Legislature(2023 - 2024)ADAMS 519
04/27/2023 01:30 PM House FINANCE
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Audio | Topic |
---|---|
Start | |
HB26 | |
SB87 | |
SB25 | |
HB125 | |
HB178 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+= | HB 26 | TELECONFERENCED | |
+= | HB 93 | TELECONFERENCED | |
+ | SB 87 | TELECONFERENCED | |
+ | HB 125 | TELECONFERENCED | |
+ | SB 25 | TELECONFERENCED | |
*+ | HB 178 | TELECONFERENCED | |
+ | TELECONFERENCED |
SENATE BILL NO. 25 "An Act relating to inactive state accounts and funds; relating to the curriculum improvement and best practices fund; relating to the fuel emergency fund and fuel emergency grants; relating to the special Alaska Historical Commission receipts account; relating to the rural electrification revolving loan fund and loans from the fund; relating to the Southeast energy fund and grants from the fund; and relating to the Exxon Valdez oil spill unincorporated rural community grant fund and grants from the fund." 2:01:35 PM Co-Chair Foster noted that the next bill would be SB 25. 2:01:50 PM AT-EASE 2:03:33 PM RECONVENED 2:03:58 PM SENATOR JAMES KAUFMAN, SPONSOR, introduced SB 25. The bill had been nicknamed "silly funds" because the goal was to eradicate funds that were meaningless. He read from the sponsor statement (copy on file): SB 25, in its current form, is intended to improve performance by reducing administrative cost and complexity associated with maintenance and tracking of accounts that are no longer needed but are still open. The state of Alaska at various times creates special accounts to receive and hold money for certain purposes, but over time some of those funds become dormant and are no longer needed. This can include filled funds that are not supporting active programs, empty funds that are not supporting active programs and funds held in trust. Reducing the administrative burden of maintaining unneeded funds is a prime example of the type of incremental continuous improvement that is needed as Alaska faces new fiscal challenges. Senator Kaufman explained that his office reviewed existing funds, determined which funds were no longer needed, and created a mechanism to review funds every two years to determine if there were any additional funds that could be removed. 2:06:17 PM MATTHEW HARVEY, STAFF, SENATOR JAMES KAUFMAN, read the sectional analysis of SB 25 (copy on file): Section 1: Amends AS 24.20.020 to add a requirement for the Legislative Finance Division to conduct a review of inactive state accounts and funds at the beginning of each new legislature and to submit an electronic report including recommendations regarding which inactive state accounts and funds should be repealed. The report distribution list is included in this section. Section 2: Adds a new subsection to AS 37.07.020 stating that the governor may act upon the Legislative Finance Division report in Section 1 of SB 25 by submitting legislation in accordance with the report. Section 3: Repeals the statutory authority for the following funds not supporting current or active programs. • AS 14.07.182 Curriculum Improvement and Best Practices Fund • AS 26.23.400 Fuel Emergency Fund • AS 41.35.380 Alaska Historical Commission Receipts Account • AS 42.45.020 Rural Electrification Revolving Loan Fund • AS 44.33.115 Exxon Valdez Oil Spill Unincorporated Rural Community Grant Fund Co-Chair Foster asked Senator Kaufman whether the Rural Electrification Revolving Loan Fund (RERLF) related to efforts to construct high powered electric lines in rural areas of the state. Senator Kaufman responded that the loan program was largely supplanted by the Electrical Service Extension fund. Many of the accounts had names that sounded compelling, but the funds had been supplanted by other funds. Representative Josephson noted that the Southeast Energy Fund (SEF) was slated to be removed, but it was also listed under repeals. He asked Mr. Harvey for clarity on the situation. Mr. Harvey responded that the Committee Substitute that was passed by Senate Finance [CSSB(FIN)] removed the energy fund and the inclusion of the fund on the list of repeals seemed to be an error. Representative Josephson noted that SEF still appeared to be in the bill. Mr. Harvey responded that AS 42.45.020 was in the bill. Representative Josephson indicated that he had misread it. 2:10:20 PM Co-Chair Edgmon asked Senator Kaufman if there would be any implications relative to the Infrastructure Investment and Jobs Act (IIJA) if SEF was removed. He was leery of removing fund that were inactive that might have a future purpose. He was in support of the bill. Senator Kaufman responded that in the process of crafting the bill, he found many funds that had reasons to exist. He was not married to the idea of any specific fund being deleted. The idea behind the bill was more focused on implementing a clean-up mechanism that would require that the funds be reviewed every two years. He would research whether there would be any impact on IIJA and would follow up with the committee with the information. Co-Chair Foster requested that an entity such as the Alaska Energy Authority (AEA) provide information to the committee about the potential impact of the removal of the energy fund. Co-Chair Edgmon commented that it was easy to remove the funds but difficult to reinstate the funds. He was supportive of the bill but would like to be cautious about the potential consequences. Representative Hannan wondered if the any entities under which a fund had been created had indicated that a fund was not needed. She asked Mr. Harvey how much money was in the funds and whether the money was supposed to be compiled for ten years. She agreed that if there were funds that were not being used that the funds should be removed, but she wanted to ensure that entities that were responsible for a fund agreed that it was no longer needed. Mr. Harvey responded that as a result of the sweep in prior years, many of the funds with statutory authority now had zero balances. The Fuel Emergency Fund had a balance of about $22,000, but the Disaster Relief Fund was now being used for the same intents and purposes for which the emergency fund was initially created. 2:14:51 PM Representative Galvin appreciated the intent of the bill. She did some research on the bill and commented that there was a section in AS 43.05.095 covering indirect expenditure reports. It seemed as though the commissioner was required to provide an annual report to the chair of the House Finance Committee (HFC) detailing the expenditures. She thought the process already seemed to be in place and she was curious what would change with the bill. Senator Kaufman replied that the bill would require the Legislative Finance Division (LFD) to review the expenditures and deliver the report. He argued that it would expediate the process. Representative Galvin relayed that she was not certain what to do with the information. She wondered if the purpose of the bill was to further emphasize the intent that was already in statute but was not being followed. Senator Kaufman responded that the bill might further emphasize the intent in an indirect way. Representative Coulombe thought there was concern around deleting accounts. She stated her understanding that LFD would review the accounts every two years and recommend which ones should be deleted. Subsequently, the governor would need to introduce legislation to have the accounts deleted. She asked if her understanding was correct. Senator Kaufman responded in the affirmative. Representative Coulombe asked if funds would be allocated to the unrestricted general fund (UGF) if accounts that still contained funds were closed. She wondered who would decide where the money would go. Senator Kaufman replied that the funds would go to UGF. Co-Chair Johnson referred to page 2, line 20 of the bill. She commented that sometimes HFC did not have a chair or had multiple chairs. She asked if there needed to be an amendment in order to accommodate all possible scenarios. Senator Kaufman responded that he would be amendable to the introduction of an amendment. Co-Chair Johnson replied that she had wondered about the verbiage of "chair" as compared to "chairs." Representative Stapp relayed that he was going to make the same comment as Co-Chair Johnson. He appreciated the bill and the efforts to clean up the processes to ensure that unnecessary funds were deleted. 2:20:39 PM Representative Hannan referred to AS 43.05.095 mentioned by Representative Galvin, which directed the Department of Revenue (DOR) to manage accounts. She understood that the bill would request LFD to review the accounts and create a report. She asked if DOR had not been completing the statutory duties and whether LFD would be the best entity to conduct the duties in the department's stead. She was amenable to restructuring the process but it appeared that the accounts were intended to be under the purview of DOR. She wondered if substituting DOR for LFD would fix the problem. Senator Kaufman responded that the zero fiscal note stated that LFD could easily absorb the duties into its current workload and it would not be a financial burden. Mr. Harvey responded that he did not have the definition of indirect expenditures in front of him, but it was his understanding that the accounts that were proposed to be deleted were outside of the definition and it was not statutorily required to have it included in the report. He understood that it would be a slightly different report. He would follow up with the committee with a more in depth response in writing. Co-Chair Foster asked Mr. Alexei Painter to comment. 2:23:22 PM ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION, explained that LFD conducted one half of the indirect expenditure report and DOR conducted the other half. The report for which LFD was already responsible focused on forgone revenue and not on funds. He relayed that there would be two separate reports and it would be a new statutory responsibility for LFD. He clarified that DOR conducted its portion of the indirect expenditure report as required by statute and LFD crafted a different portion of the report. Representative Galvin commented that she appreciated the clarification. She wondered if the process would be similar for both reports. Mr. Painter responded in the affirmative. He explained that DOR was responsible for a portion of the indirect expenditure report on an annual basis and LFD was responsible for another portion that ran on a six-year cycle. The proposal would involve an additional publication every two years on the funds. The division repeated some information provided by DOR but also added information that was not included in DOR's portion of the report. Representative Galvin asked for clarification that LFD collected the report by DOR and combined it with LFD's report before presenting it to the committee. Mr. Painter responded in the affirmative. 2:26:28 PM Representative Coulombe asked Senator Kaufman if all accounts would be reviewed or only the accounts under DOR. Senator Kaufman deferred the question to Mr. Painter. Mr. Painter responded that the bill did not say specifically that it would only review funds under DOR and there might be funds outside of the department that would be required to be included in the report. He clarified that the report would go beyond the funds administered by DOR. Representative Coulombe asked if the permanent fund would be reviewed. Mr. Painter responded that the permanent fund would certainly not be considered an inactive fund, but the fund was within DOR. Co-Chair Foster reminded the committee that the presentation was intended to be an introduction to the bill. He thought some of the nuances would be discussed in subsequent hearings. He thanked the presenters. Senator Kaufman relayed that he appreciated the committee's time. SB 25 was HEARD and HELD in committee for further consideration.