Legislature(2023 - 2024)SENATE FINANCE 532
01/22/2024 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB186 || SB187 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 186 | TELECONFERENCED | |
| *+ | SB 187 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 186
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making capital appropriations; making
supplemental appropriations; making reappropriations;
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."
SENATE BILL NO. 187
"An Act making appropriations, including capital
appropriations and other appropriations; making
reappropriations; making appropriations to capitalize
funds; and providing for an effective date."
9:09:00 AM
LACEY SANDERS, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, introduced herself and discussed
her background. She relayed that she would provide a
presentation on an overview of the governors FY 25 budget.
She relayed that there were administrative services
directors from the departments present to address any
questions that might arise. She shared that she was a
graduate of Juneau Douglas High School and had worked for
the state for over 22 years including positions in the
budgetary field. She had worked in multiple agencies,
including the Department of Corrections, the Department of
Commerce, Community and Economic Development, Department of
Military and Veterans Affairs, and the Department of
Administration. She relayed that she had worked as the
operating budget coordinator and in other roles for the
Legislative Finance Department for just over 11 years. Most
Ms. Sanders continued that most recently she had worked for
the Department of Education and Early Development as the
administrative services director and deputy commissioner.
Co-Chair Stedman knew that Ms. Sanders grew up in the state
and had extensive background working in state agencies.
9:11:01 AM
Ms. Sanders discussed a presentation entitled "Overview of
the FY2025 Governor's Budget - Senate Finance Committee -
January 22, 2024" (copy on file), which would provide a
high-level overview of the governors proposed FY 25
budgets. She recognized that the committee had extensive
experience but endeavored to adequately explaining the
information for the general public.
Ms. Sanders noted that as required by Alaska statute, the
governor must release a budget by December 15 of each year.
She noted that the governors proposed budget for FY 25 was
released on December 14. The budget consisted of three
appropriation bills: the operating appropriation bill for
state agency operations, the capital operating bill, and a
mental health appropriation bill. The mental health
appropriation bill incorporated operating and capital
appropriations specific to the states integrated mental
health programs. She noted that the numbers she would be
discussing incorporated the numbers from all three
appropriation bills.
Ms. Sanders summarized that the governor's budget focused
on providing a safe and healthy environment that kept
Alaskan families in the state and promoted growth across
the state. While working on the development of the budget,
there were three recurring themes: affordability,
education, and public safety. She relayed that she would
tie her presentation to the themes throughout her
presentation.
9:12:39 AM
Ms. Sanders reviewed slide 2, "FY2025 Fiscal Summary," and
pointed out that the slide was referred to the state's
fiscal summary and was the highest level picture that OMB
could provide the public on the states revenues and
expenditures, and providing an overall view of what the
budget would look like. She highlighted that the right-hand
side of the slide reflected the FY 24 budget that was
enacted into law the previous year. The left-hand side
showed the governor's FY 25 proposed budget.
Ms. Sanders noted that for FY 24, the numbers included the
supplemental appropriations that were included on the
December 14 budget release. While supplemental items were
statutorily due on the 15th legislative day (January 30 of
2024), there had been several items that the governor chose
to incorporate into the budget release. She anticipated
more supplementals to come for further discussion around
the 15th day of legislative session. She noted that she
would highlight supplemental items as she reviewed the
budget.
Ms. Sanders relayed that in order to simplify the budget,
OMB and the Legislative Finance Division (LFD) categorized
the hundreds of funding sources used into four categories:
federal receipts, other receipts, Designated General Funds
(DGF) and Unrestricted General Funds (UGF). She noted that
the following slide would focus on UGF, which tended to
have less restrictions in use and represented the states
fiscal picture when talking about sustainability or future
appropriations.
9:14:46 AM
Ms. Sanders highlighted that revenues for DGF, other funds,
and federal funds tended to equal what was planned in
appropriations for the funding sources, since the funds
required receipts and plans for use. She noted that UGF
were derived from using the Department of Revenue's fall
fiscal summary. Total revenues for both FY 24 and FY 25
budgets including supplemental items was $15.5 billion.
Ms. Sanders pointed out expenditures, which were broken
into categories. Operating expenditures could include fund
capitalizations, agency operations, or statewide items. The
FY 24 total operating budget was $11.3 billion for all
funding sources. For FY 25, the governors proposed budget
came in at about $10.5 billion total. She noted that there
was $2.8 billion in total funds for the capital budget for
FY 24, and the majority of the funding came from federal
receipts. Just over $350 million of the amount was matching
the federal funds. For FY 25, total capital appropriations
were proposed at $3.5 billion. She noted that $3 billion
was proposed federal receipts, and just over $300 million
was the general fund match. She noted that later she would
discuss matching funds for federal capital project funding
in more detail.
9:17:38 AM
Ms. Sanders continued by identifying $881 million
appropriated for the Permanent Fund Dividend. The current
proposed appropriation for the PFD was $2.3 billion, which
was the amount of the statutory dividend. She discussed
fund transfers, which was when money was moving between
funds but not leaving the treasury. The monies were not
counted in overall surplus or deficit but shown for public
information. She identified that a surplus or deficit was
identified by the difference between available revenues and
expenditures that were in the current year or propose dint
the governors FY 25 budget. She noted that there was
currently a $450 million proposed surplus for FY 25, and
just under $1 billion deficit. To meet the deficit, the
governor proposed spending from the Statutory Budget
Reserve Fund and the Constitutional Budget Reserve Fund
(CBR). The current estimated balances were shown on the
chart.
9:19:25 AM
Co-Chair Stedman asked about FY 25 supplemental items,
which he did not see on the slide. He asked if the
legislature should plan on supplemental items or use zero.
He asked Ms. Sanders to identify on why a supplemental item
was added as a supplemental rather than added to the FY 25
budget.
Ms. Sanders thought there was an historical acknowledgement
that there were supplemental items on an annual basis. She
considered that when analyzing prior years, the
supplemental amounts were not consistent, because
supplemental items were unanticipated and unknown costs.
She acknowledged that there had not been a year without
supplementals, and they would be likely. There were
measures in the governor's proposed bill that strove to
reduce the number of supplements that would come forward.
Co-Chair Stedman noted that the deficit proposed for FY 25
was $987 million, and recognized the dividend in statute
was the historic dividend calculation and would create a
$2.3 billion expenditure. He asked if the dividend, now
that the constitutional obligation of submitting a budget
had been accomplished, would be adjusted to another numeric
as part of the budget process, or if the committee should
use the proposed number.
Ms. Sanders relayed that the governor had noted many times
that he would follow the law when it came to the PFD, and e
budget that was proposed by the governor followed the law.
She contemplated that a change to the PFD amount was the
legislatures prerogative. She noted that the amount
originally submitted would not be changing through the
upcoming supplemental or amendment process.
Co-Chair Stedman referenced following the law, and assumed
that the governor did not support a draw over 5 percent of
the Permanent Fund.
Ms. Sanders answered affirmatively, and relayed that the
governor would follow the law of any statute.
Ms. Sanders spoke to slide 3, "FY2025 Fiscal Summary
Continued," which showed a table. She addressed revenues
shown at the top and reminded that OMB used the Department
of Revenues (DOR) fall revenue forecast to determine UGF
availability. For FY 24, UGF totaled just under $3 billion
and $2.7 billion for FY 25. The fiscal summary also
reflected the percent of market value (POMV) draw from the
ERA, using the formula set in law and was calculated to be
$3.5 billion for FY 24, and just under $3.7 billion for FY
25. The draw brought the total UGF revenue to $6.5 billion
for FY 24, and $6.3 billion for FY 25. She noted that the
right-hand side showed a decrease of about $218 million
between the two funding sources. There was nothing
currently projected for FY 25.
9:25:35 AM
Ms. Sanders identified total operating and capital
expenditures for FY 24 at $5.2 billion, and $5.1 billion
for FY 25, for an overall decrease of $126 million. She
attributed the decrease to the many one-time appropriations
that were being reversed out of the FY 24 budget. She noted
that there were several investments in education, public
safety, and other areas. She commented that the
administration was proposing a stable budget, and notably
there were significant inflationary costs addressed in the
budget for many agencies as well as approximately $97
million in salary adjustments for contractually negotiated
salaries. She noted that of the $90 million, $45 million
was UGF. She summarized that while there was a slight
decrease, there were substantial investments in the budget.
Ms. Sanders noted that there was $78 million worth of
supplementals reflected for FY 24, which the largest being
$61 million for fire disaster declaration, which was
approved by the governor and legislature earlier in the
year. In addition there was there were also funds for the
Supplemental Nutrition Assistance Program (SNAP)
application backlog, as well as funds for food banks and
funds to address the case load in the Office of Public
Advocacy (OPA). She made note of additional funding for a
capital supplemental for the community of Wrangell, to
address emergency needs for the Wrangell dam following the
disaster in the community on November 20, 2023.
Ms. Sanders commented that she had worked closely with the
LFD director to ensure that everyone understood the
differences in the fiscal summary and information from both
OMB and LFD. She highlighted that the $61 million that she
had included for the fire disaster declaration was not
included by LFD since the division was waiting for a formal
transaction or change record. She noted that differences
were not uncommon but were minor technical items in the
budget.
Ms. Sanders continued to address slide 3. She relayed that
the governor continued to advocate for a full dividend. The
bottom of the slide reflected surplus and deficit. The
overall surplus was $449 million for FY 24. She recalled
that the previous year there had been a calculation for
half of any surplus revenue to go to the CBR, and half of
the funds to go out to an energy relief payment with the
PFD. Currently $110 million would be deposited to the CBR,
and the equivalent amount would be paid to qualified
residents as an energy relief payment of approximately $165
to $175 depending upon the number of qualified applicants.
9:30:41 AM
Co-Chair Stedman asked to discuss the CBR, and noted that
in previous years the committee had been focused on
increasing the accounts liquidity and the solvency of the
state. The CBR savings component had been moved up to
approximately $2.7 billion as reflected on the slide for FY
24. He noted that LFDs suggested target was about $3.5
billion, and he thought most if not all committee members
agreed with the number. He recalled that the administration
was considering a balance of about $2.5 billion. Of the
amount, about $500 million in cash flow was needed for
state operations. He calculated that if the target was $2.5
billion, $2 billion would be left and the FY 25 budget
would be below the minimum target. He asked for the
administration's thoughts on the CBR target amount and
necessary liquidity, if oil prices went to $70/bbl. He
pondered at what point the committee should be paying more
attention to the matter.
Ms. Sanders referenced slide 4, "Fiscal Summary Savings
Balances," and mentioned that she was new in her current
role of OMB director. She had not heard the $3.5 billion
figure referenced by Co-Chair Stedman, but had heard the
figure of $2 billion. She thought DOR had used $400 million
in order to address cash flows throughout the year. In
acknowledgment of the last slide of the presentation and a
ten-year plan, the governor thought the state was at the
point of needing to contemplate changes in revenue or
changes in expenditures to address the states fiscal
picture. She noted that the previous year, there had been
conversations without result. There was a recognition that
something would have to be adjusted given the future
outlook of the ten-year plan that forecast being out of
funds by the end of 2027 on the current trajectory.
Co-Chair Stedman identified that the committee had been
working diligently to strengthen the state's fiscal
position, and that rating agencies had given the state
improved credit ratings. He thought some of the information
was still under review. He emphasized that the rating
improvements were based on having balanced budgets and
ample liquidity rather than deficit spending. He explained
that he would be surprised if the committee reversed course
and moved into liquidation and quit working on
strengthening the states position. He though the state
needed to come up with a direction for the states revenue
stream. He suggested that Ms. Sanders work with the
governor to discuss the minimum CBR balance, and run
sensitivity analyses to look at the states cash flow at
different oil prices.
Co-Chair Stedman reminded the public that lenders within
the oil and gas industry used the oil price of $60/bbl to
examine the profitability of projects, but emphasized that
the state could not survive on an oil price of $60/bbl.
9:37:03 AM
Senator Bishop referenced past recommended CBR balances of
$6 billion, $3.5 billion, and the current $2.5, and
suggested that it was a moving target. He agreed with Co-
Chair Stedman on keeping the balance as high as possible to
make payroll. He asked Ms. Sanders to identify which body
of funding would be exhausted in 2027 as she had mentioned.
Ms. Sanders relayed that in the current budget proposed by
the governor, the balance of the SBR was at almost $21
million, which would be depleted. For FY 27, only the CBR
fund would remain and would be depleted by status quo
spending and revenue.
Ms. Sanders continued to address slide 4. She noted that
the CBR and SBR were the states primary savings accounts
that had designed purposes. She made note of the fund
balance being just under the $2 billion after the proposed
FY 25 budget, and noted that the last slide of the
presentation would address the future outlook.
Ms. Sanders turned to slide 5, "Budget Lookback," which
showed a bar graph depicting a high-level lookback of the
total expenditures for each year starting at FY 19,
including revenues. She highlighted that the two items that
had the most fluctuation were the capital budget and the
PFD. She explained that as revenues were limited in the
early years, there had been more focus on providing
matching funds for the capital budget. As the POMV
introduced more stability in revenue, there was growth in
the capital budgets and PFD. She noted that FY 24 and FY 25
reflected statewide items (in yellow) decreasing
significantly. The primary drivers were the end of oil and
gas tax credits and leaving only retirement and debt
service payments and other smaller items. The operating
budget tended to be fairly stable from approximately $4
billion in FY 19 to $4.2 billion in FY 25. The state had
sustained the amount of growth and she noted that salaries
and inflation had contributed to operating budget growth.
9:41:54 AM
Ms. Sanders considered slide 6, "FY2025 Operating Budget by
Agency (UGF)," which showed a swoop graph providing a high-
level snapshot of UGF spend per agency for the FY 25
budget. She pointed out the significant cost drivers of K-
12 foundation formula, pupil transportation, and Medicaid;
which represented 41 percent of the operating budget. She
noted that the K-12 foundation formula and pupil
transportation programs were fully funded in the governors
proposed budget based on the statutory Base Student
Allocation (BSA) of $5,960. The Department of Health had
finalized its Medicaid projections on December 15, and the
information had not been readily available for the December
14 budget release. She noted that OMB was evaluating the
projections for inclusion in both the FY 24 supplemental
budget and governors amendment process. She cited that as
noted by Co-Chair Stedman, amendments were due on the 30th
day of the legislative session, which was February 14.
Co-Chair Hoffman commented that the two largest items on
the graph on slide 6 were education and health. He thought
the previous year the chart had included the spending for
the PFD. He thought the public should know that the $2.3
billion proposed for the PFD was a huge number, and
surpassed the mount in the budget for education and for
health.
Senator Bishop asked if the committee had requested the
slide to be restated the previous year.
Co-Chair Stedman explained that LFD would have the PFD
included. He thought the slide was titled appropriately and
noted that the PFD was not an operating budget item. He
thought for transparency to the public, it was appreciated
when the PFD was included. He recognized that the inclusion
of the PFD appropriation would make some people
uncomfortable because of the magnitude, but thought few
Alaskans understood the magnitude of the total PFD
appropriation. He thought the slide was misleading in terms
of spending.
Ms. Sanders appreciated the members perspective. She was
happy to make adjustments to ensure the public was provided
with the best viewpoint.
Co-Chair Stedman suggested that the dividend be included
when looking at the previous years.
9:46:20 AM
Ms. Sanders displayed slide 7, "Operating Budget
Significant Highlights Affordability
Alaska Permanent Fund Dividend
•$2,303.7 UGF for a full statutory Alaska Permanent
Fund Dividend
Department of Commerce, Community and Economic
Development
•$3,000.0 UGF FY2024 Supplemental for food banks and
food pantries across Alaska
•$48,049.8 DGF to fully fund the Power Cost
Equalization Program
Department of Health
•$1,500.0 UGF to provide access to food at food banks
and food pantries across Alaska
•$8,829.2 ($6,078.2 UGF/ $2,751.0 FED) FY2024
Supplemental adding 30 non-permanent Eligibility
Technician positions to address the Supplemental
Nutrition Application Program (SNAP) application
backlog
•$1,800.0 UGF to change 20 previously added non-
permanent Eligibility Technician positions to full
time and continue to address the SNAP application
backlog
Ms. Sanders reiterated that the governor had focused his
budget on three primary categories to support Alaskans:
affordability, education, and public safety. She noted that
the presentation was a new format for categorizing within
the areas. She reviewed the items on the slide and noted
that the dividend appropriation was to ensure that the
governor was addressing inflation and the high cost of
living in the state. She noted that the Department of
Commerce, Community and Economic Development was stepping
in to assist the Department of Health in getting funding
for food out to entities that could support those needing
assistance.
Senator Wilson asked about the supplemental funding for
food banks, and what program DOH would use to administer
the funds. He mentioned the previously the distribution had
not covered the Matanuska-Susitna Valley (Mat-Su). He asked
why DCCED could not continued successfully administering
the program.
Ms. Sanders explained that $3 had been provided to DCCED,
and the intention was that DCCED could likely reach more
entities than just food banks and food pantries in the
state. Through an application process, the administration
was hopeful that DCCED could reach more entities across the
state and not just in primary hubs. She continued that DOH
had provided grants to food pantries and food banks the
previous year, and the administration want to ensure it
would continue into FY 25. She was happy to have a
conversation regarding whether the function should be moved
to DCCED or not.
Senator Wilson asked which account the funds would be
utilized through in DOH.
Ms. Sanders asked if Senator Wilson was referring to $1.5
million. She requested that staff from the department
address the question.
9:52:30 AM
RAQUEL SOLOMON-GROSS, DEPUTY DIRECTOR, FINANCE AND
MANAGEMENT SERVICES, DEPARTMENT OF HEALTH (via
teleconference), did not have the answer at hand but
offered to get back to the committee in writing.
Senator Wilson wondered about fully funding the Power Cost
Equalization (PCE) Fund. He thought Ms. Sanders would be
addressing fund capitalization later in the presentation,
but did not think one could talk about PCE without talking
about the Community Assistance Fund (CAF). He wondered if
there would be a supplemental item to fully fund CAF for FY
24.
Ms. Sanders relayed that the administration was in the
midst of evaluating which supplemental items would be put
forward for consideration by the legislature, and did not
currently have an answer to Senator Wilson's question. She
was aware of the lack of funding for FY 24.
Senator Kiehl thought it seemed odd to have two departments
addressing funding for food pantries. He thought it could
result in a lot of non-profits with only one employee or
volunteers would have double the paperwork. He wondered if
the departments or OMB get back to the committee with why
using two departments was a preferable structure. He
observed that there was a mismatch with the two lines for
the SNAP backlog in DOH. He observed that turning the non-
permanent positions into permanent positioned cost about
$900,000 but the additional 30 non-permanent positions cost
about $300,000.
Ms. Sanders affirmed that Senator Kiehl was correct in that
the supplemental budget had some information technology
work and other items within the amount beyond the 30
positions. She recounted that the previous year the 20
non-permanent positions included funding in the budget. The
$8.8 million was necessary to make the positions permanent
and full time.
Senator Kiehl thought it would be helpful to get additional
detail on what was included in the $8.8 million. He
referenced discussion the previous year about whether the
funding would be sufficient and referenced a federal waiver
that had not materialized.
9:56:23 AM
Senator Wilson asked if the department had looked at doing
a reclassification of the eligibility technician positions.
He commented on the length of time needed to train for the
positions, and did not think an entry-level position was
appropriately classified if it required nine months of
training.
Ms. Sanders could not recall a classification study, but
recalled that the administration was looking at letters of
agreement to incentivize recruitment and retention of the
positions. She noted anecdotally that often as people were
hired and trained, the employees were moving on to other
eligibility positions. She added that the state had entered
into a contract to complete a salary study and would seek
to find that the positions were being adequately paid. She
hoped to receive a report from the contractor by June,
2024.
Senator Bishop commented that he knew Alaska was one of 15
states that had rejected additional funding. He asked about
the department's position and whether it was trying to take
advantage of additional federal funding the following year.
He knew the food bank in his district had expressed
interest in the additional funding.
Co-Chair Stedman asked about the added positions for DOH
and whether it would be in a fast-track supplemental
budget.
Ms. Sanders relayed that the administration was currently
having the conversations and she hoped to have information
shortly when the administration released the supplemental
budget.
Co-Chair Stedman asked for Ms. Sanders to also address
child-care issues.
Ms. Sanders highlighted slide 8, "Operating Budget
Significant Highlights Education
Department of Education and Early Development
• $1,237,175.7 ($1,181,295.8 UGF; $35,088.9 Other;
$20,791.0 Federal Receipts) Full funding for school
districts according to the Foundation Program and
Pupil Transportation statutory formulas
• $5,000.0 UGF for the Alyeska Reading Institute
• $5,000.0 UGF for a grant to Alaska Native Science
and Engineering Program
• $1,500.0 UGF for continued Teacher Recruitment,
Retention, Certification and Apprenticeship
Development
• $1,500.0 UGF for continued Career and Technical
Education initiative
• $1,200.0 UGF for continued access to the Coding in
Minecraft Program statewide
• $1,000.0 UGF for a grant to Alaska Education
Resource
• $1,000.0 UGF for support of Youth Hunter Education
programs statewide Department of Military and
Veterans' Affairs
• $843.1 UGF and two PFT positions to address the
Alaska Military Youth Academy's operational expenses
associated with the return to pre-COVID class sizes
and additional staffing
Debt Service
• $57,517.7 ($44,417.7 UGF/ $13,100.0 DGF) Full
funding for School Debt Reimbursement Program based on
the statutory formula
• $26,978.0 Full funding for the Regional Educational
Attendance Area (REAA) and Small Municipal School
District Fund based on the statutory formula
Ms. Sanders relayed that providing Alaskas students with
access to quality education continued to be a priority of
the governor, alongside with fully funding the foundation
formula and pupil transportation programs based on the
statutory formula. The FY 25 budget provided a total of $25
million in operating and capital investment. She discussed
the operating items listed on the slide, many of which were
introduced to the legislature the previous session and
funded as one-time items. She relayed that the governors
proposed budget continued many of the items into the future
and also added them to the base budget. She addressed new
and recurring items listed on the slide.
Co-Chair Stedman asked Ms. Sanders to note when items were
in the governors proposed or enacted budget.
Ms. Sanders clarified that all of the items on the slide
were in the governors proposed FY 25 budget.
10:02:38 AM
Senator Wilson asked if the items in DEED were included in
the previous years operating or capital budget. He
observed that there were several granting programs listed
that were not necessarily state agency functions. He
wondered if the items would be more appropriately placed in
the capital budget.
Ms. Sanders affirmed that all of the items were in the
operating budget the previous year. She explained that it
was not for DEED to have grants within its budget. The
department worked closely with all the school districts
administering grants for various programs. She explained
that the items were operational needs and could be
justified in the operating budget.
Co-Chair Stedman asked Co-Chair Hoffman to remind the
public of the issue between the operating budget and the
capital budget and the life span of the legislation.
Co-Chair Hoffman commented that the operating budget had a
life of one year, and the capital budget had a life of six
years. He noted that many projects took more than one year
to be implemented.
Co-Chair Hoffman asked about major maintenance for the REAA
Fund, and pondered how large the cost was. He raised the
topic because the longer the legislature ignored the
maintenance of rural schools, the higher the cost would be
for new construction.
Ms. Sanders did not have the number available, but agreed
to follow up at a later time. She affirmed that the funds
went to communities to address deferred maintenance or
school district needs without further appropriation. She
knew there was a cap on the fund, and agreed to provide
more information on the balance.
10:05:24 AM
Co-Chair Stedman followed up regarding what he perceived as
confusion over Mount Edgecumbe High School's (MEHS)
deferred maintenance. He understood that MEHS did not fit
under the REAA deferred maintenance schedule, so Co-Chair
Hoffman had added some deferred maintenance for MEHS along
with the REAA Fund and other school deferred maintenance to
have it balanced around the state. He recounted that the
governor had vetoed the appropriation for MEHS, with the
reasoning that MEHS should be accounted for in the REAA
Fund. He asked for OMB to clarify the matter. He thought
there was substantial confusion around the matter, and
emphasized that there needed to be a legitimate reason for
a veto.
Ms. Sanders agreed to look into the matter.
Ms. Sanders looked at slide 9, "Operating Budget
Significant Highlights Public Safety
Department of Corrections
•$19,300.0 UGF for Physical Health Care, Institutions,
Community Residential Centers, and Pre-Trial Services
Department of Law
•$2,328.6 UGF and 12 full-time positions for consent
law changes (House Bill 325, Chapter 44, SLA 2022)
•$1,900.0 UGF and 10 full-time positions for drug
prosecutions, child protection cases, expand consumer
protection investigations, and grand jury
Department of Military and Veterans' Affairs
•$399.8 UGF and one full-time position for the Alaska
State Defense Force, Naval Militia, and Civil Air
Patrol
Department of Public Safety
•$3,500.0 UGF for 10 additional Village Public Safety
Officer positions and address salaries
•$700.0 UGF for three positions for investigators
focused on crimes against children
•$557.0 UGF for two Aircraft Pilots and an Aircraft
Maintenance Inspector
•$450.0 UGF to fully fund four Missing and Murdered
Indigenous Persons investigators
•$250.0 UGF for one position for new and innovative
recruitment strategies to attract qualified Alaska
State Trooper applicants
Ms. Sanders cited that the governors proposed budget
provided a $19.3 million investment in DOC. She referenced
a historical cycle of underfunding the DOC budget. She
identified two significant increases in the Department of
Law. She discussed organized militia being increasingly
needed to respond to emergencies and disasters in rural
Alaska and the operational funding requested. She described
the proposed investment in DPS.
Ms. Sanders added that there was a proposed $250,000 for
DPS not listed on the slide to go towards a public
information campaign associated with Missing and Murdered
Indigenous Persons.
10:11:54 AM
Senator Wilson asked about the $19 million proposed for
DOC. He asked if the funding was for healthcare services or
build out services within institutions. He understood per
the last subcommittee that DOC did not provide contractual
rates for healthcare institutions. He wondered why the
department had not entered into contracts to save money for
the state.
Ms. Sanders noted that the $19.3 million did not only
reflect costs associated with inmate healthcare. The
department had created a projection of sorts to try and
true-up what costs were experienced in institutions,
community residential centers, and physical healthcare for
FY 25. She deferred questions related to any contracts or
negotiations for inmate healthcare to the department.
Senator Kiehl clarified that the additional funds were
reflective of a historical cycle of short funding. He asked
Ms. Sanders if the funded levels from the legislature were
above or below the governors final request levels in the
four allocations in DOC the previous year.
Ms. Sanders relayed that she would need to run numbers to
determine what areas were above or below.
Senator Kiehl relayed that the funding levels from the
legislature were all at or above the governors requested
levels.
Co-Chair Olson understood that there had been a request for
DPS to purchase another airplane, which he did not see on
the slide. He thought the request had specifically been for
a Pilatus PC-12 single engine turbine.
Ms. Sanders relayed that the proposed aircraft purchase
would be reflected later in the presentation under capital
projects.
Co-Chair Olson commented on flying in the inclement weather
over the preceding several days. He asked about the states
plans for the King Air 350, and whether the department
planned to keep the plane if it purchased a new plane.
Ms. Sanders understood that there was funding in the budget
for maintenance needs for the aircraft, and answered yes.
10:15:31 AM
Co-Chair Stedman followed up on Senator Kiehl's point about
additions the legislature had made to DOC. He suggested
that OMB go back a decade and provide a growth curve for
agencies. He thought some agencies were growing
precipitously relative to others, and there was concern
with cost control. He thought the information would be
helpful to subcommittee chairs looking at agency budgets.
He mentioned the position requests and thought a future
slide would address vacancies and how the administration
justified continually adding positions while there was
vacancies.
Ms. Sanders affirmed that OMB would take a look at growth
for each agency and would discuss vacancies.
Senator Bishop asked Ms. Sanders to go back to the fourth
bullet on slide and re-state the funding amount for the
four Missing and Murdered Indigenous Persons investigators.
Ms. Sanders relayed that there was a proposed $450,000 to
fully fund four investigator positions. There was an
additional $250,000 not noted on the slide for a public
information campaign.
Senator Bishop asked if the four positions were permanent,
full-time.
Ms. Sanders relayed that the positions were non-permanent.
She expanded that DPS had expressed that there were often
times qualified experienced retirees that wanted to come
back and assist with investigations in a non-commissioned
officer role.
Senator Bishop advocated that the funding be shown in the
base to show the states commitment to the seriousness of
the investigations.
Ms. Sanders relayed that the request was to be in the base
for the funding, but in order to bring the retired hires,
it was necessary that the positions be non-permanent.
10:18:51 AM
Ms. Sanders addressed slide 10, "Operating Budget
Significant Highlights Additional
Department of Family and Community Services
•$5,000.0 ($1,392.8 Federal Receipts; $3,607.2 UGF)
for increasing the Foster Care Base Rate
Department of Fish and Game
•$1,302.0 UGF to continue evaluation of the Threatened
and Endangered Species Program and Marine Mammals
Program
Department of Law
•$1,072.8 UGF for expansion of an
Internship/Externship and Fellowship Programs
•$2,018.0 UGF for continued statehood defense efforts
across multiple agencies
Department of Natural Resources
•$1,800.0 UGF for Fire Suppression Activity and
Preparedness incentive pay for Wildland Firefighters
and to address firefighter vacancies
•$900.0 UGF for Forestry Management and Development to
provide increased access to land and resources
Department of Transportation and Public Facilities
•$915.0 UGF for Statewide contracted snow removal when
unexpected snowfall exceeds existing operational
capacity Statewide Items
•$30,000.0 ($27,818.1 DGF; $2,181.9 UGF) to capitalize
the Community Assistance Fund
Ms. Sanders mentioned the intent of the Department of
Family and Community Services (DFCS) intent to increase the
number of foster care families in the state. She noted that
the DFG funding was requested to be added to the base. She
highlighted that Department of Law had expanded programs in
a recruitment effort. She discussed proposed funds for
statehood defense efforts in aid of supporting state
sovereignty in matters such as federal subsistence matters,
and conversation issues. She discussed the intent to
incentivize ground level firefighter employment in the
state to ensure timely response to wildland fires. She
cited that Alaska technicians were paid 40 percent less
than those in federal agencies. The request was an attempt
to reduce the high cost of firefighting in the state due to
bringing firefighters from out of state.
Ms. Sanders discussed the proposed funds for forest
management and development, which would replace timber
receipts in FY 25. The change would allow for the receipts
to be used for economic growth in the timber industry, for
bridge replacements, roads for timber, and increasing
access to land and resources. She discussed the budget
request for Department of Transportation and Public
Facilities and snow removal at unanticipated levels.
10:23:22 AM
Co-Chair Hoffman referenced a retreat in Girdwood at which
the governor had joined the Senate Majority. He had spoken
with the governor about the precipitous decline of Chinook
Salmon on the Yukon River and Kuskokwim River. He thought
Chinook Salmon was the most prized salmon, sought by
fishermen from all over the world. He asked if any funding
had been proposed to address the issue.
Ms. Sanders relayed that a later slide addressing capital
funds would address two requests related to fisheries and
research. The projects related to the Alaska Marine Salmon
Program and a stock identification program.
Co-Chair Hoffman asked if the requests would directly
address Chinook Salmon, or if the requests were general
appropriations.
Ms. Sanders deferred Co-Chair Hoffman's question to the
department.
Co-Chair Stedman asked Ms. Sanders to get back to the
committee with the information.
Senator Wilson looked at the DOT request for $900,000 for
contractual snow removal. He did not think the funding was
sufficient for a statewide effort. He wondered if there
would be a supplemental request.
Ms. Sanders affirmed that the administration was evaluating
the supplemental and amendment needs for addressing snow
removal across the state.
Senator Bishop followed up to Senator Wilson's comment to
reference the two previous year's snow events in
Southcentral Alaska and that the climate was changing. He
suggested that the status was the new normal and perhaps
the funding was needed in the base going forward.
Co-Chair Stedman made note that the Senate Finance
Committee Subcommittee for DOT the previous year had
suggested that the legislature increase funding to the
department for snow removal. The department had felt it was
adequately prepared for a snow event, and the subcommittee
had not agreed and suggested adding an increment that could
be rolled forward if not needed. He recalled that there
had been no interest from the department. He thought it was
an important to consider that DOT have adequate funds to
respond to snow and general maintenance. He relayed that
the most common complaint received by legislators was
related to potholes. He mentioned general maintenance
funding for buildings and airplanes.
10:27:30 AM
Ms. Sanders advanced to slide 11, "FY2025 Capital Budget by
Agency (UGF)," which showed a bar graph showing an overview
of the UGF capital spending proposed for FY 25. Notably,
DOT's budget was significantly the largest from needing a
substantial amount of matching funds. She identified that
the total proposed capital budget was $305 million of UGF,
42 percent of which was in DOT. She would discuss
highlighted items beginning on slide 12.
Co-Chair Stedman asked about the $800 million increase in
federal receipts and asked if it was all due to DOT.
Ms. Sanders identified that there were three significant
increases in federal receipts. There was in increase in
DOT's federal funds, as well as increases in the Department
of Environmental Conservation to address federal
infrastructure grant funding. There was also $1 billion in
the DCCED budget for the Broadband Equity Access
Development (BEAD).
10:29:28 AM
Ms. Sanders looked at slide 12, "Capital Budget Significant
Highlights Affordability
Department of Revenue
•$25,000.0 UGF for Alaska Housing Finance Corporation
Down Payment Assistance Grants
•$62,720.0 ($26,700.0 UGF; $14,420.0 Other Receipts;
$21,600.0 Federal Receipts) for Alaska Housing Finance
Corporation Annual Housing Programs
Department of Commerce, Community, and Economic
Development
•$5,000.0 DGF for continued investment in Renewable
Energy Project Grants
•$4,500.0 UGF to Advance Commercial Investment in the
AKLNG Project and Maintain Project Assets in Ready
Status
University of Alaska
•$1,000.0 UGF for Alaska Center for Energy and Power
Energy Data Storage and Access Revitalization Project
•$11,100.0 ($8,880.0 Federal Receipts; $2,220.0 UGF)
for University of Alaska Fairbanks Alaska Railbelt
Carbon Capture and Sequestration Project
Ms. Sanders noted that it was estimated that the $20,000
Alaska Housing Finance Corporation (AHFC) down payment
grants would provide approximately 1,250 households with
assistance. She discussed AHFC projects. She discussed two
energy related items in the proposed University of Alaska
(UA) budget. She described an application to the United
States Department of Energy to enable widescale deployment
of carbon capture and storage. The project included a
required 20 percent match.
Senator Wilson hoped the committee would have people from
the Alaskas Liquified Natural Gas (AK LNG) project before
the committee. He shared concern that he had not seen any
return on investment in his time in the legislature. He
pondered the use of funds and whether there was a need for
a change in leadership.
Ms. Sanders deferred the question to the Alaska Gasline
Development Corporation (AGDC).
Senator Merrick recalled that the state's federal
delegation was able to shore up some federal funds in the
amount of $205 million to $206 million. She asked if the
needed matching funds were in the proposed budget or if the
funds would be forthcoming.
Ms. Sanders explained that the governor's FY 25 proposed
budget did not include any funding or associated matching
funds for a GRIP 3. She relayed that OMB along with DCCED,
the Alaska Energy Authority, and DOR were working closely
together to develop a plan and determine whether the
matching funds could be available over many years or if it
needed to be provided up front. She continued that the
group was working with the federal government on the
details and hoped to have a plan before the committee soon.
Co-Chair Stedman asked Ms. Sanders to define GRIP 3.
Ms. Sanders relayed that GRIP 3 had to do with grid
resilience.
Co-Chair Stedman confirmed that GRIP 3 had to do with grid
enhancements. He asked Ms. Sanders to elaborate.
Ms. Sanders asked if she could defer the question to the
department.
Co-Chair Stedman explained that GRIP 3 related to grid
upgrades for the Railbelt. He recalled that the state
needed a 20 percent match, which he thought was
approximately $200 million over a period of several years.
He thought the information was sufficient for the high-
level discussion to take place. He suggested that the
administration looked at funding the project, it looked
more broadly than the Railbelt when having the
conversation, since there would be a significant financial
request as well as the whole state to consider. He
addressed the first bullet on the slide and the proposed
$25 million for down payment assistance grants for AHFC. He
suggested that there was a greater problem with housing
availability. He thought more land was needed to be opened
up and developed. He mentioned state sources of land
including UA, the Department of Natural Resources, and the
Alaska Mental Health Trust Authority (AMHTA).
10:36:26 AM
Co-Chair Stedman commented on the AKLNG Project, and shared
similar concerns as other committee members, including that
there were no investors at the table. He thought at some
point it would be necessary to have the conversation on
ceasing the project. He thought it appeared that the
project was un-economic and commented on the spending. He
addressed the topic of carbon capture. He urged caution in
the consideration of carbon capture from coal-fired plants,
which he considered evolving technology that had not been
proved to scale. He mentioned facilities in Alberta,
Canada, North Dakota and Texas; and emphasized that the
technology was under development with existing coal plants.
Senator Merrick asked if Ms. Sanders could confirm if the
GRIP funding was a one-to-one match.
Ms. Sanders answered affirmatively and noted that $206
million would be matched with $206 million.
Co-Chair Hoffman agreed with Co-Chair Stedman and thought
that the legislature needed to address energy costs
throughout the state. He pondered whether the GRIP funding
was the responsibility of the state. He mentioned other
funding avenues such as the Municipal Bond Bank, which
could be addressed by the Railbelt. He shared his primary
concern that the highest energy costs in the state were in
rural Alaska. He commented that his heating bill for the
previous month in Bethel was a little under $2,000 per
month. He mentioned that he had a fish camp in Anchorage,
which could be heated for 12 months at the same cost. He
thought the state needed to re-focus and see what could be
done statewide to address the high cost of heating.
Co-Chair Hoffman referenced the $48 million Ms. Sanders had
mentioned for the PCE Fund, which was only for electricity
and not heating. He pointed out that heating was 10 times
more expensive. He expressed gratitude for the PCE Program.
He mentioned the AKLNG project, which had been contemplated
through numerous administrations to try and build a gas
line to get gas to market. He did not see much improvement,
support, or activity at the industry level. He pondered
that it was time for the state to use the project to lower
the cost of energy for citizens. He mentioned a legislative
trip to Iceland, where participants had learned about the
country using new methods to overcome previously high
energy costs. He emphasized that the state needed to
concentrate on energy and making the state affordable to
live in for its residents.
10:42:11 AM
Ms. Sanders showed slide 13, "Capital Budget Significant
Highlights Education
Department of Education and Early Development
$3,986.5 UGF for School Construction Grant Funds
•$4,270.2 UGF for Major Maintenance Grant Funds
University of Alaska
•$10,000.0 ($5,000.0 UGF; $5,000.0 DGF) for University
of Alaska Drones Program Year Three
•$20,000.0 ($10,000.0 UGF; $10,000.0 DGF) for
University of Fairbanks to Achieve Research 1 Status
Ms. Sanders highlighted that the funds for the School
Construction Grant would go toward the Newtok K-12 School
relocation/replacement. The second item for DEED would
provide funding for a school in Craig and for a project in
the Yukon-Koyukuk School District.
Co-Chair Stedman asked if the items included the entire
major maintenance list for schools, not including REAAs
and MEHS.
Ms. Sanders relayed that the entire list was posted online
but did not include MEHS.
Co-Chair Stedman asked how much of the list was addressed
with the proposed funded items.
Ms. Sanders related that the proposed funding did not
address the entire list. She relayed that the major
maintenance grant fund list was in the $240 million range,
and the school construction grant list was in the $350
million range.
Co-Chair Stedman thought the major maintenance seemed to be
a normal level, which signified a significant amount of
maintenance that was not addressed in the proposed budget.
He thought the proposed amount was small.
Senator Bishop recalled that the major maintenance list
from the previous year was about $346 million, and that
some projects had fallen off the list or districts had not
reapplied. He relayed that he would look into the
information to determine that actual numbers.
10:45:04 AM
Senator Kiehl asked if the numbers were placeholders, and
thought there were significant shared obligations between
the state and municipalities. He asked what the
administration's vision was for starting to address the
need on the major maintenance list.
Ms. Sanders relayed that the current process was ad hoc as
the governor proposed his budget or the legislature had
funding to address projects on the list. She thought the
committee was aware that the state's fiscal picture was not
in a good position, and in order to address things such as
deferred maintenance, there would need to be other revenues
or other items not funded.
Ms. Sanders addressed the two notable FY 25 capital budget
items listed for UA on slide 13. She highlighted the
funding for the drone program, which was in its third year
to test operations working to integrate drones with
aircraft and support the emerging industry. In addition,
there was a $20 million request for the University of
Alaska Fairbanks to achieve R1 status from its current R2
status. The funds would be used to support graduate
students' stipends, recruitment and retention, and
strengthen the PhD programs at UAF. The designation would
strengthen UAF's research portfolio, and would help advance
relevant priorities. The designation would help in
developing sustainable energy sources and infrastructure in
the state.
Senator Merrick asked about the total amount in the budget
for major maintenance for UA, and the total amount of
deferred maintenance at UA.
Ms. Sanders relayed that the deferred maintenance
allocation in the budget was approximately $28 million and
came from the Alaska Capital Income Fund.
Senator Merrick asked about the total deferred maintenance
for UA.
Ms. Sanders did not have the number at hand.
Co-Chair Stedman thought the total was significantly
larger.
Co-Chair Stedman commented on the drone program at UAF, in
light of wars taking place in Europe and the Middle East.
He thought the program was significant. He relayed that he
had originally been dubious but now saw the benefits of the
program.
10:50:15 AM
Ms. Sanders referenced slide 14, "Capital Budget
Significant Highlights Public Safety
Department of Corrections
•$10,904.3 UGF for Statewide Institution improvements
•Perimeter Fences and Gates
•Security Doors and Windows
•Backup Power System Upgrades
•Statewide Closed Circuit Television (CCTV) Systems
Department of Public Safety
•$9,500.0 UGF for Patrol Vessel Enforcer Replacement
•$6,200.0 UGF for acquisition of a Pilatus PC-12NG
Aircraft Acquisition
•$4,675.0 UGF for Aircraft and Marine Vessel
maintenance and repair
•$1,300.0 UGF for DataMaster Fleet Replacement
•$770.0 UGF for Crime Scene Investigative Equipment
•$309.8 UGF for Aviation Equipment, Gear, and
Technology Refreshment
Ms. Sanders discussed items for DPS, totaling approximately
$23 million. She discussed the patrol vessel Enforcer,
which had been taken out of commission due to design issues
and mold. The proposed aircraft acquisition involved an
aircraft that had the ability to land at 96 percent of the
maintained airports in the state, to increase the ability
for rapid response. She discussed the requests for aircraft
and marine vessel maintenance and repair. She cited that
DPS currently had 44 aircraft and 41 marine vessels that
required maintenance.
Co-Chair Olson noted that the addition of a new aircraft
always included the need for training, and asked the
proposed funds included monies for training.
Ms. Sanders did not know if the request included training,
but knew there was a request for positions and support in
the operating budget, which she thought included training.
Co-Chair Olson asked about the 41 marine vessels that Ms.
Sanders referred to. He asked about the number of aircraft.
Ms. Sanders clarified that there was 44 aircraft and 41
marine vessels.
Co-Chair Olson asked if the 44 aircraft included rotary-
wing and fixed wing aircraft.
Ms. Sanders did not know.
Co-Chair Stedman thought it would be beneficial if Ms.
Sanders could provide a schedule of maintenance needs on
the 85 capital assets owned by the state. He relayed that
DOT provided the committee an extensive list of
replacement. He thought some replacement costs were as high
as $25 million. He noted that several members had expressed
concern that the state had been doing less maintenance on
its fleets of vessels and airplanes. He thought the
department should be able to provide a schedule of the
individual maintenance needs. He emphasized that the DOT
spreadsheet was extensive. He noted that the information
had been helpful.
Co-Chair Stedman discussed the agenda for the following
day. He relayed that the committee would continue with the
presentation on slide 15.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 012424 OMB Senate Finance FY2025 Budget Overview Corrected.pdf |
SFIN 1/22/2024 9:00:00 AM |
OMB FY25 Budget Overview |