Legislature(2017 - 2018)SENATE FINANCE 532
02/22/2018 09:00 AM Senate FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SB168 | |
| SB104 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 104 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 168 | TELECONFERENCED | |
SENATE BILL NO. 168
"An Act making supplemental appropriations and other
appropriations; making an appropriation to capitalize
a fund; amending appropriations; and providing for an
effective date."
9:03:19 AM
Co-Chair Hoffman informed the committee that in past years
the supplemental bill had been incorporated into the
capital budget; and in the current year the committee
intended to address the supplemental bill early. He
believed that addressing the bill early was a positive move
for the agencies. He indicated that an identical companion
bill was expected to arrive from the other body the
following week.
Co-Chair MacKinnon MOVED to ADOPT the proposed committee
substitute for SB 168, Work Draft 30-GS2781\D
(Wallace/Martin, 2/20/18).
Co-Chair Hoffman OBJECTED for discussion.
PETE ECKLUND, STAFF, SENATOR LYMAN HOFFMAN, reminded the
committee that supplemental items were requested in the
governor's original operating and capital budget requests
on December 15, 2027. On January 31, 2018 he introduced a
standalone supplemental bill. He noted that the committee
had held overviews on all the governor's supplemental
requests.
9:06:07 AM
Mr. Ecklund addressed that the high level figures included
in the bill were $67.7 million in all funds, $49.5 million
in Unrestricted General Funds (UGF), $5.1 million in
Designated General Funds (DGF), and $13.1 million in other
funds.
Mr. Ecklund addressed the spreadsheet document "FY 2018
Supplemental Bill" (copy on file). He reported that item 2
was in the amount of $453.5 thousand for the Public
Defender Agency. He delineated that the agency experienced
a reduction in Criminal Rule 39 fee revenue, exceeding the
ethical number of maximum caseloads. The funds were
necessary to replace the reduced program receipt revenue,
maintain staffing levels, and reduce the caseload. He
turned to the item 3 for $10,447.6 million for the
Department of Corrections (DOC), Institution Director's
Office and offered that the funds were necessary to meet
institutional shortfalls from overestimating the reduction
in offender populations due to passage of SB 91 - Omnibus
Crim Law & Procedure; Corrections [CHAPTER 36 SLA 16 -
07/11/2016]. He highlighted item 4 amounting to $10,341.5
million for DOC, Institution Director's Office. He noted
that the funding was needed to meet increased inmate health
care costs. He reviewed item 5 for the Department of
Environmental Conservation (DEC), Solid Waste Management
for increased Program Receipt Authority in the amount of
$35 thousand. The department increased its fees effective
October 27, 2017 and the increased receipt authority was
necessary to collect the additional revenue. He moved to
item 6 for DEC, Air Quality for decreased Program Receipt
Authority in the amount of $35 thousand. He addressed item
7 for the Department of Revenue (DOR), Alaska Permanent
Fund Corporation (APFC) Investment Management Fees request
of $5 million for Investment and Custody Fees. He
underlined item 8 for the Legislature, Administrative
Services totaling $121.3 thousand in Program Receipt
Authority and Expenditure for Contractual Lease Cost
Increases.
Mr. Ecklund continued with item 13 for the Department of
Commerce, Community and Economic Development (DCCED),
Alaska Reinsurance Program that was a repayment of $25
million from Premera to the Reinsurance Program. He turned
to item 14 and noted that it was the only capital budget
item in the supplemental. The item was for DCCED in the
amount of $8.125 million in Statutory Designated Program
Receipts for the Alaska Energy Authority Volkswagen
Settlement that represented the state's portion of the
settlement for emission problems.
9:10:38 AM
Senator von Imhof observed that item 13 corresponded to
Section 4 (a) in the bill that showed the sum of $30
million versus the $25 million on the spreadsheet. Mr.
Ecklund explained that the original appropriation was $55
million, and the current version modified the amount to $30
million, which was a difference of $25 million.
Mr. Ecklund continued to address the Supplemental summary
spreadsheet. He turned to item 15 for the Department of
Education and Early Development (DEED), Executive
Administration that extended a grant for Every Student
Succeeds Act (ESSA) support funding. The request extended
the date for expending the funds. He reviewed item 16 for
Special Appropriations; Judgments, Claims, and Settlements
in the amount of $322 thousand for a DEC Wage and Hour
settlement. He noted that item 17 was an open-ended
language appropriation for FY 18 Judgments and Settlements.
He presented item 18 that pertained to a Fund
Capitalization for the Community Assistance Fund. He
detailed that the statutes dictated that if there was no FY
18 appropriation to the fund the balance would total $60
million, and one-third of the balance would be distributed
to communities in FY 19 in the amount of $20 million. The
supplemental originally proposed to use $30 million in one-
time funds from the Power Cost Equalization (PCE) Endowment
Fund using FY 17 earnings for FY 19. The statue mandated
that FY 17 earnings were intended for the FY 19 budget.
Therefore, the current supplemental proposed to appropriate
$30 million in one-time funding from the Alaska
Comprehensive Health Care Fund for the Community Assistance
Fund bringing the balance from $60 million to $90 million
and providing the $30 million payout to communities.
Co-Chair Hoffman stated the amount would bring the program
back on track.
Senator Olson asked about the effect on the Power Cost
Equalization Endowment Fund. Mr. Ecklund replied that the
FY 17 earnings would be available to pay FY 19 PCE costs,
community assistance, renewable energy, and other items in
the capital budget per statute. Senator Olson was concerned
what the balance of the fund would be after the
supplemental appropriation. Mr. Ecklund stated that the
appropriation in the supplemental did not expend PCE funds.
9:14:52 AM
Co-Chair MacKinnon interjected that the chairman had
presented a way to ensure that the PCE fund was not
overdrawn as it had been in the past. She elaborated that
the PCE Fund maintained a lower expectation on returns to
ensure adequate funding for its main purpose; to stabilize
energy costs in rural Alaska. Additionally, she and Co-
Chair Hoffman had carried two pieces of legislation the
previous session that protected the PCE endowment and
"rolled off" funds for community assistance if the
endowment earnings were sufficient. The returns in the
previous year allowed a $30 million draw from the fund in
FY 19. The administration had proposed to take an
additional $30 million from the PCE fund, which threatened
to overdraw of the fund. The current version of the
supplemental proposed the legislature's original intent;
excess PCE earnings would start to fund the Community
Assistance Fund and possible energy projects statewide in
FY 19. Therefore, the current version of the supplemental
employed another source of funding for FY 18.
Co-Chair Hoffman pointed out that when Office of Management
and Budget (OMB) Director, Pat Pitney had presented the
budget she spoke of transparency. He had informed Ms.
Pitney that the governor's budget had short-funded the PCE
program and a "couple" other items. He specifically noted
that if the $30 million was expended from PCE for FY 18
then a $60 million deposit would be necessary the following
year. The current supplemental transaction was attempting
to get the fund balances "back on track."
9:17:51 AM
Senator Micciche asked if the committee would review the
purpose of the Community Assistance Program. He was not
sure that Alaskans were aware of how the funds were used.
He discussed the use of funds for emergency response
services for people utilizing roads in the jurisdiction of
small rural communities, which was the only source of state
support for the communities.
Co-Chair Hoffman thought the topic was expedient. He
recounted that the previous community assistance fund was
too heavily dependent on state resources and became
unaffordable to maintain. Three years earlier the Co-Chairs
of the Senate Finance Committee, Senator MacKinnon and
Senator Kelly reduced the program by 50 percent, so it
could be more affordable for the state, but still be able
to provide services to many communities. He agreed that the
subject should be revisited in a future meeting. He added
that he had cautioned the administration that the
governor's original budget placed a large financial burden
on the state with his proposed $30 million draw. He
reiterated his effort to get the program back on track.
9:20:22 AM
Co-Chair MacKinnon stated that given the state's fiscal
situation, it might be helpful to discuss the inception of
the PCE program. She thought some might not understand the
genesis of the program. She delineated that many years ago
the legislature had "heavily invested" in capital projects
(dams) in urban Alaska to provide a lower cost stable
energy supply. In an effort to support rural communities,
the legislature had established an "investment model;" an
endowment set up like the corpus of the Permanent Fund. She
reiterated that the PCE fund was adjusted to allow the
"rolling off" of funding to urban communities through
community assistance. The entire state was benefitting from
the saved assets, but the original function of the program
was to ensure the equitable investment of resources
throughout the state.
Senator von Imhof asked for an explanation of how the
funding worked.
Co-Chair Hoffman explained that when the $60 million per
year distribution for the Community Assistance Program was
reduced to a $30 million per year distribution the
communities were given an additional two year's notice.
Therefore, and additional $60 million appropriation was
necessary bringing the total to $90 million. The $30
million would be matched with and additional $30 million
appropriation to guarantee the amount communities would
receive for the two years. Senator von Imhof asked if the
money would no longer be available in approximately FY 20
or FY 21. Co-Chair Hoffman answered in the negative. He
continued that next year a $30 million appropriation was
necessary. He reminded the committee that the amount was
subject to appropriation by the legislature.
Senator Micciche shared that when the fiscal crisis
developed he wanted to shut down the revenue sharing
program. However, as he reviewed the public value of the
program he appreciated the changes made to save the
program. He strongly endorsed an informational meeting
about PCE and the CAP programs.
9:25:26 AM
Mr. Ecklund continued to review the supplemental summary.
He addressed Item 19, which was a Fund Capitalization for
the Disaster Relief Fund increased from $2 million to $4
million. The increase was necessary due to the low balance
of the disaster relief fund and the estimated amount needed
for spring 2018 disasters. He stated that currently the
balance of the fund was $1.5 million, and the
administration typically kept $5 million in the fund.
Senator Micciche asked if there had ever been a problem
appropriating additional funds when the fund was used for
significant disaster response. Mr. Ecklund stated that the
recommended balance of the fund was $5 million and if the
fund ran out of money he was unsure whether merely a
ratification or a special session was necessary to
appropriate more funding. Senator Micciche was struggling
with the appropriation because he was uncertain the state
could afford to "tie up" the money.
Co-Chair Hoffman was not sure that the funds were being
"tied up." He viewed the funds as a "safety measure."
9:27:44 AM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION, stated
that historically funding for disaster relief had been
intermittent and jumped between large and small
appropriations. He recalled that $32 million was deposited
into the Disaster Relief Fund 5 years prior. Subsequently,
the balance had since fallen from over $30 million down to
the current $1.5 million. He determined that the
legislature faced a choice of a higher annual funding rate
or a large lump sum when necessary. Given the fiscal
situation, the recommendation was to increase the annual
deposit to $4 million and hope the amount was sufficient.
Senator Micciche supposed that the administration had the
authority to spend on emergency response over the amount of
the fund. He offered that he viewed the funding differently
under the climate of constrained spending. He favored
keeping funding in accounts that earned interest rather
than depositing large amounts of funding in accounts that
accrued nothing. Mr. Teal had neglected to mention that it
was possible to spend more money than was in the fund, but
the amount was limited to $1 million. He reasoned that if
the balance was too low when disaster struck, additional
funding beyond the $1 million authority was subject to
appropriation.
Co-Chair Hoffman interjected that it was important to be
able to respond to a disaster no matter what part of the
state the disaster happened. He considered the
appropriation a small amount of insurance for the
protection of Alaskan citizens.
Senator Micciche agreed with Co-Chair Hoffman. He thought
it was time to reevaluate the $1 million in over-spending
authority and felt that it was insufficient.
Co-Chair MacKinnon asked if Mr. Teal had a figure for the
use of the fund in the previous year. Mr. Teal would
provide the numbers.
9:32:30 AM
Mr. Ecklund continued to discuss the Supplemental document.
He addressed Item 20 for Fund Transfers into the Alaska
Marine Highway System (AMHS) Fund in the amount of
$23,918.2 million. He remarked out of the $30 million
appropriated from GF to the AMHS fund for FY 2018, only
$6,081,800 was available to transfer due to the associated
contingent language. The appropriation back-filled the
short fall. He moved to item 21 for Fund Transfers to the
Civil Legal Services Fund for $10.4 thousand. He reviewed
item 22 for Salary and Benefit Adjustments. He reported
that after the prior session was over, contract agreements
had been reached with the Fairbanks Firefighters Union,
IAFF Local 1324 and the United Academics - American
Association of University Professors, American Federation
of Teachers without any monetary impacts.
Senator von Imhof referenced item 21 and asked why there
was no amount of UGF listed. Mr. Ecklund corrected that the
amount was $10.4 thousand and not million.
Mr. Ecklund noted that the remaining items were
ratifications that did not add to the budget. He indicated
that ratifications "straightened out" prior years
accounting.
9:34:54 AM
Senator Stevens referenced the Disaster Relief Fund and
wanted to see the longer term use of the fund - for the
prior five years. Co-Chair Hoffman agreed to provide the
information.
Co-Chair Hoffman WITHDREW his objection. There being NO
further OBJECTION, it was so ordered. The CS for SB
168(FIN) was ADOPTED.
Co-Chair Hoffman handed the gavel to Co-Chair MacKinnon.
9:36:34 AM
AT EASE
9:39:04 AM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 104 Sponsor Statement.pdf |
SFIN 2/22/2018 9:00:00 AM |
SB 104 |
| CSSB 104 Version N Sectional Analysis.pdf |
SFIN 2/22/2018 9:00:00 AM |
SB 104 |
| SB 168 work draft version D.pdf |
SFIN 2/22/2018 9:00:00 AM |
SB 168 |
| SB 168 Fast Track StatewideTotals-Op Cap.pdf |
SFIN 2/22/2018 9:00:00 AM |
SB 168 |
| SB 168 FY18 Supplemental Summary and Detail with LFD Notes-Senate.pdf |
SFIN 2/22/2018 9:00:00 AM |
SB 168 |
| SB 104 work draft version N.pdf |
SFIN 2/22/2018 9:00:00 AM |
SB 104 |