Legislature(2017 - 2018)SENATE FINANCE 532
02/09/2018 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB144 | |
| SB143 | |
| SB168 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 144 | TELECONFERENCED | |
| *+ | SB 168 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 143 | TELECONFERENCED | |
SENATE BILL NO. 144
"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."
9:05:40 AM
Co-Chair Hoffman related that the Operating and Mental
Health budgets were before the committee. He said that the
administration would offer an additional presentation on
the Governor's Supplemental requests. He relayed that the
committee substitutes for the Operating and Mental Health
budgets before the committee were a rearrangement of the
Governor's budget requests, in a form that both the
Division of Legislative Legal and the Division of
Legislative Finance (LFD) believed were appropriate.
9:05:52 AM
Co-Chair MacKinnon MOVED to ADOPT the committee substitute
for SB 144, Work Draft 30-GS2564\D (Wallace, 1/29/18).
Co-Chair Hoffman OBJECTED for discussion.
9:06:32 AM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
explained the committee substitute. He stated that version
D, with a few exceptions, used the same fund sources, same
amounts, located in the same areas of the budget, as the
Governor's proposed bill. He noted that the exceptions were
several contingent appropriations; The Constitutional
Budget Reserve (CBR) language pertaining to $425 million
and the $1.1 million appropriation for "hot shot" crews in
the Department of Natural Resources. He stated that the
division treated contingencies as the maximum value, while
the Governor's budget treated them as a minimum. He related
that with those two differences, the transactions were the
same. He offered that the point in creating the current
version, rather than using the Governor's budget, was to
make the conforming technical changes to make the bill
readily amendable. He said that format changes would not be
as issue future iterations of the legislation but for all
practical purposed the bill mirrored the Governor's
proposal.
9:08:27 AM
Senator Micciche spoke to the maximum and minimum value
difference related to the contingency language. He wondered
whether the bottom line changed because of the differing
viewpoints.
Mr. Teal replied in the affirmative. He stated that the
number in the current version was higher, because the
administration counted General Fund spending as zero (in
anticipation of federal dollars for the "hot shot"
program), while the LFD counted it as $1.1 million - the
total that could be spent.
9:09:19 AM
Mr. Teal said that there was a two-page document that
explained some of the larger changes, "Summary of Changes
from the Governor's Operating Bill and CSSB 144(FIN) Work
Draft 30-GS2564\Wallace, 1/29/18"(copy on file) and a Word
document that tracked changes, "SB 144 ver A to D from Leg
Legal 1/30/18 CS Zero".
9:09:54 AM
Co-Chair Hoffman explained that any substantive amendments
would be addressed by each budget subcommittee and brought
before the committee after the public process. He noted
that the committee was awaiting the draft sent by the other
body, as well.
9:10:20 AM
Co-Chair MacKinnon surmised that the budget as proposed by
the Governor did not include community assistance.
Mr. Teal replied that community assistance was in the
budget in the sense that a supplemental appropriation has
been included, bringing the year-end FY 18 balance up to
$90 million, which allowed for a $30 million appropriation
for distribution to communities in FY 19. He pointed out to
the committee that there was no FY 19 funding for community
assistance, which LFD believed should exist by law. He
explained that FY 17 excess earnings should have been
deposited for FY 19, this had not been done; currently,
communities would receive $30 million in FY 19, which will
drop to $20 million in FY 20.
9:11:49 AM
Co-Chair Hoffman argued that the Governor was short funding
the future and was not following the intent of the pervious
legislation pertaining to community revenue sharing, which
was that communities should be able to depend on the fund
source for planning purposes.
9:12:49 AM
Co-Chair MacKinnon noted the second item, pensions, had not
been funded to the requested amount determined by the
previous actuarial numbers.
Mr. Teal replied that the June 2016 valuation, which had
determined the FY 19 rates, reflected that the state
assistance contributions to retirement programs, should
have been approximately $299 million. He said that in 2015
there had been a large deposit made to the retirement
systems, with the intent that the 3-year rate setting lag
should be truncated to 2 years. He said that in an effort
to shorten the lag, the June 2016 valuation had been
updated with new assumptions, which had resulted in an
impact to state assistance by $35 million - mostly due to
exceptional returns experienced in FY 17. He relayed that
the Governor's bill had built in retirement savings under a
group waiver for retirees that would reduce drug costs and
could result in an additional savings. He stated that the
Governor's budget had those savings built in immediately,
even though they were not yet achieved. He suggested
considering whether the committee wanted to build in
potential savings before they had materialized, or whether
traditional actuarial methods should be used. He worried
about taking advantage of savings that had not yet
materialized.
9:16:25 AM
Co-Chair MacKinnon expressed some trepidation about the
administration taking the $3 billion cash infusion in an
attempt to increase the funding ratio for retiree
healthcare. She said that the projected unfunded pension
obligation was growing. She spoke to the tax credits for
industry and when those credits should be paid. She asked
for details, based on current statute, concerning short
funded tax credits in the Governor's budget.
Mr. Teal suggested that in future talks concerning
retirement benefits that the committee should note the
actuarial projections over the next 20 years. He said that
the funding ration had fallen over the last few years, and
would continue to fall, and that future contributions were
expected to increase. He questioned decreasing
contributions now, in the face of falling funding ratios,
and increasing contributions in the future.
Mr. Teal spoke to the tax credits. He explained that the
statutory minimum would be $206 million, and alternative
interpretation was as low as $49 million. He said that the
administration supported the $206 million level of funding.
He stated that the Governor's budget contained $27 million
for oil and gas tax credits, which was what the cost of
debt service would be for issuing bonds to fully buy the
outstanding tax credits and then make the debt service
payments. He reiterated that there was no money deposited
into the oil and gas tax credit purchase fund in the budget
but was instead a $27 million appropriation to pay debt
service on bonds that would be used to buy credits.
9:21:08 AM
Co-Chair Hoffman clarified that the cs did not address any
of the issues under conversation but would be discussed by
the committee during the process of amending the
legislation.
9:22:00 AM
Co-Chair MacKinnon believed that the budget was lower than
it should be to meet the state's responsibility to
industry.
9:22:58 AM
Senator Micciche asked how legislation, and the
consideration of the passage of certain bills, would be
included in the budget.
9:23:34 AM
Co-Chair Hoffman replied that the statutorily required
items under discussion would be the base of the budget.
9:24:23 AM
Senator Micciche understood that if legislation passed
during the budgetary process, it would be reflected in a
final budget document.
9:24:42 AM
Mr. Teal stressed that LFD would have the three fiscal
notes that were built into the budget: oil and gas tax
credits, senior benefits, and school trust fund -
preferably as fiscal notes. He said that, for example, the
division would have preferred a $206 million appropriation
in the bill for tax credits, with a fiscal note that
reduced the amount and changing it to debt service. He
relayed that there were supplemental appropriations in the
Operating Budget, he emphasized that the bill version
before the committee was not an LFD recommendation, but a
rewrite of the Governor's proposal that contained the
fiscal notes and the supplemental appropriations included
by the administration. He said that it would be up to the
amendment process to change the bill.
9:26:26 AM
Co-Chair Hoffman stated that the practice for 20 years had
been to not include supplemental requests in the Operating
Budget.
9:27:04 AM
Senator Micciche wondered whether the supplemental items
included in the bill could be highlighted.
9:27:21 AM
Co-Chair Hoffman hoped to address the supplemental items at
a later date.
9:27:43 AM
Senator Olson remarked that there was a difference between
the philosophical and political implications related to the
budget. He asked whether there was an actual financial
difference between using fiscal notes in the budget and the
way the administration had presented the budget proposal.
Mr. Teal replied that there was no difference as long as
the legislation passed; if money was going to be put in the
budget that was contingent on the passage of a bill, if the
fiscal note matched the amount of money that was currently
in the budget - there was no real difference.
9:28:46 AM
Senator Olson spoke of the dwindling constitutional budget
reserve (CBR), and the possible use of the earnings
reserve. He wondered whether the Governor's approach was
faulty.
Mr. Teal thought that transparency was in the eye of the
beholder. He believed that the administration was trying to
present a budget that they thought was was transparent.
9:29:44 AM
Co-Chair Hoffman WITHDREW the OBJECTION. There being NO
OBJECTION, the proposed committee substitute was adopted.
SB 144 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 020918 FY2018 Supplemental Summary and Detail.pdf |
SFIN 2/9/2018 9:00:00 AM |
SB 168 |
| SB 168 FY2018 Supplemental Summary.pdf |
SFIN 2/9/2018 9:00:00 AM |
SB 168 |
| SB 168 FY2018 Supplemental Backup.pdf |
SFIN 2/9/2018 9:00:00 AM |
SB 168 |
| SB 144 D operating budget.pdf |
SFIN 2/9/2018 9:00:00 AM |
SB 144 |
| SB 144 Summary of Changes from the Gov to CSSB 144(FIN).pdf |
SFIN 2/9/2018 9:00:00 AM |
SB 144 |
| SB 144 ver A to D from Leg Legal 1 30 18 CS Zero.pdf |
SFIN 2/9/2018 9:00:00 AM |
SB 144 |
| SB 143 work draft version D.pdf |
SFIN 2/9/2018 9:00:00 AM |
SB 143 |
| SB 143 Summary of Changes from the Gov to CSSB143(FIN).pdf |
SFIN 2/9/2018 9:00:00 AM |
SB 143 |
| SB 143 ver A to D from Leg Legal 1 30 18 CS Zero.pdf |
SFIN 2/9/2018 9:00:00 AM |
SB 143 |