Legislature(2021 - 2022)ANCH LIO DENALI Rm
07/14/2022 01:00 PM House LEGISLATIVE BUDGET & AUDIT
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| Audio | Topic |
|---|---|
| Start | |
| Approval of Minutes | |
| Special Audit Request | |
| Revised Program Legislative (rpl) | |
| Executive Session | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
Anchorage, Alaska
July 14, 2022
1:02 p.m.
MEMBERS PRESENT
Senator Natasha von Imhof, Chair
Representative Chris Tuck, Vice Chair
Senator Lora Reinbold
Senator Bert Stedman
Senator Lyman Hoffman
Representative Ivy Spohnholz
Representative Andy Josephson
Representative Neal Foster
Representative James Kaufman
Representative Dan Ortiz (alternate)
MEMBERS ABSENT
Senator Peter Micciche
Senator Click Bishop (alternate)
COMMITTEE CALENDAR
APPROVAL OF MINUTES
SPECIAL AUDIT REQUEST
REVISED PROGRAM LEGISLATIVE (RPL)
EXECUTIVE SESSION
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
REPRESENTATIVE MATT CLAMAN
Alaska State Legislature
Anchorage, Alaska
POSITION STATEMENT: Explained the special audit request.
KRIS CURTIS, Legislative Auditor
Legislative Audit Division
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Provided information on the special audit
request.
ALEXEI PAINTER, Director
Legislative Finance Division
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Presented the RPLs and answered questions.
DOUG VINCENT-LANG, Commissioner
Alaska Department of Fish & Game
Juneau, Alaska
POSITION STATEMENT: Answered questions pertaining to the RPLs.
MEGAN WALLACE, Director
Legislative Legal and Research Services
Juneau, Alaska
POSITION STATEMENT: Offered comments to the committee regarding
a contract for legal services.
ACTION NARRATIVE
1:02:40 PM
CHAIR NATASHA VON IMHOF called the Legislative Budget and Audit
Committee meeting to order at 1:02 p.m. Representatives
Spohnholz, Josephson, Foster (via teleconference), Kaufman,
Tuck, and Ortiz (via teleconference) and Senators Reinbold,
Stedman, and von Imhof were present at the call to order.
Senator Hoffman arrived as the meeting was in progress. Also
present were Senators Revak and Kiehl (via teleconference).
1:03:43 PM
^Approval of Minutes
Approval of Minutes
CHAIR VON IMHOF announced that the first order of business would
be Approval of Minutes.
1:03:53 PM
REPRESENTATIVE TUCK moved that the Legislative Budget and Audit
Committee approve the minutes for the March 3, 2022, March 15,
2022, and April 8, 2022, meetings as presented. There being no
objection, the minutes were approved.
^Special Audit Request
Special Audit Request
1:04:22 PM
CHAIR VON IMHOF announced that the next order of business would
be the Special Audit Request.
1:04:52 PM
REPRESENTATIVE MATT CLAMAN, Alaska State Legislature, shared
with the committee that the audit request had been refined with
input from user groups and the Legislative Audit Division. He
stated that the audit would review processes regarding workers'
compensation insurance. He stated that his office had
collaborated with the Legislative Audit Division for
approximately eight months to develop the structure of the audit
request.
1:06:39 PM
KRIS CURTIS, Legislative Auditor, Legislative Audit Division,
Legislative Agencies and Offices, acknowledged that there had
been extensive collaboration and that the request had been pared
down to align with available resources, and she cautioned that
some areas of the audit may lack data. When asked by Chair von
Imhof, she estimated that work would not begin for at least two
years.
CHAIR VON IMHOF stated that it was her intent that the proposed
audit should consider both employees and employers and remain
fair and balanced.
1:08:06 PM
REPRESENTATIVE TUCK moved that the Legislative Budget and Audit
Committee approve the Special Audit Request for the Division of
Workers' Compensation as presented.
MS. CURTIS interjected that there existed a typo on the fourth
page, item 7(c), which read, "Evaluate whether injured workers
with cognitive disabilities sign releases without or legal
counsel" and recommended that the word "or" be deleted.
REPRESENTATIVE CLAMAN expressed his agreement with the
recommended change.
1:09:01 PM
REPRESENTATIVE TUCK move that the Legislative Budget and Audit
Committee approve the Special Audit Request for the Division of
Workers' Compensation, as amended. There being no objection, it
was so ordered.
^ Revised Program Legislative (RPL)
Revised Program Legislative (RPL)
1:09:25 PM
CHAIR VON IMHOF announced that the next order of business would
be the Revised Program - Legislative (RPL).
1:09:50 PM
ALEXEI PAINTER, Director, Legislative Finance Division,
Legislative Agencies and Offices, stated that all nine of the
Revised Programs Legislative (RPLs) were similar to one
another.
CHAIR VON IMHOF asked for summary comments from Mr. Painter as
well as an explanation of the reason of the timing of the
request, including the reason they were not requested in the
budget [process.]
MR. PAINTER answered that all nine RPLs would be managed by the
Alaska Department of Fish & Game (ADF&G) and would be funded by
Exxon Valdez Oil Spill (EVOS) funds. He explained that the
proposed projects had been among approximately 70 reviewed by
the EVOS Council, the majority of which would be managed by
federal agencies and would not be subject to the [state]
budgeting process. He noted that there existed six capital
projects managed by the state in the FY 22 supplemental budget
and in the FY 23 capital budget, and the nine RPLs before the
committee would be in addition to those. He noted that the
governor had vetoed a $200,000 EVOS item in the budget and that
it was not related to the RPLs before the committee. He stated
that the projects had been approved in January and deferred to
ADF&G to offer additional explanation on the timing of the
request. He stated that the RPLs were submitted as operating
[budget] items and, although it would be appropriate for the
projects to be part of a capital budget, it would be possible to
fund them over multiple years within the operating budgets. He
anticipated that the department might request funds under
capital projects in the future. He noted that the RPLs were
associated with unanticipated revenue. He stated that the
Legislative Finance Division does not have any technical issues
with the RPLs.
1:12:48 PM
CHAIR VON IMHOF asked what amount of funds would remain in the
EVOS fund after accounting for the RPLs being considered.
MR. PAINTER offered to follow up with the committee with the
requested information.
CHAIR VON IMHOF added that it would be beneficial to know
whether the EVOS activities would be ongoing or would be winding
down.
1:13:42 PM
DOUG VINCENT-LANG, Commissioner, Alaska Department of Fish &
Game, explained that the EVOS trust fund was created to address
issues associated with the Exxon Valdez Oil Spill, and the
council consisted of three federal and three state members, of
which he is one and the commissioner of the Department of
Environmental Conservation (DEC) Jason Brune, and Attorney
General Treg Taylor, the other two. He noted that funds to be
expended required a unanimous vote of the council. He explained
that the functions of EVOS had been reorganized from ADF&G to
DEC and it had been assumed that the nine projects were
addressed within the DEC budget and were pass-through funds to
be distributed to other entities. He explained that the EVOS
Council had determined to "spend down" the fund within the next
5 to 10 years. In response to Chair von Imhof, he confirmed
that the council had unanimously decided to wind down the fund
within the next decade. In further response, he confirmed that
ADF&G would monitor and report to the legislature on the
effectiveness of the funded projects.
1:16:58 PM
REPRESENTATIVE TUCK asked, since the projects had been approved
[by the EVOS Council] in January, why the projects had not been
brought before the legislature prior to now.
MR. VINCENT-LANG explained that ADF&G had assumed that DEC would
budget for the projects and DEC had assumed that ADF&G would
budget for the projects and therefore they had "slipped through
the cracks."
REPRESENTATIVE TUCK expressed that he had raised concerns about
the RPL process circumventing the normal legislative process
previously and cautioned that it remains an ongoing concern.
MR. VINCENT-LANG offered that the [late] request before the
committee had been an error and assured the committee that he
would monitor for any such cases in the future.
1:18:36 PM
REPRESENTATIVE TUCK moved that the Legislative Budget and Audit
Committee approve the following RPLs:
11-2023-0001, Port Graham Corporation General
Restoration & Habitat Protection, $3,271,353, Exxon
Valdez Oil Spill Settlement, (1018 EVOS), Operating
11-2023-0002, Kenai Peninsula Stream Watch,
$151,871, EVOS Settlement, (1018 EVOS), Operating
11-2023-0003, Status and Trends of EVOS Injured
Seabirds, $354,871, EVOS Settlement, (1018 EVOS),
Operating
11-2023-0004, Chugach Regional Ocean Monitoring
Program, $892,950, EVOS Settlement, (1018 EVOS),
Operating
11-2023-0005, Prince William Sound Kelp
Mariculture Development for Habitat Restoration and
Local Economy, $1,064,505, EVOS Settlement, (1018
EVOS), Operating
11-2023-0006, Social, Cultural, and Economic
Assessment of Kelp Mariculture Opportunities for
Coastal Villages Within the EVOS Spill Zone,
$1,108,199, EVOS Settlement, (1018 EVOS), Operating
11-2023-0007, Community Organized Restoration and
Learning Network, $3,543,600, EVOS Settlement, (1018
EVOS), Operating
11-2023-0008, Prince William Sound Natural
History Symposium, $32,729, EVOS Settlement, (1018
EVOS), Operating
11-2023-0009, Culture Camp Funding for the
Chugach Region, $719,251, EVOS Settlement, (1018
EVOS), Operating
There being no objection, the RPLs were approved.
^Executive Session
Executive Session
1:21:22 PM
CHAIR VON IMHOF announced that the next order of business would
be Executive Session.
1:21:38 PM
REPRESENTATIVE TUCK moved that the Legislative Budget and Audit
Committee go into Executive Session under Uniform Rule 22(b)(3),
discussion of matters that may, by law, be required to be
confidential. He asked that the following persons remain in the
room or on the phone lines:
• The Legislative Auditor, Legislative Legal Services,
and Legislative Finance Division and their necessary
staff;
• Any legislators not on the committee; and
• Staff for legislators who are members of the
committee.
There being no objection, it was so ordered.
1:22:17 PM
The committee took an at-ease from 1:22 p.m. to 3:38 p.m. for
the purpose of executive session.
3:38:18 PM
CHAIR VON IMHOF called the Legislative Budget and Audit
Committee meeting back to order at 3:38 p.m. Representatives
Spohnholz, Josephson, Foster, Kaufman, Ortiz (alternate, via
teleconference) and Senators Reinbold, Stedman, and von Imhof
were present at the call back to order. Also present were
Representatives Hannan (via teleconference) and Edgmon and
Senators Revak and Kiehl (via teleconference).
CHAIR VON IMHOF explained that the committee had discussed
confidential matters related to the release of preliminary
audits.
3:39:11 PM
REPRESENTATIVE TUCK moved that the following Preliminary Audits
be released to the agencies for their formal comment:
o Fiscal Year 21 Single Audit
o Alaska CARES Act Small Business Relief Program
Special Audit
There being no objection, the preliminary audits were released.
3:39:37 PM
REPRESENTATIVE TUCK moved and asked unanimous consent that the
Legislative Budget and Audit Committee, under the authority of
AS 24.20.201(a)(8), authorize a contract for legal services not
to exceed $100,000 to undertake litigation on behalf of the
legislature regarding the deposit of certain state taxes and
royalties resulting from Federal Energy Regulatory Commission
(FERC) decisions into the general fund, as opposed to the
constitutional budget reserve, as required under Article IX,
Section 17(a) of the Alaska State Constitution. He further
moved that the Legislative Budget and Audit Committee authorize
the chair to give direction to Legislative Legal Services and
outside legal counsel regarding the litigation.
CHAIR VON IMHOF objected for discussion.
REPRESENTATIVE SPOHNHOLZ expressed her support of advancing
litigation regarding audit findings over the prior four years
that revealed an issue of funds deposited into the general fund
(GF) rather than the constitutional budget reserve (CBR). She
expressed her hope that a non-adversarial determination on the
matter would provide for transparency going forward.
SENATOR STEDMAN explained that the issue had arisen during the
prior administration and that disagreement existed regarding an
approximate $1.5 billion amount in question. He stated that the
legislature held the belief that the funds should belong in the
CBR, and that the administration holds the belief the funds
should belong in the GF. He stated that there exists the
possibility of future impact and that additional funds may be
required to be paid back [to the CBR] and encouraged a final
determination and agreement to be made. He stated that there
exists no impact on the funds that had already been spent.
REPRESENTATIVE KAUFMAN offered that solving problems should
proceed with collaboration. He noted that the "top ten" audit
findings that had been brought before the committee would be
positively impacted by a final determination on this matter.
3:45:36 PM
MEGAN WALLACE, Director, Legislative Legal Services, stated that
Legislative Legal Services had limited resources and that
litigation can result in uncertainty. She expressed her support
of the committee seeking outside legal services for the matter
and offered the division's operational and coordination support
to the committee and outside counsel.
REPRESENTATIVE JOSEPHSON expressed his support for a resolution
of the matter and referenced the higher education investment
fund regarding the CBR and its requirements. He noted that the
prior two administrations had held the belief that the funds in
question belonged in the GF. He expressed that there exists a
need for a comprehensive fiscal plan and disputes over limited
resources should be resolved. He expressed confidence in the
Legislative Legal Services and encouraged the hiring of outside
counsel to aid in alleviating its workload.
CHAIR VON IMHOF reflected that this matter had existed for four
to five years, and additional FERC settlements would be awarded
to the state and, in the absence of a resolution of the dispute,
the dispute would be ongoing. She encouraged timely action to
prevent negative consequences to the state's credit rating and
emphasized that the intent of seeking outside counsel was not an
adversarial act.
CHAIR VON IMHOF removed her objection to the motion to authorize
a contract for legal services not to exceed $100,000. There
being no further objection, the motion passed.
3:49:25 PM
REPRESENTATIVE KAUFMAN suggested that a framework for the "top
ten" audit findings process he referenced earlier be established
for the benefit of the current and future members of the
committee to approach audit findings in a structured manner.
SENATOR REINBOLD expressed her belief that the timely addressing
of the matter is a critical function of the legislature. She
encouraged accountability to discourage bad behavior. She
stated that she had found the work done by the Legislative Audit
Division to be exemplary.
CHAIR VON IMHOF echoed the compliments to the Legislative Audit
Division.
3:53:03 PM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
3:53 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 071422 LBA Agenda Final.pdf |
JBUD 7/14/2022 1:00:00 PM |
7/14/22 LB&A Agenda |
| III LBA Workers' Compensation Div Spec Audit Request.pdf |
JBUD 7/14/2022 1:00:00 PM |
Special Audit Req Workers' Comp Division Claman 2022 |
| IV LBA RPL Packet 071422 DFG.pdf |
JBUD 7/14/2022 1:00:00 PM |
LB&A DFG RPL Packet 7.14.22 |