Legislature(2019 - 2020)ADAMS ROOM 519
03/28/2019 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Consideration of Governor's Appointees: John Sturgeon, Alaska Mental Health Trust Authority, Board of Trustees | |
| HB77 | |
| HB48 | |
| SB38 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 48 | TELECONFERENCED | |
| += | HB 77 | TELECONFERENCED | |
| + | SB 41 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 53 | TELECONFERENCED | |
| + | SB 38 | TELECONFERENCED | |
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
quickly.
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
applied.
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
legislature.
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
quickly.
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
fuels.
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
fire.
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
flood.
Representative Josephson asked if funds had been
traditionally allocated for that purpose (prior to
flooding).
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
meeting.
| Document Name | Date/Time | Subjects |
|---|---|---|
| John Sturgeon_Redacted.pdf |
HFIN 3/28/2019 9:00:00 AM |
Confirmation |
| 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 |