Legislature(2021 - 2022)ADAMS 519

04/12/2021 01:30 PM House 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.

Download Mp3. <- Right click and save file as

Audio Topic
01:33:11 PM Start
01:33:43 PM HB69 || HB71
01:34:01 PM Presentation: American Rescue Plan (arp) Overview by Council of State Governments
02:27:44 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 69 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Heard & Held
+= HB 71 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Heard & Held
+ Presentation: American Rescue Plan Act of 2021 TELECONFERENCED
Funding by Council of State Governments
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 69                                                                                                             
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain   programs;    capitalizing   funds;   amending                                                                    
     appropriations;    making   reappropriations;    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."                                                                                
                                                                                                                                
HOUSE BILL NO. 71                                                                                                             
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive    mental    health    program;    making                                                                    
     supplemental  appropriations;  and   providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
1:33:43 PM                                                                                                                    
                                                                                                                                
^PRESENTATION:  AMERICAN  RESCUE   PLAN  (ARP)  OVERVIEW  BY                                                                  
COUNCIL OF STATE GOVERNMENTS                                                                                                  
                                                                                                                                
1:34:01 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster indicated  the meeting was the  third on the                                                                    
topic of  ARP funding. He  thanked the presenters  for being                                                                    
available. He  indicated Representative Wool had  joined the                                                                    
meeting.                                                                                                                        
                                                                                                                                
SARAH NEEDLER,  DIRECTOR OF RESEARCH,  THE COUNCIL  OF STATE                                                                    
GOVERNMENTS  (via  teleconference), introduced  herself  and                                                                    
provided   a  brief   background.  The   Council  of   State                                                                    
Governments    (CSG)   was    a   non-partisan    membership                                                                    
organization   that  represented   state  governments.   The                                                                    
organization primarily worked  with legislators, legislative                                                                    
staff,  governor staff,  and executive  cabinets to  promote                                                                    
excellence in  state government through policy  research and                                                                    
by convening its members to  share ideas. As the director of                                                                    
research,  she   ensured  that  that  the   entity's  policy                                                                    
analysis   had  technical   assistance   and  was   evidence                                                                    
informed.  She  was  before  the   committee  to  share  the                                                                    
research  CSG conducted  on federal  funding for  the state.                                                                    
She deferred to Christina to introduce herself.                                                                                 
                                                                                                                                
1:36:59 PM                                                                                                                    
                                                                                                                                
CHRISTINA  GORDLEY, SENIOR  POLICY ANALYST,  THE COUNCIL  OF                                                                    
STATE GOVERNMENTS (via  teleconference), introduced herself.                                                                    
In  addition to  the fiscal  and  budgetary team  she was  a                                                                    
member   of  the   workforce   development  and   disability                                                                    
employment policy  team. She noted  she had  enjoyed working                                                                    
with  the Alaska  Work Matters  Task Force  that was  led by                                                                    
Duane  Mayes and  Kristin Vandagriff.  Prior to  joining CSG                                                                    
she worked  as a policy  and budget analyst in  the Kentucky                                                                    
Governor's Office for over 15 years.                                                                                            
                                                                                                                                
Ms.   Needler   introduced  the   PowerPoint   presentation:                                                                    
"American  Rescue Plan  (ARP) Overview."  She  was asked  to                                                                    
present on the American Rescue  Pan (ARP) and funds going to                                                                    
Alaska as part of the plan.  She was aware that in the prior                                                                    
week the committee  had heard from the  Office of Management                                                                    
and Budget (OMB) and the  Legislative Finance Division (LFD)                                                                    
who  did an  excellent job  of  sharing the  details of  the                                                                    
funding breakdown  of the ARP.  From her  experience working                                                                    
with all  50 states and  U.S. territories, she  could report                                                                    
that Alaska  was ahead  of several  states in  preparing for                                                                    
the  receipt and  utilization  of the  funds  coming to  the                                                                    
state  as  part  of  the ARP.  Even  though  many  questions                                                                    
remained  about the  details of  the  ARP as  the state  was                                                                    
awaiting further guidance, she  would focus the presentation                                                                    
on what she knew so far.                                                                                                        
                                                                                                                                
Ms. Needler  reviewed the presentation overview  on slide 2.                                                                    
She  would share  about the  impact of  Covid-19. She  would                                                                    
provide an  overview of  the ARP  and talk  a bit  about the                                                                    
State and Local  Fiscal Recovery Funds. She  would also talk                                                                    
about the  Elementary and Secondary School  emergency Relief                                                                    
(ESSER) Fund.  Kristina would share  some of  the approaches                                                                    
to the  ARP fund  utilization from other  states as  well as                                                                    
lessons learned from previous federal funding to states.                                                                        
                                                                                                                                
Ms. Needler turned  to slide 3 to discuss the  impact of the                                                                    
COVID-19  pandemic on  state government.  She reported  that                                                                    
CSG  had conducted  significant  analysis of  the impact  of                                                                    
COVID-19  on  all  50  states   along  with  how  state  had                                                                    
responded  to  the pandemic.  In  one  of the  analyses  the                                                                    
council looked at the fiscal  risk and the fiscal resiliency                                                                    
of  all 50  states.  The  council found  that  Alaska had  a                                                                    
medium  level of  fiscal risk  and  a high  level of  fiscal                                                                    
resiliency. The  counsel wanted to  take the  opportunity to                                                                    
commend  Alaska  for the  high  level  of fiscal  resiliency                                                                    
which had  been apparent in  Alaska's ability to  handle the                                                                    
fiscal impact of Covid-19.                                                                                                      
                                                                                                                                
Ms.  Needler   continued  that  furthermore  CSG   had  also                                                                    
conducted analyses  of responses  to the  pandemic including                                                                    
vaccination  rate.  In  the council's  research  on  vaccine                                                                    
dissemination  with   Covid,  it   found  that   Alaska  had                                                                    
responded  very  quickly  and efficiently  by  administering                                                                    
Covid-19  vaccinations to  its  population. As  of April  9,                                                                    
2021,  over  25 percent  of  Alaska's  total population  had                                                                    
received  at least  one dose  of the  COVID-19 vaccine.  The                                                                    
council also  found that Alaska  had both  online scheduling                                                                    
tools as  well as  a hotline  and that  Alaska was  the best                                                                    
performing  state  in  terms   of  percentages  of  vaccines                                                                    
received that were administered.  All of the information was                                                                    
published  in a  report which  she was  happy to  share with                                                                    
members.                                                                                                                        
                                                                                                                                
1:40:51 PM                                                                                                                    
                                                                                                                                
Ms.  Needler moved  to slide  4: "The  American Rescue  Plan                                                                    
(ARP)."  She  indicated  that  as  members  heard  from  the                                                                    
presentations  in the  previous week  from OMB  and LFD  ARP                                                                    
funds  would   be  disbursed   to  Alaska   through  several                                                                    
allocations.  Some  of  the  funds  would  require  a  state                                                                    
appropriation and  some would  not. Slide  4 showed  how the                                                                    
funds were divided.  In the presentation she  would focus on                                                                    
the  four largest  funds requiring  stat appropriation.  The                                                                    
four  funds included  the state  fiscal  recovery Fund,  the                                                                    
local fiscal  recovery fund, the capital  projects fund, and                                                                    
funds   going  to   Department   of   Education  and   Early                                                                    
Development.  She  reported  that  CSG  had  conducted  some                                                                    
analyses  on these  elements so  far and  would continue  to                                                                    
conduct analyses on other parts  of the plan which she would                                                                    
review in the presentation.                                                                                                     
                                                                                                                                
Ms. Needler  turned to  slide 5 to  discuss state  and local                                                                    
fiscal recovery  funds. It was  estimated that  Alaska would                                                                    
see  approximately $1.36  billion  total for  the state  and                                                                    
local fiscal  recovery fund plus capital  projects. A little                                                                    
over  $1 billion  of  the funds  would go  to  the State  of                                                                    
Alaska.   Approximately  $45   million  would   be  directly                                                                    
allocated to Anchorage  and about $43.5 million  would go to                                                                    
all  other cities  throughout the  state.  She relayed  that                                                                    
approximately $141.8 million would  be allocated directly to                                                                    
boroughs and  census areas  and $112.2  million would  go to                                                                    
the  State of  Alaska  for the  capital  projects fund.  She                                                                    
added  that  the  treasury would  establish  a  process  for                                                                    
applying for capital project fund  grants by May 10th. These                                                                    
funds would be available  for critical capital projects that                                                                    
directly  enabled  work,  education, and  health  monitoring                                                                    
including remote options in response  to the Covid-19 public                                                                    
health crisis. She  noted that although it  was not included                                                                    
on  the slide,  there was  an additional  $400 million  that                                                                    
would  also be  directly allocated  to tribes    each  would                                                                    
receive $1.7 million.                                                                                                           
                                                                                                                                
Representative Wool  asked Ms.  Needler to define  the term,                                                                    
"other  non-counties." Ms.  Needler asked  if Representative                                                                    
Wool was referring to the $141 million.                                                                                         
                                                                                                                                
Representative Wool  clarified the figure of  $43.5 million.                                                                    
Ms. Needler replied  that the funds would be  given to other                                                                    
cities in the state.                                                                                                            
                                                                                                                                
Co-Chair  Foster  noted  that Representative  Rasmussen  was                                                                    
online and listening in.                                                                                                        
                                                                                                                                
1:44:02 PM                                                                                                                    
                                                                                                                                
Ms.  Needler continued  to slide  6 to  review the  usage of                                                                    
state and local fiscal recovery  funds. She pointed out that                                                                    
the   bill   provided   limited  direction   on   what   the                                                                    
expenditures would be eligible for  as part of the state and                                                                    
local fiscal  recovery funds.  It did allow  for the  use of                                                                    
the funds for  a few specific things outlined  on the slide.                                                                    
The  funds could  be utilized  to respond  to public  health                                                                    
emergencies  with  respect  to   Covid-19  or  its  negative                                                                    
economic  impact including  assistance to  households, small                                                                    
businesses, or  non-profits. It  could also  be used  to aid                                                                    
impacted   industries   such   as   tourism,   travel,   and                                                                    
hospitality.                                                                                                                    
                                                                                                                                
Ms. Needler continued that the  funds could also be utilized                                                                    
to respond  to workers performing essential  work during the                                                                    
Covid-19 public  health emergency  by providing  premium pay                                                                    
to eligible  workers who were  performing essential  work or                                                                    
by providing  grants to eligible employers  who had eligible                                                                    
workers to perform  essential work. The funds  could also be                                                                    
used to  provide government  services to  the extent  of the                                                                    
reduction in revenue. It could  be online property or income                                                                    
tax  de  to the  public  health  emergency relative  to  the                                                                    
revenues collected in  the most recent fiscal  year prior to                                                                    
the  emergency. The  funds  could also  be  used for  making                                                                    
necessary   investments  in   water,  sewer,   or  broadband                                                                    
infrastructure.                                                                                                                 
                                                                                                                                
Vice-Chair Ortiz  asked if there  was a  national definition                                                                    
of  "Essential Workers."  He  asked  for clarification.  Ms.                                                                    
Needler indicated  there were some  guidance related  to his                                                                    
question. She would  have to get back to  the committee. She                                                                    
asked Kristina  to find the information  while she continued                                                                    
with the presentation.                                                                                                          
                                                                                                                                
Representative LeBon  thought slide 6 defined  the usage for                                                                    
state and local  governments. He wondered if  there were any                                                                    
sidebars for  the use of  funds for tribes. Ms.  Needler had                                                                    
not looked at  the information yet but could get  it for the                                                                    
committee.                                                                                                                      
                                                                                                                                
1:47:12 PM                                                                                                                    
                                                                                                                                
Ms. Needler  advanced to slide 7  regarding the restrictions                                                                    
associated  with  state  and local  fiscal  recovery  funds.                                                                    
There were restrictions on how  the funds could be utilized.                                                                    
She  highlighted states  were not  allowed to  use funds  to                                                                    
either directly or indirectly offset  a reduction in the net                                                                    
tax revenue that resulted from  a change in law, regulation,                                                                    
or administrative  interpretation during the  covered period                                                                    
that reduced  any tax.  No funds were  to be  deposited into                                                                    
any pension fund. There was  also a limitation placed on the                                                                    
premium pay for eligible workers.  It was limited to $25,000                                                                    
for any single eligible worker receiving premium pay.                                                                           
                                                                                                                                
Co-Chair Foster  pointed out that  sidebars for  spending by                                                                    
the  tribes would  be  addressed in  a  presentation by  the                                                                    
Alaska  Federation  of  Natives  on tribal  ARP  funding  on                                                                    
Wednesday, April 14, 2021, at  1:30 pm for the House Finance                                                                    
Committee.                                                                                                                      
                                                                                                                                
Representative   Edgmon  asked   if   the  information   the                                                                    
presenter  was   providing  was  what  she   knew  from  the                                                                    
legislation  itself. He  wondered  if he  was accurate.  Ms.                                                                    
Needler responded, "That's correct."                                                                                            
                                                                                                                                
Representative  Edgmon had  been told  to expect  guidelines                                                                    
from the U.S. Treasury Department  on or about May 10, 2021.                                                                    
He thought what  was being presented in  the current meeting                                                                    
was from a  high-level view that he  thought engendered more                                                                    
questions  than   answers.  He  asked  what   Ms.  Needler's                                                                    
confidence   level  was   that  the   state  would   receive                                                                    
guidelines  on May  10th that  might be  able to  adequately                                                                    
answer  many of  the questions  the state  had. Ms.  Needler                                                                    
replied that  CSG had been  in touch with the  U.S. Treasury                                                                    
as  well as  other  member associations  that had  submitted                                                                    
several questions  to the treasury to  get further guidance.                                                                    
She  was  hopeful  that  many of  the  questions  would  get                                                                    
answered once the guidance was released on May 10th.                                                                            
                                                                                                                                
1:50:18 PM                                                                                                                    
                                                                                                                                
Ms.  Needler  indicated that  the  slide  touched on  a  few                                                                    
points regarding  the administration  of the  federal funds.                                                                    
The funds would  be distributed with a  spending deadline of                                                                    
December  31, 2024.  The treasury  was required  to pay  the                                                                    
first installment by  May 10, 2021. The  second would follow                                                                    
at least 12  months after the first  disbursement. She noted                                                                    
that  the  ARP  had  allocated about  $77  million  for  the                                                                    
Government  Accountability Office  and $40  million for  the                                                                    
Pandemic  Response and  Accountability Committee  to promote                                                                    
transparency, accountability, and oversight of the plan.                                                                        
                                                                                                                                
Representative  LeBon had  a question  about  the 2  payment                                                                    
installments. He wondered if the  installments were of equal                                                                    
value. Ms. Needler would have  to get back to the committee.                                                                    
Representative LeBon  commented that  it would  be important                                                                    
information to be aware of.  Co-Chair Foster shared that his                                                                    
understanding  was that  the funds  could be  released in  2                                                                    
tranches depending on what a state's unemployment rate.                                                                         
                                                                                                                                
Vice-Chair Ortiz asked  whether the third bullet  on slide 8                                                                    
was  a  definitive  statement regarding  two  payments.  Ms.                                                                    
Needler  confirmed  that the  bill  stated  that the  monies                                                                    
would arrive in two payments.                                                                                                   
                                                                                                                                
Representative  Edgmon asked  what  was  known about  states                                                                    
having to apply for the funds.  Ms. Needler did not know any                                                                    
other details than she was currently presenting.                                                                                
                                                                                                                                
Ms.  Needler  returned to  the  definition  of an  essential                                                                    
worker.  In  the  bill  essential  workers  were  defined  a                                                                    
workers  needed  to  maintain continuity  of  operations  of                                                                    
essential  critical  infrastructure sectors  and  additional                                                                    
sectors as  each chief executive  officer of  a metropolitan                                                                    
city,  non-entitlement unit  of local  government or  county                                                                    
may  designate  as  critical  to   protect  the  health  and                                                                    
wellbeing of  the residents of their  metropolitan city non-                                                                    
entitlement  unit   of  local  government  or   county.  She                                                                    
commented  that  the  definition   of  an  essential  worker                                                                    
remained  unclear. She  thought  perhaps  the U.S.  Treasury                                                                    
would provide further guidance.                                                                                                 
                                                                                                                                
Ms.  Needler  advanced  to  slide  9:  "State  Authority  to                                                                    
Utilize Funds."  much of  the information  on the  slide had                                                                    
been  presented  in   the  prior  week.  In   terms  of  the                                                                    
utilization of the  fund, it remained unclear  how the funds                                                                    
could be used. However, there  was some guidance in the bill                                                                    
on   how  the   funding  could   be  distributed   to  local                                                                    
governments. Some of that information  was on the slide. She                                                                    
noted that if state payments  were not paid within 120 days,                                                                    
any  unpaid amounts  would  become state  debt  owed to  the                                                                    
government and  would come  out of  the state  recovery fund                                                                    
distribution.                                                                                                                   
                                                                                                                                
1:55:06 PM                                                                                                                    
                                                                                                                                
Ms.   Needler    discussed   reporting    requirements   and                                                                    
certification and recoupment  on slide 10. There  were a few                                                                    
reporting requirements  related to the AFP  Act. States were                                                                    
required to report  how funds were used and  how tax revenue                                                                    
was modified  during the time  that funds were  spent during                                                                    
the  covered period.  The  period began  March  3, 2021  and                                                                    
ended on the  last day of the fiscal year.  A state or local                                                                    
government had  either spent  or returned  all funds  to the                                                                    
U.S. Treasury. If  a state, county, or  municipality did not                                                                    
comply with any provisions of  the ARP, it would be required                                                                    
to repay  the U.S. Treasury and  equal to the funds  used in                                                                    
violation. She concluded the section  of the presentation of                                                                    
the state and  local recovery fund. She  would transition to                                                                    
the  subject of  education.  She asked  if  members had  any                                                                    
questions.                                                                                                                      
                                                                                                                                
Representative  Wool stated  that  there  was a  significant                                                                    
amount of  discussion about tax revenues  being modified. He                                                                    
thought there was a presumption  that if governments were to                                                                    
lower  their  taxes  resulting in  less  revenues,  revenues                                                                    
could be made  up with federal dollars.  However, Alaska did                                                                    
not   have  a   statewide  tax,   and  would   have  trouble                                                                    
implementing the  idea. He suggested raising  the motor fuel                                                                    
tax. He  thought the  idea was counter  to what  the federal                                                                    
government intended.  He asked  her to comment.  Ms. Needler                                                                    
replied  that she  could not  provide a  firm answer.  There                                                                    
were  several  questions   regarding  the  federal  funding,                                                                    
particularly  around  tax  rates.   She  indicated  CGS  had                                                                    
submitted questions  to the U.S.  Treasury and  was awaiting                                                                    
clarification through  the guidance that was  expected to be                                                                    
released soon.                                                                                                                  
                                                                                                                                
Representative Wool  asked if  she agreed  that much  of the                                                                    
language was being  used to prevent taxes  being lowered and                                                                    
subsequently back-filled  with federal funding. He  asked if                                                                    
his  statement was  fair. Ms.  Needler responded,  "Yes." in                                                                    
the affirmative.                                                                                                                
                                                                                                                                
Ms. Needler would talk about  education funding beginning on                                                                    
slide  11: "The  Elementary and  Secondary School  Emergency                                                                    
Relief (ESSER)  Fund." She explained that  the state, local,                                                                    
and fiscal recovery funding along  with the capital projects                                                                    
funding  was the  largest  source of  funding  going to  the                                                                    
government  for state  appropriation. She  also noted  there                                                                    
was  additional   funding  that   was  allocated   to  state                                                                    
agencies.  The  largest portion  of  that  funding would  be                                                                    
going to  the Department of Education  and Early development                                                                    
(DEED). She would provide an overview of that funding.                                                                          
                                                                                                                                
Ms. Needler relayed  that there was a total  of $358 million                                                                    
that would be  going to DEED in FY 21.  The largest chunk of                                                                    
the  funding,  90  percent  or   $322.8  million,  would  be                                                                    
allocated   for  Alaska   local   education  agencies.   The                                                                    
remaining  $35  million  would be  allocated  to  DEED.  The                                                                    
amount would  need to be  split out for  specific activities                                                                    
assigned in  the ARP.  The distribution  was shown  on slide                                                                    
11.  She  reported  that  approximately  5  percent  or  $18                                                                    
million  would  need to  be  allocated  to address  learning                                                                    
costs  as a  result  of  the pandemic.  About  1 percent  or                                                                    
$3.6 million   would  be   directed  to   summer  enrichment                                                                    
activities.  another  1 percent  or  $3.6  million would  be                                                                    
dedicated toe after school programs.  She continued that 2.5                                                                    
percent or  $9 million  would be  used for  other activities                                                                    
not  defined  in  the  bill. An  additional  .5  percent  or                                                                    
$1.8 million   would   be    dedicated   to   administration                                                                    
activities.                                                                                                                     
                                                                                                                                
2:00:21 PM                                                                                                                    
                                                                                                                                
Representative Wool asked about the  90 percent going out to                                                                    
the  local  education  agencies.   He  had  heard  that  the                                                                    
distribution  was  based  on   the  population  of  Title  1                                                                    
students in  a district.  He asked if  she could  verify the                                                                    
information.  Ms. Needler  would  have to  get  back to  the                                                                    
committee.                                                                                                                      
                                                                                                                                
Ms. Needler  reviewed the  requirements associated  with the                                                                    
ESSER Fund  on slide  12. One of  the requirements  was that                                                                    
states maintain  support for elementary  education in  FY 22                                                                    
and FY 23 at least to  the proportional level of support for                                                                    
elementary  and  secondary  education  relative  to  overall                                                                    
spending. She  clarified that  it was  based on  the average                                                                    
for  FY  17,  FY  18,  and  FY  19.  The  requirements  also                                                                    
specified  that any  funds a  state did  not award  within 1                                                                    
year of receipt  would have to be returned  to the secretary                                                                    
for  reallocation.  She  turned  the  presentation  over  to                                                                    
Kristina.                                                                                                                       
                                                                                                                                
Representative LeBon referred to  slide 12. He mentioned the                                                                    
education   component   citing  elementary   and   secondary                                                                    
education and average spending from  FY 17 through FY 19. He                                                                    
wondered   how   higher    education   would   be   treated,                                                                    
specifically   the  University   of   Alaska.  Ms.   Needler                                                                    
responded  that the  ESSER funding  was  only dedicated  for                                                                    
elementary  and  secondary  education.  There  was  separate                                                                    
funding for higher  education in the bill.  However, she had                                                                    
not included it in the presentation.                                                                                            
                                                                                                                                
Representative  Edgmon suggested  that the  fiscal years  on                                                                    
slide 12 applied to individual  states' fiscal years and not                                                                    
the federal fiscal year. [Ms. Needler nodded.]                                                                                  
                                                                                                                                
Ms. Gordley continued  to slide 13: "Approaches  to ARP Fund                                                                    
Utilization." She  would talk about different  approaches to                                                                    
ARP fund utilization,  some trends CGS had  seen that states                                                                    
were looking at, and approaches seen in the past.                                                                               
                                                                                                                                
Ms. Gordley  relayed that the first  approach was investment                                                                    
in infrastructure. It was not  as exciting as pilot projects                                                                    
or  handing  out  money directly  to  people.  However,  the                                                                    
basics of water,  sewer, power, and data  systems were vital                                                                    
to government.  Due to  budgetary constraints,  states often                                                                    
deferred  maintenance.  The  federal  stimulus  money  would                                                                    
provide the opportunity to remove  those band aids of piece-                                                                    
meal repairs  through the years  a fully look at  the design                                                                    
for a  wholistic approach. Released  today, the  White House                                                                    
provided  individual  report  cards  for  states  and  their                                                                    
infrastructure as  part of the  background for  the proposed                                                                    
American Jobs Plan.  She indicated a report for  the need of                                                                    
road    and    bridges,   public    transportation,    water                                                                    
infrastructure,   and  broadband   among   other  items   of                                                                    
infrastructure.                                                                                                                 
                                                                                                                                
Ms.  Gordley  continued  that  another  item  that  CSG  saw                                                                    
trending with  states was workforce  development. It  was an                                                                    
opportunity  for  states  to examine  the  future  of  their                                                                    
workforce,  the new  demands for  job seekers,  and how  the                                                                    
states  could   elevate  and  upscale   their  constituents.                                                                    
Currently, there was a great  push for apprenticeships and a                                                                    
focus on green jobs by  the U.S. Department of Labor. Alaska                                                                    
could align  itself for those  funds and  opportunities. She                                                                    
added  that  as  many  state agencies  and  businesses  were                                                                    
forced into  remote work, states could  take the opportunity                                                                    
to  examine what  worked in  telework  and what  did not  to                                                                    
enhance the  appeal of  public sector  jobs and  to increase                                                                    
efficiency in job satisfaction.                                                                                                 
                                                                                                                                
Ms. Gordley  moved to the  topic of  unemployment insurance.                                                                    
She   reported  that   as  states   experienced  record-high                                                                    
unemployment,  there was  a  nationwide  effect of  deferred                                                                    
maintenance  on  data  systems  and  years  of  budget  cuts                                                                    
towards  the  agencies  that administered  the  unemployment                                                                    
programs.  It  was  an opportunity  to  make  the  necessary                                                                    
investments  and build  up the  programs.  States were  also                                                                    
faced with  loans that  were taken  to pay  for unemployment                                                                    
benefits. An area of consideration  that several states were                                                                    
looking at was how best to  utilize its funds. She posed the                                                                    
question   whether  states   should  pay   back  the   loans                                                                    
immediately or space out the repayment.                                                                                         
                                                                                                                                
Ms. Gordley  review some state  examples. Every  state, thus                                                                    
far,   was  approaching   the  use   of   the  ARP   funding                                                                    
differently.  Recently,  Kentucky  had a  short  legislative                                                                    
session because their usual budget  session would be held in                                                                    
the  following year.  However,  they had  to  pass a  1-year                                                                    
budget  which  did not  include  any  appropriation for  the                                                                    
stimulus   funds.  Instead,   they  used   other  bills   to                                                                    
appropriate the  funds through a free  conference committee.                                                                    
They were  able to  take a  bipartisan approach  to allocate                                                                    
the ARP funding  on priority items such as  the repayment of                                                                    
the  unemployment   insurance  loan,  high   speed  internet                                                                    
infrastructure, K-12 school  construction, vocational school                                                                    
renovations,  rural hospitals,  and  upgrades  to water  and                                                                    
sewer.                                                                                                                          
                                                                                                                                
Ms.  Gordley presented  another  state example.  Utah was  a                                                                    
good  place with  steady revenue  and low  unemployment. The                                                                    
legislature  passed the  annual budget  but did  not include                                                                    
any ARP funding, as there  were too many unknowns. A special                                                                    
session would  have to  be held after  the May  10th federal                                                                    
guidelines were  released. New York  was another  state that                                                                    
recently passed  their budget. Instead  of handling  the ARP                                                                    
separately,  they   wove  the  funds  directly   into  their                                                                    
biannual budget. They were  implementing some pilot programs                                                                    
that  were targeted  towards the  Covid-19 response  such as                                                                    
returning  to  work,  the  tourism  industry,  and  one-time                                                                    
programing.                                                                                                                     
                                                                                                                                
2:07:48 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Ortiz asked  about investing  in infrastructure.                                                                    
He had  asked a  previous presenter  about spending  the ARP                                                                    
funding  on deferred  maintenance.  Although that  presenter                                                                    
did not  know specifically about deferred  maintenance, they                                                                    
indicated spending had  to be tied to COVID.  He wondered if                                                                    
her understanding was  that the ARP funding did  not need to                                                                    
be tied  to Covid impacts.  Ms. Gordley responded  that that                                                                    
was her understanding.  She would double check  and get back                                                                    
to the committee.                                                                                                               
                                                                                                                                
Representative Edgmon thought slide  13 was a departure from                                                                    
the earlier slides  in that there seemed to be  a direct tie                                                                    
to  public  health  emergencies  and  requirements  for  use                                                                    
similar to the CARES  Act funding stipulations. However, the                                                                    
current  slide listed  different categories  and alternative                                                                    
ways to use the funding. He  asked if he was accurate in his                                                                    
assessment that the first 12  slides of the presentation and                                                                    
the emphasis  on public health  emergencies dealt  more with                                                                    
the  state  fiscal  recovery  plan   and  the  local  fiscal                                                                    
recovery  plans.  Whereas  the   remaining  portion  of  the                                                                    
presentation dealt with the capital  projects fund which was                                                                    
$112 million. He asked for clarification.                                                                                       
                                                                                                                                
Ms.  Gordley replied  that Ms.  Needler  had been  reporting                                                                    
more on  the actual findings  for the bill. Ms.  Gordley had                                                                    
was taking  a stance on what  states had been doing.  In the                                                                    
following  slide she  would be  discussing  things that  had                                                                    
been  done in  the  past,  things to  avoid,  and things  to                                                                    
consider.                                                                                                                       
                                                                                                                                
Representative Edgmon  asked if  the presenters  had reached                                                                    
the  portion of  the presentation  dealing with  the capital                                                                    
budget.  Ms. Gordley  indicated that  she had  not separated                                                                    
the  money. Representative  Edgmon asked  about the  capital                                                                    
project monies  and whether the  funding had to  somehow tie                                                                    
into  public health  emergencies.  Ms.  Gordley invited  Ms.                                                                    
Needler to comment.                                                                                                             
                                                                                                                                
Ms.  Needler was  hoping to  get  clarification through  the                                                                    
U.S.  Treasury's guidance  of  how and  to  what extent  the                                                                    
funds needed to be linked to the pandemic.                                                                                      
                                                                                                                                
Representative Edgmon  was raising  the issue  because until                                                                    
the  state received  U.S. Treasury  guidelines, it  was very                                                                    
difficult  for  any state  to  appropriate  the ARP  funding                                                                    
because of  a lack of specifics.  He wanted the state  to be                                                                    
able to use the  money in a way such that  it would not have                                                                    
to pay it back. He asked if he was correct.                                                                                     
                                                                                                                                
Ms. Gordley  replied that that there  were several unknowns.                                                                    
She was  reluctant to respond  because after the  passage of                                                                    
the CARES Act,  states had asked for flexibility  in the use                                                                    
of those funds.  The CARES Act had  several restrictions and                                                                    
many  detailed  line  items.   The  U.S.  Treasury  provided                                                                    
significant  flexibility  without  many rules.  States  were                                                                    
currently  in a  waiting period  [regarding ARP  guidelines]                                                                    
which was nearly as frustrating.                                                                                                
                                                                                                                                
2:14:29 PM                                                                                                                    
                                                                                                                                
Representative  Edgmon heard  that  some state  legislatures                                                                    
were already putting their budgets  together prior to having                                                                    
the money  or the guidelines  around ARP funding.  He opined                                                                    
that  it  was  putting  the  cart ahead  of  the  horse.  He                                                                    
wondered why the State of Alaska  was not doing the same. He                                                                    
asked if other states were doing so.                                                                                            
                                                                                                                                
Ms. Gordley replied that the  three states she had mentioned                                                                    
passed their  budgets because of a  constitutional deadline.                                                                    
A  couple of  legislatures  were on  opposite  years of  the                                                                    
normal  budget  cycle.  They budgeted  in  even  years.  She                                                                    
suggested  several states  were using  the information  they                                                                    
knew  to budget.  However, there  were several  proposals in                                                                    
process at the legislative level  using the ARP funding. She                                                                    
also reported several other states  that were hesitating and                                                                    
waiting for further guidance.                                                                                                   
                                                                                                                                
Representative  Wool asked  how  and why  other states  were                                                                    
able   to  produce   their  budgets   without  the   federal                                                                    
guidelines.  He wondered  why some  states were  producing a                                                                    
budget and  some were not.  Ms. Gordley opined that  much of                                                                    
it depended on where the  state was going into the pandemic.                                                                    
If looking  at the  stability of the  budget prior,  a state                                                                    
might have to  utilize the funds earlier  than other states.                                                                    
Alaska had the Permanent Fund  as a rainy-day fund, and Utah                                                                    
had  a   huge  budget   reserve  fund  similar   to  Alaska.                                                                    
Therefore,  there was  not as  much  of an  urgency as  with                                                                    
other  states.   Every  state  was  approaching   the  issue                                                                    
differently.                                                                                                                    
                                                                                                                                
2:18:36 PM                                                                                                                    
                                                                                                                                
Ms.  Gordley  moved  to  slide 14  to  discuss  the  lessons                                                                    
learned   from  previous   federal  stimulus   funding.  She                                                                    
suggested  that when  planning states  should remember  that                                                                    
the stimulus money was a  one-time infusion of funds. In the                                                                    
budgeting  world  there  was  always  a  concern  of  making                                                                    
recuring  expenditures  funded with  non-recurring  revenue.                                                                    
Unfortunately,  some states  experienced this  in the  Great                                                                    
Recession  and  the  stimulus   funding  from  the  American                                                                    
Recovery   and  Reinvestment   Act   of   2009.  As   states                                                                    
implemented programs to revitalize  local economies and meet                                                                    
the  needs   of  the  states,  they   brought  on  full-time                                                                    
employees and  added ongoing costs.  Suddenly, in  two years                                                                    
they experienced  "the cliff,"  states were  responsible for                                                                    
continuing those  programs without adequate  funding. States                                                                    
had to decide whether to continue the programs.                                                                                 
                                                                                                                                
Ms.  Gordley  noted  there  was  preparation  for  reporting                                                                    
requirements. She  was certain  the state budget  office and                                                                    
the legislative  finance committees were prepared  after the                                                                    
CARES Act.  The state would  continue to monitor  and report                                                                    
how it was handling the funding  either with a task force or                                                                    
committees. Using  the lessons from 2009,  simple accounting                                                                    
functions set  up in advance and  careful thought beforehand                                                                    
would  be  helpful. She  also  recommended  making sure  any                                                                    
needed information could be pulled  easily. She was aware of                                                                    
different   reporting  requirements   which  would   require                                                                    
additional  thought   about  how   the  state  set   up  the                                                                    
applicable programs and accounting.                                                                                             
                                                                                                                                
Ms. Gordley moved  to the next bullet on slide  14 having to                                                                    
do  with  backfilling  budgets  versus  investments  in  the                                                                    
future. She suggested  that if cuts had  been implemented or                                                                    
if  there were  savings through  attrition, it  was easy  to                                                                    
continue those efficiencies. That  savings could be used for                                                                    
new  programs  or  areas.  However,  there  was  a  delicate                                                                    
balance in  choosing what  to backfill.  It took  until 2019                                                                    
for  states  to return  to  pre-2008  employment levels  and                                                                    
service  levels because  of the  cuts made  in 2008.  It was                                                                    
easy  to  roll  with  efficiencies  already  in  place,  but                                                                    
something  for states  to continue  considering. Similar  to                                                                    
the  public sector  supports, she  suggested thinking  about                                                                    
ways  state  governments   could  provide  those  supporting                                                                    
functions to ensure they were available.                                                                                        
                                                                                                                                
Ms. Gordley turned to slide  15: "Additional CSG Resources."                                                                    
She  rereported   that  CSG  had  conducted   the  following                                                                    
analysis  which she  provided to  members:  ARP funding  for                                                                    
employers  and  K-12  education,  and  an  overview  of  the                                                                    
American Jobs  Plan Proposal. In-progress  analysis included                                                                    
analysis   based  on   themes   like  industries,   workers,                                                                    
infrastructure,   housing,   nutritional   assistance,   and                                                                    
information technology. She  indicated that currently, based                                                                    
on policy  shops and grant  funded areas of  research within                                                                    
CSG, they would explore the  implications of ARP funding and                                                                    
opportunities to  address items like  disability employment,                                                                    
apprenticeships,  civics, occupational  licensure, food  and                                                                    
nutrition,  vaccine dissemination,  and mental  health. Soon                                                                    
there   would  be   weekly  updates   on  state   ARP  funds                                                                    
utilization  and  oversight.  As CSG  received  information,                                                                    
they would be sending out  summaries of federal guidance and                                                                    
any new federal funding bills.                                                                                                  
                                                                                                                                
Ms. Gordley  turned to the contact  slide at the end  of the                                                                    
presentation.  She  indicated  that  additional  information                                                                    
could be found on CSG's website.                                                                                                
                                                                                                                                
Co-Chair  Foster  reported  that the  presentation  was  the                                                                    
third regarding the ARP funding  attempting to shed light on                                                                    
the anticipated guidelines to be released in May 2021.                                                                          
                                                                                                                                
2:24:36 PM                                                                                                                    
                                                                                                                                
Vice-Chair Ortiz  asked about learning loss.  He wondered if                                                                    
there  would   be  certain   assumptions  made   or  whether                                                                    
documented learning loss would  be required to expend funds.                                                                    
Ms. Gordley responded that it  was not specified in the bill                                                                    
at present.                                                                                                                     
                                                                                                                                
Representative Wool  asked about maintenance of  effort. Ms.                                                                    
Gordley had touched  on the issue as it related  to K-12. He                                                                    
had  heard  it   was  the  aggregate  of   K-12  and  higher                                                                    
education, and the maintenance of effort  had to be met in a                                                                    
combined  way in  order  to receive  funding.  He asked  Ms.                                                                    
Needler to verify the claim.                                                                                                    
                                                                                                                                
Ms. Needler replied that she  was uncertain, as CSG had only                                                                    
been looking at  K-12. She indicated that from  what she had                                                                    
seen  for  the  K-12  funding,  the  maintenance  of  effort                                                                    
applied directly  to the funds for  elementary and secondary                                                                    
education. She  thought the maintenance  of effort  would be                                                                    
applied   separately.   However,   she  was   not   certain.                                                                    
Representative Wool  commented that it made  more sense that                                                                    
K-12 and higher education would be looked at separately.                                                                        
                                                                                                                                
Co-Chair  Foster  thanked  the presenters  and  relayed  the                                                                    
agenda  for  the following  meeting  on  Tuesday, April  13,                                                                    
2021, at 9:00 a.m.                                                                                                              
                                                                                                                                
HB  69  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HB  71  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
CSG Analysis of the American Rescue Plan - Employers041221.pdf HFIN 4/12/2021 1:30:00 PM
HFIN CSG ARP Presentation
CSG Analysis of the American Jobs Plan041221.pdf HFIN 4/12/2021 1:30:00 PM
HFIN CSG ARP Presentation
CSG Analysis of the American Rescue Plan - K-12 Education041221.pdf HFIN 4/12/2021 1:30:00 PM
HFIN CSG ARP Presentation
CSG Analysis of the American Rescue Plan - State and Local Recovery Fund041221.pdf HFIN 4/12/2021 1:30:00 PM
HFIN CSG ARP Presentation
CSG_ARP_Alaska House Finance Comm 041221.pdf HFIN 4/12/2021 1:30:00 PM
HFIN CSG ARP Presentation
CSG ARP HFIN Response to Q 041521.pdf HFIN 4/12/2021 1:30:00 PM