
Alaska Seafood Marketing Institute (ASMI) and Department of
Corrections (DOC). He acknowledged that spending would increase
[under SB 67]. He said he wasn't aware why other agencies had
not submitted fiscal notes.
3:42:17 PM
SENATOR KAWASAKI noted that SB 67 would apply to municipalities
and schools as well as state agencies. He asked whether schools
were expected to buy more local [foods under SB 67].
SENATOR KAWASAKI noted that Mr. Mayer nodded an apparent
affirmation.
3:42:34 PM
MR. MAYER noted that the "Polisubs" [Purchasing Entity, line 8]
spending on the slide 5 chart totaled $263,000. He said the US
Foods survey report was long and detailed, covering about eleven
months of food purchases, predominantly by the Petersburg School
District for about $205,000 and the Delta Greeley School
District for around $58,000. He noted that a lot of schools
don't take advantage of [the US Foods contract].
3:43:11 PM
SENATOR KAWASAKI reiterated that many school districts do not
currently take advantage of the [US Foods contract], but if they
did, they would likely experience an increase in their costs. In
particular, the two school districts mentioned would [see an
increase].
3:43:33 PM
MR. MAYER said there would be a three percent difference and if
a school district bought $500,000 worth of food instead of
$200,000, they would experience an increase.
3:43:56 PM
SENATOR HUGHES asked for the grand total of spending on food by
state departments.
3:44:10 PM
MR. MAYER answered that the chart on slide 5 represented the
total spending reported by state departments and by US Foods. He
said the US Foods contract was mandatory for Department of
Corrections (DOC) and non-mandatory for all other state
agencies. If agencies are purchasing other food, that was not
reported, though it was information requested [by the DOA
survey]. He said other food was probably being purchased but
opined that it was not very much.
3:44:40 PM
SENATOR HUGHES noted the effort to incrementally increase the
percentage of Alaska grown food. She asked whether there had
been any cost comparisons between Alaska grown food and food
coming to Alaska on barges and whether the difference from seven
to ten percent would trigger the requirement to purchase Alaska
grown foods.
3:45:09 PM
MS. LATHAM said DCCED did not take the seven to ten percent
increase into consideration. She said they looked at making de
minimis changes to the existing statute. The purpose for that
was:
1. to increase the [amount of] food that is purchased in
state.
2. to increase awareness of in-state producers that want to
ramp up their production and have access to commercial
markets.
3:45:35 PM
SENATOR HUGHES appreciated the effort expressed and affirmed
that it reflects the desire of producers. She wondered whether
the proposed percentage would be effective. She said producers
are providing potatoes and carrots and peas and things in the
schools and they are willing to step up and produce that, but
they need to know a year in advance. She asked whether there was
a system in place to gather information for the producers to be
able to provide carrots and potatoes.
3:46:50 PM
MR. MAYER said he was not aware of a system [to provide that
level of collaboration] from DOA. He explained that the Office
of Procurement establishes contracts but does not engage in
marketing. He noted the short growing season in Alaska and said
the fresh foods were available for a very limited time. He said
[limited food] storage was also a problem.
3:47:28 PM
SENATOR HUGHES emphasized that potatoes and carrots do last and
said there needed to be more effort to facilitate coordination
so growers could eventually reach economies of scale. She
acknowledged that she didn't know how to get there and suggested
an opportunity for upcoming conversations with producers. She
urged progress toward a real difference.
3:48:08 PM
CHAIR GIESSEL concurred and noted improvements in storage for
potatoes and carrots. She said there were full warehouses and
that producers were ready to meet the need but must know the
need is there. She noted that very few grocery stores were
carrying Alaska produce.
3:48:35 PM
SENATOR CLAMAN questioned whether there was evidence of the
capacity to produce enough food to meet the needs of state
agencies. He pointed out that DOC's [Alaska grown purchases]
totaled $117,000, less than one percent of their total spending
on food. He asked whether there were potatoes and carrots
rotting in warehouses because nobody was buying them or if they
were they selling. He asked whether SB 67 would result in
effectively increased production.
3:49:55 PM
MR. MAYER appreciated the question. He said the contract DOA
established with US Foods specifies that US Foods provides the
product. He said that US Foods may source the product from local
producers or other growers and then customers shop from [the US
Foods] website. He was not aware of an effort [to determine how
much local produce US Foods sells].
3:50:16 PM
SENATOR CLAMAN asked how to determine the actual production
levels. restated his question about whether there was evidence
that SB 67 would result in growth of Alaska produced food to
meet the demand.
3:50:38 PM
CHAIR GIESSEL suggested that the commissioner of the Department
of Natural Resources (DNR) may be able to answer. She asked
whether Senator Claman had further follow-up questions.
3:50:47 PM
SENATOR CLAMAN restated his question about whether there was
evidence that SB 67 would result in growth of Alaska produced
food to meet the demand.
3:51:00 PM
MR. MAYER said the Department of Commerce, Community and
Economic Development (DCCED), Office of Procurement had not
looked at that.
3:51:08 PM
CHAIR GIESSEL noted the presenters were focused on what [Alaska
grown food products] had been used and not on issues of
production. She invited concluding statements.
3:51:38 PM
MS. LATHAM said there may not be a way to provide evidence of
exactly what is grown that is not being sold to the commercial
market. She suggested that [DCCED] could initiate conversations
with the growers about supply and demand to determine the level
of viability at a larger scale.
3:52:12 PM
CHAIR GIESSEL thanked the presenters. She noted available
experts on line who may be able to answer the committees'
questions on SB 67.
3:52:45 PM
ANDREW JENSEN, Policy Advisor, Governor's Office, Anchorage,
Alaska, discussed the governor's proposals to enhance food
production and processing in Alaska. He highlighted the addition
of processing and storage equipment at the correctional farm in
Point MacKenzie, and said it was available to both the facility
and the community. Jensen also mentioned the new owner of a
slaughterhouse in Palmer, who seeks more markets, particularly
institutional ones, to increase production. He emphasized the
need to address market access and awareness to incentivize local
food production and improve food security. SB 67 is an attempt
to stimulate economic activity in the agricultural sector by
increasing Alaska grown food product purchases by state
agencies.
3:55:32 PM
CHAIR GIESSEL asked whether slaughterhouse products were
included under SB 67.
3:55:47 PM
MR. JENSEN noted that livestock was considered an agricultural
product. He said hamburger, pork, dairy and poultry products
would qualify for the [provisions of SB 67].
3:56:10 PM
SENATOR WIELECHOWSKI asked whether there were any constitutional
issues with SB 67. He said SB 67 essentially imposed price
control and mandated that in-state products be purchased. He
opined that it may violate free-market ideals. He asked whether
there was a constitutional limit, noting the increase from 15 to
25 percent.
3:56:53 PM
MR. JENSEN answered that when state funds are used, some of the
constitutional issues are mitigated. He noted that when ferries
were built in Ketchikan using state funds, those questions were
mitigated. He said that was why the preference [threshold] was
limited to entities that receive state funding. He said he had
not heard of any legal questions around increasing the optional
preference to 25 percent and if an entity had the money within
their budget and could go to 25 percent over, they certainly
would be able to purchase that Alaska product.
3:58:03 PM
CHAIR GIESSEL noted the struggle for school districts with their
budgets and observed that it appeared SB 67 would require them
to pay three percent more for Alaska [food] products [to be
included in school menus]. She asked how that policy meshed with
the budget constraints faced by school districts.
3:58:33 PM
MS. LATHAM said SB 67 was investing 3 percent back in the state
from state agencies and from school districts that receive state
funding. She said there would be a very incremental cost to the
school districts, and that would have to be considered during
the legislative process.
3:59:04 PM
SENATOR CLAMAN noted that all school districts receive state
money. He posed a hypothetical scenario in which there are
Alaska grown potatoes available on the US Foods website and they
cost ten percent more than potatoes grown in Washington, also
available through the website. He observed that, under SB 67,
the school district would be required to get the Alaska grown
potatoes.
3:59:37 PM
MS. LATHAM affirmed that the school district would be required
to buy the Alaska potatoes.
3:59:46 PM
SENATOR CLAMAN noted that when there are no Alaska potatoes, the
school district is allowed to buy the Washington potatoes. It is
only when Alaska grown products are available that [state
entities] would be required to purchase them over [out of state
products].
4:00:16 PM
MS. LATHAM affirmed that was correct according to existing
statute.
4:00:30 PM
SENATOR CLAMAN commented that when school districts are prepared
to purchase, Alaska produce is not usually available.
4:00:41 PM
SENATOR DUNBAR asked whether Petersburg and Delta Junction
school districts were the only school districts to purchase
Alaska grown products. He noted that the Matanuska Susitna (Mat-
Su) district produces a lot of [the available Alaska grown
foods].
4:01:07 PM
MR. MAYER said the report DOA received from US Foods showed only
the two school districts.
4:01:15 PM
SENATOR DUNBAR noted that the larger school districts were not
purchasing local foods. He emphasized the financial constraints
on Alaska school districts and suggested they might purchase
alternate products, rice instead of potatoes, for example, to
avoid having to pay extra for Alaska produced foods. He asked
what enforcement mechanism would be imposed to prevent school
districts from making those choices.
4:02:10 PM
MS. LATHAM said there was enforcement in statute, but not when
there is substitution of, for example, one starch food for
another.
4:02:25 PM
SENATOR DUNBAR opined that [school districts] would choose to
purchase less expensive options over Alaska produced foods when
Alaska produced foods were more expensive. He proposed that
state funding for school districts be increased to offset the
projected increase to their spending.
4:03:26 PM
CHAIR GIESSEL invited the Commissioner of the Department of
Natural Resources (DNR) to address the issue of production and
storage of Alaska grown products and their availability.
4:04:02 PM
JOHN BOYLE, Commissioner, Department of Natural Resources (DNR),
Anchorage, Alaska, introduced himself and emphasized that
agriculture was within DNR's wheelhouse. He highlighted the
capacity of Alaska producers to grow more if they had a stable
market. He noted the existing farm-to-school program previously
housed with Department of Natural Resources (DNR), now
administered by Department of Education and Early Development
(DEED). He advocated for effective collaboration between DEED
and DNR to link producers with procurement officers in school
districts and establish a consistent demand for Alaska-grown
products, allowing producers to plan and supply [food products]
accordingly.
COMMISSIONER BOYLE expanded the farm-to-school example to other
state funded entities, advocating for the role of government to
eliminate communication gaps and facilitate the exchange between
producers and procurement officers. He opined that Alaska
producers could compete with lower 48 suppliers if given the
right market conditions.
4:08:29 PM
CHAIR GIESSEL noted future hearings on Alaska agriculture were
scheduled.
4:08:47 PM
SENATOR WIELECHOWSKI noted the assertion that most Alaska
producers could be competitive with outside producers and
asserted that Alaskan consumers would prefer to buy Alaskan
grown products, over products from out of state. He asked why it
was necessary for government to step in and basically force
organizations to pay higher prices for those goods. He suggested
that government's role might be to educate and advertise rather
than forcing organizations to pay more.
4:09:34 PM
COMMISSIONER BOYLE noted the dual nature of the issue,
emphasizing that some Alaska producers can already compete with
imported products, while others may need certainty to scale up
their operations to become competitive. He highlighted the
potential for producers to invest in equipment and processing
tools which could lower their costs and achieve economies of
scale, bringing their products to competitive levels.
COMMISSIONER BOYLE offered Alaska Range Dairy as an example. He
said the dairy produced high-quality milk that was competitively
priced compared to organic or other premium milks from the Lower
48. He stated that Alaska products might initially cost more,
but their superior quality and potential for cost reduction
through scaling made them competitive.
4:11:52 PM
SENATOR CLAMAN asked how much of the food products grown in
Alaska, except for fish products, were exported or if they were
all consumed in Alaska.
4:12:10 PM
COMMISSIONER BOYLE said he would provide that figure at a future
meeting.
4:12:14 PM
SENATOR CLAMAN also asked for more data demonstrating that there
is a market to produce more and price data to support the
expectation of economies of scale.
4:12:53 PM
CHAIR GIESSEL held SB 67 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2.7.25 SB 67 Transmittal Letter.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 67 |
| 2.7.25 SB 67 Fiscal Note DCCED-DCRA.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 67 |
| 2.7.25 SB67 PowerPoint Presentation to SRES.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 67 |
| 2.7.25 SB 67 Sectional Analysis version A.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 67 |
| 2.7.25 SB 75 Sectional Analysis Timber Management Leases 1.28.2025.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 75 |
| 2.7.25 SB75 Timber Mgmt. Leases Transmittal Letter.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 75 |
| 2.7.25 SB75 DNR presentation to SRES Timber Management Leases.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 75 |
| 2.7.25 SB 75 Fiscal Note DNR.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 75 |