Legislature(2019 - 2020)ADAMS ROOM 519

03/28/2019 09:00 AM House FINANCE

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Audio Topic
09:02:58 AM Start
09:03:37 AM Consideration of Governor's Appointees: John Sturgeon, Alaska Mental Health Trust Authority, Board of Trustees
09:08:53 AM HB77
09:10:18 AM HB48
09:22:52 AM SB38
09:55:09 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Consideration of Governor's Appointees: Alaska TELECONFERENCED
Mental Health Trust Authority
Moved CSHB 48(FIN) Out of Committee
Moved HB 77 Out of Committee
Scheduled but Not Heard
<Pending Referral>
+ Bills Previously Heard/Scheduled TELECONFERENCED
Scheduled but Not Heard
-- Public Testimony --
Moved CSSB 38(FIN) Out of Committee
-- Public Testimony --
<Companion Bill to HB 53>
CS FOR SENATE BILL NO. 38(FIN)                                                                                                
     "An   Act   making  supplemental   appropriations   for                                                                    
     unemployment  assistance, fire  suppression activities,                                                                    
     and   restoration   projects  related   to   earthquake                                                                    
     disaster relief; capitalizing  funds; and providing for                                                                    
     an effective date."                                                                                                        
9:22:52 AM                                                                                                                    
PAUL  LABOLLE, STAFF,  REPRESENTATIVE NEAL  FOSTER, reported                                                                    
that  the bill  was disaster  supplemental legislation  that                                                                    
dealt with  fire suppression and  the Cook  Inlet Earthquake                                                                    
[that occurred  in Anchorage in December  2018]. He provided                                                                    
a  sectional analysis  of the  bill. Section  1 included  $1                                                                    
million in  federal funds for unemployment  assistance - for                                                                    
people who found themselves unemployed  or who lost business                                                                    
due to the  earthquake and were not  otherwise qualified for                                                                    
unemployment.   Section  2   was  $7.9   million  for   fire                                                                    
suppression under the Department  of Natural Resources (DNR)                                                                    
to cover  the projected  costs of  the coming  spring's fire                                                                    
season. Section  3 was for the  Department of Transportation                                                                    
and  Public  Facilities  (DOT)  and  had  four  subsections:                                                                    
subsection  (a) included  $65 million  in federal  funds for                                                                    
surface  repair  for  roads and  buildings  damaged  by  the                                                                    
earthquake;  subsection  (b) was  the  state  match of  $6.5                                                                    
million; subsection  (c) was $1  million to  covered damaged                                                                    
items  not covered  by  insurance; and  section  (d) was  $1                                                                    
million for those not covered by federal receipts.                                                                              
Mr. Labolle  moved to  Section 4  - fund  capitalization for                                                                    
the  Disaster  Relief  Fund. Subsection  (b)  increased  the                                                                    
federal  receipts  from  $9  million  to  $46  million.  The                                                                    
section also  included $21.9 million  from the  General Fund                                                                    
to  the  Disaster  Relief Fund.  Section  5  included  lapse                                                                    
dates.  He detailed  that appropriations  made in  Section 3                                                                    
for DOT lapsed under  capital grants. Appropriations made in                                                                    
Section 4  - fund capitalization  for disaster relief  - did                                                                    
not lapse. Section 6 was the immediate effective date.                                                                          
Co-Chair Foster listed  individuals available for questions.                                                                    
He  asked  for verification  the  disaster  relief fund  was                                                                    
scheduled to  run out  on April  1 [2019].  He spoke  to the                                                                    
need to  pass the legislation  in order to  recapitalize the                                                                    
fund. He detailed the Senate had  sent the bill to the House                                                                    
recently and  there was  an effort to  move the  bill fairly                                                                    
9:27:22 AM                                                                                                                    
Mr. Labolle  replied in the affirmative.  The department had                                                                    
communicated the fund would run out at the end of March.                                                                        
Vice-Chair Ortiz read from subsection (c) [of Section 3]:                                                                       
     The sum of $1,000,000  is appropriated from the general                                                                    
     fund  to the  Department of  Transportation and  Public                                                                    
     Facilities,  for  costs  related  to  damage  to  state                                                                    
     facilities  caused by  the Southcentral  earthquake not                                                                    
     reimbursed by insurance.                                                                                                   
Vice-Chair Ortiz asked  if state was paying  a deductible or                                                                    
it had been unaware of  some areas where the insurance would                                                                    
not cover damages. He asked for detail.                                                                                         
Mr.  Labolle deferred  the question  to  the department.  He                                                                    
explained that sidewalks  or parking lots that  were part of                                                                    
a property  but not part  of the structure were  examples of                                                                    
items not covered by insurance.                                                                                                 
Co-Chair  Foster  asked  Mr.  Labolle  who  the  appropriate                                                                    
person would be to direct the question to.                                                                                      
Mr.  Labolle   deferred  the  question  to   the  Office  of                                                                    
Management and Budget (OMB).                                                                                                    
AMANDA  HOLLAND, MANAGEMENT  DIRECTOR, OFFICE  OF MANAGEMENT                                                                    
AND  BUDGET  FOR  DEPARTMENT OF  TRANSPORTATION  AND  PUBLIC                                                                    
FACILITIES, answered  that the  $1 million  supplemental was                                                                    
for  administrative activities  that were  not covered.  She                                                                    
detailed the  supplemental was for repairs  related to state                                                                    
facilities that were damaged in  the earthquake. Funds would                                                                    
be  used for  damage assessments;  parking lots;  sidewalks;                                                                    
heating,  ventilation,  and  air conditioning  systems  that                                                                    
would need  permanent repair (temporary repair  was possible                                                                    
in the short-term).                                                                                                             
9:29:56 AM                                                                                                                    
Vice-Chair  Ortiz  clarified that  his  question  in no  way                                                                    
represented  an unwillingness  to meet  the disaster  relief                                                                    
needs.  He  asked if  standard  insurance  policies did  not                                                                    
cover things like the associated public property.                                                                               
LACEY  SANDERS, BUDGET  DIRECTOR, OFFICE  OF MANAGEMENT  AND                                                                    
BUDGET,  replied that  OMB  and DOT  were  working with  the                                                                    
Department of  Administration's Risk Management  to identify                                                                    
what costs could be and  could not be put towards insurance.                                                                    
There were some  costs, such as parking lots,  that were not                                                                    
covered by the state's insurance.                                                                                               
Co-Chair  Foster referenced  Ms.  Holland's testimony  about                                                                    
things  that  were  not   covered,  such  as  administrative                                                                    
activities.  He asked  if she  had been  referencing the  $1                                                                    
million in subsection (d).                                                                                                      
Ms.  Holland affirmed  that  she had  been  speaking to  the                                                                    
surface   transportation   administrative  activities.   She                                                                    
elaborated there  were some expenses  that were  not covered                                                                    
by the Federal Highway  Administration (FHWA) or the Federal                                                                    
Emergency   Management   Agency   (FEMA).   The   activities                                                                    
ineligible  for reimbursement  included  things like  damage                                                                    
assessments,  some  overhead  costs,  project  planning  and                                                                    
scheduling, and  any damage estimated  to be $5,000  or less                                                                    
per site. She detailed that  FEMA also did not cover regular                                                                    
work hours for employees, only overtime costs.                                                                                  
9:31:59 AM                                                                                                                    
Co-Chair  Foster  looked  at a  chart  [source:  Legislative                                                                    
Finance Division  Multi-year Agency Summary -  FY 2020 House                                                                    
Structure (copy on file)]  showing the disaster supplemental                                                                    
would  total $38,301,000  UGF  and  $103,000,002 million  in                                                                    
federal funds.                                                                                                                  
Representative Sullivan-Leonard asked if  there was a fiscal                                                                    
note associated with the bill.                                                                                                  
Ms.  Sanders  replied that  the  bill  was an  appropriation                                                                    
bill; appropriation bills did  not have fiscal notes because                                                                    
the bill made the appropriation.                                                                                                
Co-Chair Wilson looked  at Section 4 of the  bill that would                                                                    
allocate more  than 10 percent  to match the $46  million in                                                                    
federal funds. She  asked where the $68  million figure came                                                                    
from.  She asked  if  the $46  million  was guaranteed.  She                                                                    
noted  there had  been a  10  percent match,  but the  match                                                                    
included was 20 percent.                                                                                                        
Ms. Sanders  replied that the  bill had  initially contained                                                                    
an  estimated deposit  to the  Disaster Relief  Fund of  $46                                                                    
million, which  was $36  million above  the estimate  in the                                                                    
prior  year's  appropriation  bill. She  stated  that  $21.9                                                                    
million had been  estimated. The estimate had  been given in                                                                    
January. The numbers used to  come up with the estimate were                                                                    
the  numbers   used  to  apply  for   the  federal  disaster                                                                    
declaration.  The   numbers  had   been  modified   and  the                                                                    
anticipated amount  needed for  the remainder  of FY  19 and                                                                    
into FY 20  was approximately $12.2 million  in state funds.                                                                    
She detailed  it was not  a program where the  75/25 percent                                                                    
match could  be applied.  There were  a variety  of programs                                                                    
covered  under  the  Disaster  Relief  Fund,  some  had  100                                                                    
percent  federal  reimbursement,  some   had  a  75  percent                                                                    
reimbursement with a 25 percent  match. She explained it was                                                                    
not an  easy calculation  where the  75/25 percent  could be                                                                    
Ms. Sanders highlighted that the  amount of federal receipts                                                                    
received was  an estimate -  the state could receive  all of                                                                    
the  federal receipts  it was  eligible  for. The  remaining                                                                    
amount  of $9  million (above  the identified  $12 million),                                                                    
was in anticipation of any  spring disasters that may occur.                                                                    
She detailed that spring flooding  typically occurred in the                                                                    
April to June timeframe. She  pointed out that amount in the                                                                    
bill  reflected an  initial request  - OMB  expected at  the                                                                    
high end  that $60 million in  state funds may be  needed in                                                                    
total  to address  the Cook  Inlet earthquake;  $6.5 million                                                                    
had  already  been  obligated,   but  that  was  within  the                                                                    
Disaster  Relief   Fund.  She  continued  that   the  budget                                                                    
included  another  $12 million  and  OMB  was working  on  a                                                                    
separate  supplemental request  to  cover  the remainder  to                                                                    
reach  the $60  million. She  expounded that  it took  about                                                                    
five  years  to work  through  the  process of  declaring  a                                                                    
disaster  and   the  payment  process.  The   Department  of                                                                    
Military  and  Veterans  Affairs  (DMVA)  believed  the  $12                                                                    
million was sufficient to get through  FY 19 and into FY 20.                                                                    
The administration  would be back  with a  solidified number                                                                    
for the remaining amount as the process moved forward.                                                                          
9:36:09 AM                                                                                                                    
Co-Chair Wilson  hoped the administration was  going to come                                                                    
back with  information on  how the state  would pay  for the                                                                    
disaster  funding.  She  had   understood  the  bill  to  be                                                                    
primarily  for earthquake  [disaster] funding,  but it  went                                                                    
beyond  that. She  spoke to  the fire  suppression component                                                                    
and highlighted the  $7.9 million in Section 2  of the bill,                                                                    
which  she believed  was  for the  spring  fire season.  She                                                                    
remarked  that the  bill included  another  $9 million  that                                                                    
could be  used for fire  and/or flooding in  anticipation of                                                                    
what may happen. She asked  why the administration would not                                                                    
just  come back  with  a supplemental  request  (as was  the                                                                    
normal practice) if needed.                                                                                                     
Ms. Sanders addressed the $7.9  million request from DNR and                                                                    
explained  that  the  bill  had  been  put  together  as  an                                                                    
emergency response  - not only addressing  the disaster, but                                                                    
also addressing  the existing shortfall in  fire suppression                                                                    
funding. There  had been approximately  $5.2 million  in the                                                                    
DNR  budget for  wildland fire  protection. The  funding had                                                                    
been sufficient to  cover fire costs in  the fall; currently                                                                    
there  was  an  unobligated   balance  of  approximately  $1                                                                    
million.  She elaborated  that based  on  the lowest  year's                                                                    
cost for  fire suppression, the cost  would be approximately                                                                    
$8.9 million  for the spring  season; the $7.9  million plus                                                                    
the $1 million was expected to  be enough to get through the                                                                    
end  of the  year. The  department  had the  ability to  use                                                                    
disaster   funding   for   wildfire  response   without   an                                                                    
appropriation;  however,  that  method  took  a  significant                                                                    
amount  of   administrative  overhead.   The  administration                                                                    
believed  it  prudent  to  request   the  funding  from  the                                                                    
Ms. Sanders highlighted the second  component related to the                                                                    
Disaster Relief  Fund. She referenced  $9 million  above the                                                                    
$12.1 million need. The balance  of the fund was anticipated                                                                    
to run  out on  March 31  or April 1.  She detailed  that an                                                                    
appropriation of $12.9  million was needed. at  the time the                                                                    
administration   had   submitted   the   request,   it   had                                                                    
anticipated  the amount  needed to  get through  the initial                                                                    
period was  $21 million. The administration  believed it was                                                                    
necessary  to bring  a balance  into the  fund using  the $9                                                                    
million  in  order  for  spring  flooding  to  be  addressed                                                                    
9:39:18 AM                                                                                                                    
Co-Chair Wilson  reviewed her  understanding of  the funding                                                                    
in the bill. She referenced  $65 million that was earthquake                                                                    
related that would  be matched with $6.5  million. She asked                                                                    
for verification  that the GF  matching funds could  be used                                                                    
even if the  total $65 million [in federal  funding] did not                                                                    
come to fruition.                                                                                                               
Ms.  Sanders replied  that the  money  was appropriated  for                                                                    
federal highway  surface transportation disaster  repair and                                                                    
could not be used for anything else.                                                                                            
Co-Chair  Wilson understood  the funds  had to  be used  for                                                                    
transportation.  She  clarified  her understanding  that  if                                                                    
only  $55 million  in federal  funds came  in, it  would not                                                                    
prevent  the agency  for  using the  full  $6.5 million  [in                                                                    
state GF].                                                                                                                      
Ms. Sanders  replied that the  $6.5 million could  [only] be                                                                    
used  for  disaster  repair  if that  was  the  intent.  She                                                                    
explained  the  intent  was  to match  the  $65  million  in                                                                    
anticipated [federal] funds.                                                                                                    
Co-Chair Wilson was frustrated the  funding was being called                                                                    
matching funds,  which made  it sound  like the  funds would                                                                    
only be utilized if certain  federal funds were received. In                                                                    
reality, the [state]  funding could be utilized  even if all                                                                    
of the federal  funds did not come in. She  pointed out that                                                                    
the   legislature   would   be  forward   funding   possible                                                                    
disasters. She could not recall  where in the budget to look                                                                    
to see how the funds  were specifically spent. She suggested                                                                    
asking for a  balance of the Disaster Relief  Fund after the                                                                    
fire  and flooding  seasons. She  did not  want funds  to be                                                                    
unavailable in the event of a  flood, but she did not want a                                                                    
"slush  fund"   that  was  not   being  used  the   way  the                                                                    
legislature thought it should be.                                                                                               
9:41:31 AM                                                                                                                    
Vice-Chair  Johnston asked  for a  historical accounting  of                                                                    
the fund balance.                                                                                                               
Ms. Sanders  replied that the information  had been included                                                                    
in her presentation on March 8  and she would follow up with                                                                    
the information.                                                                                                                
Vice-Chair Ortiz asked  if the bill's $8.9  million for fire                                                                    
suppression  had  been discussed  in  Ms.  Sander's March  8                                                                    
presentation. He  asked if the  money was in  the [disaster]                                                                    
fund currently.                                                                                                                 
Ms. Sanders  corrected that  the amount was  not a  fund; it                                                                    
was an appropriation to DNR.                                                                                                    
Vice-Chair Ortiz  asked for  verification that  $8.9 million                                                                    
reflected the  least amount  of money  that would  be needed                                                                    
for fire suppression.                                                                                                           
Ms. Sanders replied in the affirmative.                                                                                         
9:43:07 AM                                                                                                                    
Representative  Carpenter asked  what happened  to the  $7.9                                                                    
million for fire  suppression (in Section 2 of  the bill) if                                                                    
it was not utilized by the end of the fiscal year.                                                                              
Ms. Sanders replied  that the money would lapse  back to the                                                                    
General Fund if was not used by the end of the fiscal year.                                                                     
Representative Carpenter asked  for verification the funding                                                                    
would only be used in the event of a fire.                                                                                      
Ms. Sanders responded affirmatively.  She detailed the money                                                                    
would  go  to   a  separate  allocation  to   DNR  for  fire                                                                    
suppression activity.                                                                                                           
Representative   Knopp   noted   the   appropriation   under                                                                    
discussion was  a supplemental appropriation  for FY  19. He                                                                    
highlighted that  the budget also included  approximately $8                                                                    
million in fire  suppression funds for FY  20. He considered                                                                    
that the  funding for FY 19  may lapse to the  General Fund.                                                                    
He   asked   for  verification   there   would   be  a   new                                                                    
appropriation for FY 20 on July 1.                                                                                              
Ms. Sanders  replied in the affirmative.  She explained that                                                                    
the governor's proposal  for the FY 19  supplemental and the                                                                    
FY  20 amended  budget brought  the amount  appropriated for                                                                    
fire suppression up  to the lowest expected  amount in order                                                                    
to have sufficient fire response funding available.                                                                             
Representative Knopp  thought actual  fire seasons  had cost                                                                    
considerably higher  than $9 million. He  wondered about the                                                                    
lapse  and   asked  why  the   full  amount  would   not  be                                                                    
reappropriated for fire suppression.                                                                                            
Ms. Sanders agreed that the  figure represented the low end.                                                                    
She   elaborated   that   fire  suppression   activity   was                                                                    
unpredictable and  varied annually.  She explained  that the                                                                    
administration  may  be  back  before  the  legislature  the                                                                    
following  year  with a  supplemental  request  if the  fire                                                                    
season exceeded the allocated amount.                                                                                           
9:45:33 AM                                                                                                                    
Representative  Carpenter directed  a  question  to DNR.  He                                                                    
recognized it was  not possible to predict  when fires would                                                                    
break out. He acknowledged the  high cost of fighting fires.                                                                    
He asked if  any of the funding was used  to reduce the fuel                                                                    
source around population centers  that would reduce the cost                                                                    
of  fighting fires  or reduce  the  likelihood of  spreading                                                                    
around population centers.                                                                                                      
FABIENNE  PETER-CONTESSE, ADMINISTRATIVE  SERVICES DIRECTOR,                                                                    
DEPARTMENT OF  NATURAL RESOURCES,  OFFICE OF  MANAGEMENT AND                                                                    
BUDGET, confirmed that DNR had  other funding sources in its                                                                    
operating budget to  deal with the issue.  She detailed that                                                                    
DNR  had a  consolidated  federal grant  used for  hazardous                                                                    
fuels  mitigation. She  elaborated that  grant funding  paid                                                                    
for  wildland firefighter  staff to  work on  hazardous fuel                                                                    
mitigation before and  between fires. She had  found out the                                                                    
previous  day  that  DNR may  receive  additional  funds  to                                                                    
address the spruce bark  beetle infestation; the infestation                                                                    
was a  problem for  the forests  and also  created hazardous                                                                    
Representative  Carpenter asked  for verification  that none                                                                    
of  the money  in the  bill would  go towards  that type  of                                                                    
activity  [hazardous  fuels  mitigation].  He  surmised  the                                                                    
funds in  the bill  were available  only in  the event  of a                                                                    
Ms.   Peter-Contesse  replied   in   the  affirmative.   She                                                                    
explained that  fire suppression activity was  in a separate                                                                    
component from fire  suppression preparedness. She confirmed                                                                    
that the funds would only be used during firefighting.                                                                          
9:48:16 AM                                                                                                                    
Representative Josephson  pointed out that the  $7.9 million                                                                    
was for  FY 19  and surmised  the funding was  for a  May or                                                                    
June fire.                                                                                                                      
Ms.  Peter-Contesse replied  that DNR  had a  statutory fire                                                                    
start  date of  April 1.  She  reasoned that  fires did  not                                                                    
observe  the budget  start date.  She explained  the funding                                                                    
would augment  the $1 million  remaining [from  the previous                                                                    
season] to get  through June 30, 2019  based on projections.                                                                    
She  expounded that  $14  million was  about  the least  the                                                                    
department had spent [in a  season] over the past ten fiscal                                                                    
years,  which had  been  in FY  12 and  FY  18. The  average                                                                    
firefighting cost  on the  General Fund  side was  about $35                                                                    
million. She  stated it was  possible, but unlikely,  that a                                                                    
portion  of   the  funds  would  lapse.   She  informed  the                                                                    
committee it  was more likely  the department would  come to                                                                    
the  legislature with  a  supplemental  request, given  fire                                                                    
service projections. She clarified that was not yet known.                                                                      
Representative Josephson  asked what part of  the bill would                                                                    
be used for flooding mitigation.                                                                                                
Ms. Sanders answered that the  Disaster Relief Fund could be                                                                    
used  for  response  to  flooding,   but  not  for  flooding                                                                    
mitigation.  For example,  the funding  could be  used if  a                                                                    
disaster was declared for spring  breakup that resulted in a                                                                    
Representative   Josephson   asked   if   funds   had   been                                                                    
traditionally   allocated  for   that   purpose  (prior   to                                                                    
Ms.  Sanders could  not speak  to mitigation  work that  had                                                                    
been done on  flooding, as it was her  understanding that it                                                                    
was  not what  the Disaster  Relief Fund  was used  for. She                                                                    
would  check with  multiple  agencies  to determine  whether                                                                    
anyone did  flood mitigation work  and would follow  up with                                                                    
the committee.                                                                                                                  
9:50:47 AM                                                                                                                    
Representative   Josephson  asked   if  the   sum  reflected                                                                    
anticipated  funding.  Alternatively,  he  wondered  if  the                                                                    
funds could also be used in the event of flooding.                                                                              
Ms. Sanders replied  that the Disaster Relief  Fund could be                                                                    
used for  any disaster response including  flooding, another                                                                    
earthquake, or  another type of  disaster. The  $9.7 million                                                                    
was not based off of  a spring projection that happened over                                                                    
a ten-year  period; the cost  varied from  year-to-year. She                                                                    
would provide the  committee with a detailed  listing of the                                                                    
historical disasters and the funding allocated.                                                                                 
Representative  Josephson  asked  about the  UGF  outlay  of                                                                    
approximately  $37 million  related  to  the earthquake.  He                                                                    
asked if there was confidence  the state had done everything                                                                    
within federal law to capture all possible federal revenue.                                                                     
Ms.  Sanders   replied  that  DMVA  Homeland   Security  and                                                                    
Emergency Management  was working  diligently to  ensure the                                                                    
appropriate costs were charged  to the federal government or                                                                    
the state (when not covered  with federal funds). She stated                                                                    
that DMVA  was following very  strict rules to  ensure funds                                                                    
were allocated appropriately.                                                                                                   
9:52:59 AM                                                                                                                    
Vice-Chair  Johnston  pointed to  slide  5  of the  March  8                                                                    
presentation from OMB  in members' packets [titled  "HB 53 -                                                                    
Disaster Relief Supplemental Overview"]  (copy on file). She                                                                    
noted that the  slide showed a Disaster  Relief Fund balance                                                                    
of $362,900 as  of March 5, 2019. She asked  if the graph on                                                                    
slide 4 was  the graph Ms. Sander's was  suggesting showed a                                                                    
historical fund balance. She thought  it looked more like an                                                                    
appropriation than a fund balance.                                                                                              
Ms. Sanders  agreed. She explained  there had been  a second                                                                    
presentation  given later  in March  that included  the fund                                                                    
balance as of July 1 of  each year. She would follow up with                                                                    
the information.                                                                                                                
9:54:11 AM                                                                                                                    
Co-Chair Wilson MOVED to REPORT CSSB 38(FIN) out of                                                                             
committee with individual recommendations.                                                                                      
There being NO OBJECTION, CSSB 38(FIN) was REPORTED out of                                                                      
committee with six "do pass" recommendations and five "no                                                                       
recommendation" recommendations.                                                                                                
Co-Chair Foster provided the schedule for the following                                                                         

Document Name Date/Time Subjects
John Sturgeon_Redacted.pdf HFIN 3/28/2019 9:00:00 AM
HFC 3.8.19 HB 53 - FY2019 Disaster Relief Supplemental Overview.pdf HFIN 3/28/2019 9:00:00 AM
HB 53
SB 38
SB 38 HFIN March 28 2019
HB048 ver M Am#1 3.27.19.pdf HFIN 3/28/2019 9:00:00 AM
HB 48
HB 53 3.8.19 OMB Response.pdf HFIN 3/28/2019 9:00:00 AM
HB 53
SB 38