Legislature(2009 - 2010)HOUSE FINANCE 519

03/24/2009 08:30 AM House FINANCE

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                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 24, 2009                                                                                           
                         8:40 a.m.                                                                                              
8:40:52 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Hawker called the House Finance Committee meeting                                                                      
to order at 8:40 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Mike Hawker, Co-Chair                                                                                            
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas, Jr., Vice-Chair                                                                                     
Representative Allan Austerman                                                                                                  
Representative Harry Crawford                                                                                                   
Representative Anna Fairclough                                                                                                  
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
MEMBERS ABSENT                                                                                                                
Representative Richard Foster                                                                                                   
Representative Les Gara                                                                                                         
Representative Woodie Salmon                                                                                                    
ALSO PRESENT                                                                                                                  
Larry Persily,  Staff, Co-Chair  Mike Hawker; Karen  Rehfeld,                                                                   
Director,  Office of  Management  and Budget,  Office of  the                                                                   
Governor; Jo  Ellen Hanrahan,  Analyst, Office of  Budget and                                                                   
PRESENT VIA TELECONFERENCE                                                                                                    
HCR 13    Certifying that the State of Alaska requests and                                                                      
          will use  any funds provided to the  state, a state                                                                   
          agency, a municipality,  or a political subdivision                                                                   
          of  the  state  under  the  American  Recovery  and                                                                   
          Reinvestment Act of 2009.                                                                                             
          HCR 13 was REPORTED out of Committee with a "no                                                                       
          recommendation" and with a new zero fiscal note by                                                                    
          the Legislature.                                                                                                      
HB 199    "An Act making supplemental appropriations and                                                                        
          capital appropriations; amending appropriations;                                                                      
          and providing for an effective date."                                                                                 
          HB 199 was heard and HELD in Committee for further                                                                    
HOUSE CONCURRENT RESOLUTION NO. 13                                                                                            
     Certifying that the State of Alaska requests and will                                                                      
     use any funds provided to the state, a state agency, a                                                                     
     municipality, or a political subdivision of the state                                                                      
     under the American Recovery and Reinvestment Act of                                                                        
8:41:07 AM                                                                                                                    
LARRY PERSILY,  STAFF, CO-CHAIR  MIKE HAWKER, explained  that                                                                   
HCR  13 is  an option  available to  individual states  under                                                                   
section 1607  of the American  Recovery and Reinvestment  Act                                                                   
(economic stimulus program). Governors  have 45 days from the                                                                   
date the  Act was enacted or  until April 3, 2009  to certify                                                                   
that their  state will participate  in the economic  stimulus                                                                   
program and will  use these funds to create  jobs and promote                                                                   
economic  growth. The  legislature can  decide by  concurrent                                                                   
resolution  to participate  in  the program  if its  governor                                                                   
declines to  participate. The concurrent resolution  would be                                                                   
sent to  the United States  Office of Management  and Budget.                                                                   
There  is  no  specific  deadline   for  legislative  action.                                                                   
However, the receipt of a legislative  resolution (in lieu of                                                                   
action by the governor)  would have to be timely  in order to                                                                   
meet  application  deadlines for  appropriation  of  specific                                                                   
funds.  A resolution is not a  pledge, promise, commitment or                                                                   
contract  to  accept  funds,   participate  in  any  specific                                                                   
programs,  or  to  adhere  to  any  of  the  requirements.  A                                                                   
resolution  is  merely  the  first step  in  a  process  that                                                                   
notifies  the  federal government  that  the  state wants  to                                                                   
participate in federal economic  stimulus programs. The state                                                                   
reserves  judgment as  to participation  in  each program;  a                                                                   
resolution is non-binding and  does not commit the state. Mr.                                                                   
Persily compared  HCR 13  to a  reservation at a  restaurant,                                                                   
which only provides a place at the table.                                                                                       
8:43:43 AM                                                                                                                    
Co-Chair Hawker  asked if  the resolution  is binding  on the                                                                   
executive branch.  Mr. Persily pointed to a  legal opinion by                                                                   
the  Congressional  Research Service,  which  indicated  that                                                                   
there is  nothing in the  stimulus bill that  overrules state                                                                   
law or  is intended  to interfere  with the relation  between                                                                   
the executive  and legislative branches or  administration of                                                                   
state governments. The Congressional  Research Service report                                                                   
concluded  that there  is nothing  to  prohibit the  governor                                                                   
from vetoing  a legislative appropriation. The  executive and                                                                   
legislative   branches   will   have  to   work   out   state                                                                   
participation in each program.                                                                                                  
Co-Chair   Hawker   concluded   that   nothing   trumps   the                                                                   
constitutional authority established  in either the executive                                                                   
or  legislative branches  of  state government.  Mr.  Persily                                                                   
affirmed and  noted that section  1607 was included  to allow                                                                   
legislative  action in the  event that  a state governor  did                                                                   
not act.                                                                                                                        
HCR  13  was   HEARD  and  HELD  in  Committee   for  further                                                                   
8:47:06 AM                                                                                                                    
HOUSE BILL NO. 199                                                                                                            
     "An Act making supplemental appropriations and capital                                                                     
     appropriations; amending appropriations; and providing                                                                     
     for an effective date."                                                                                                    
KAREN  REHFELD, DIRECTOR,  OFFICE OF  MANAGEMENT AND  BUDGET,                                                                   
OFFICE  OF THE GOVERNOR  introduced her  staff. She  reviewed                                                                   
documents in the bill packet.                                                                                                   
Co-Chair  Hawker  listed the  items  in  the bill  packet:  a                                                                   
supplemental spreadsheet  of items  included in the  bill and                                                                   
another  spreadsheet  of  items  not  included.  Ms.  Rehfeld                                                                   
informed of  additional included  documents known  as "change                                                                   
8:49:05 AM                                                                                                                    
Ms. Rehfeld  recalled the February  24, 2009 presentation  of                                                                   
the  Department  of  Transportation   and  Public  Facilities                                                                   
Transportation  (DOT) appropriation  bill. She mentioned  the                                                                   
submitted  second  appropriation   bill  containing  the  non                                                                   
transportation elements for economic  stimulus. She noted the                                                                   
submitted amendments incorporating  the federal reimbursement                                                                   
rate under Medicaid.                                                                                                            
Ms. Rehfeld  stated that  the governor  had not rejected  any                                                                   
stimulus  funds. The  governor  is interested  in a  dialogue                                                                   
with  the  committee,  as  well   as  with  the  public.  She                                                                   
mentioned that there are a number  of requirements in the law                                                                   
including significant federal government oversight.                                                                             
8:51:08 AM                                                                                                                    
Ms. Rehfeld turned  to a handout entitled  "American Recovery                                                                   
and Reinvestment  Act  (ARRA)" (copy  on file). She  informed                                                                   
that ARRA  is a very complex  piece of legislation.  The bill                                                                   
totals  over $787  billion  with a  portion  of $288  billion                                                                   
designated  for   tax  relief  and  the   remaining  portions                                                                   
designated  for  a number  of  programs  in the  budget.  She                                                                   
highlighted several areas targeted  by the federal government                                                                   
including  tax   relief,  state  and  local   fiscal  relief,                                                                   
infrastructure,  protection  of vulnerable  citizens,  health                                                                   
care, education and energy.                                                                                                     
Ms.  Rehfeld noted  the objectives  of  the legislation.  The                                                                   
objectives include the preservation  of jobs and the creation                                                                   
of new jobs while stabilizing  state and local economies. The                                                                   
reinvestment  piece concerns infrastructure,  with  long term                                                                   
goals of addressing energy and research.                                                                                        
Ms.  Rehfeld   detailed  the   timelines  revealed   for  the                                                                   
programs. The federal government  desires that twenty percent                                                                   
of the  stimulus funds  be spent between  now and  October of                                                                   
2009, an additional 30 percent  spent by October 2010, and 80                                                                   
percent of the dollars spent by October of 2011.                                                                                
Ms.  Rehfeld  mentioned  the  primary  distribution  measures                                                                   
incorporated  into the  stimulus act.  The first two  formula                                                                   
areas and demand  programs will come to the  committee in the                                                                   
form  of   request  for  appropriation  authority.   Existing                                                                   
formulas  such  as the  highway  transportation  program  and                                                                   
Medicaid  do  not  require  new   administrative  structures.                                                                   
Demand  programs   are  caseload  or  workload   driven.  The                                                                   
competitive grants do not have  requests included, because it                                                                   
is unknown  which agencies will  compete for the  grants. The                                                                   
automatic   disbursements   and  federal   agencies   include                                                                   
appropriations that are directed to federal agencies.                                                                           
8:54:21 AM                                                                                                                    
Ms.  Rehfeld  mentioned  unprecedented   accountability.  She                                                                   
noted  that  the Act  contains  specific  appropriations  for                                                                   
inspector  general  activity  in  each  one  of  the  federal                                                                   
agencies  along  with  a  board,  application  timelines  for                                                                   
obligations  of funds, tracking  and reporting  requirements,                                                                   
and certifications and assurances  required for the programs.                                                                   
8:55:01 AM                                                                                                                    
Co-Chair  Hawker  discussed the  one  required  certification                                                                   
date of  April 3,  2009. He inquired  about other  deadlines.                                                                   
Ms.  Rehfeld agreed  that there  were a  number of  timelines                                                                   
mandating  that state  agencies  submit pre-applications  for                                                                   
funds.  The   department  is  working  to   meet  preliminary                                                                   
timelines.  Following the decision  regarding the  acceptance                                                                   
of funds,  the  department will  have necessary  applications                                                                   
8:56:43 AM                                                                                                                    
Ms. Rehfeld addressed the governor  certification deadline of                                                                   
April  3, 2009.  She noted  that  this requirement  certifies                                                                   
that the  individual states  will apply  for and utilize  the                                                                   
funds to create jobs and promote  economic growth. She opined                                                                   
that the governor has remained  consistent about her concerns                                                                   
about the  stimulus package, even  before it was  signed into                                                                   
law.  The governor  believed that  it was  important for  the                                                                   
public and  the legislature  to analyze  the bill and  answer                                                                   
some of the large looming questions.                                                                                            
Ms. Rehfeld  reported on  other certifications and  timelines                                                                   
already  addressed. She  noted  that the  administration  has                                                                   
remained proactive in these areas.  She explained the process                                                                   
of meeting these certifications.  She noted that a delegation                                                                   
to the  commissioner of  transportation  was signed as  there                                                                   
are assurances in the law requiring  that any projects funded                                                                   
by  the stimulus  dollars meet  the  federal highway  program                                                                   
requirements  providing  an  appropriate  use  of  taxpayer's                                                                   
dollars.  She noted  the specific  assurances  in the  energy                                                                   
program as  part of  the policy  discussion planned  for this                                                                   
8:59:08 AM                                                                                                                    
Co-Chair Hawker  pointed out the interpretive  differences in                                                                   
the  energy  policy.  He  hoped  to  dispel  myths  regarding                                                                   
interpretive  differences of energy  assurances. Ms.  Rehfeld                                                                   
agreed   to   discuss   the   challenges   regarding   energy                                                                   
8:59:45 AM                                                                                                                    
Ms. Rehfeld referred to the graph  on Slide 10 to explain the                                                                   
estimated allocation for state  government of $930.5 million.                                                                   
These  are  the only  items  identified  to date  from  those                                                                   
preliminary  allocations  from   the  federal  agencies.  The                                                                   
capital bills equal 55 percent  of the proposal. The Medicaid                                                                   
portion  equals   approximately  14  percent   of  the  total                                                                   
Representative Austerman  asked if the 14 percent  portion of                                                                   
Medicaid came from  FY 09 budget. Ms. Rehfeld  explained that                                                                   
the  portion arrived  from  the  FY09 and  FY10  supplemental                                                                   
operating   budgets.   She   explained   that   the   federal                                                                   
participation  rate  will  increase   and  the  general  fund                                                                   
participation  lessening over  FY09, FY10,  and a portion  of                                                                   
Representative Austerman asked  if the same criteria apply to                                                                   
this bill  as the  capital transportation,  where you  cannot                                                                   
supplement  general funds.  Ms. Rehfeld  reported that  there                                                                   
are many  requirements stated  in ARRA. The Medicaid  portion                                                                   
was  part  of   the  state  fiscal  stabilization   component                                                                   
included  in  the act  to  help  states dealing  with  budget                                                                   
shortfalls and areas the federal  government was extending or                                                                   
increasing their participation rate.                                                                                            
9:02:01 AM                                                                                                                    
Ms. Rehfeld  noted  that the total  ARRA request  to date  is                                                                   
$642.0  million with  $262.9  for transportation  (HB  154/SB
123),  $251.5 for  non-DOT economic  stimulus  (SB 161),  and                                                                   
$128.5 for Medicaid FY09 and FY10 amendments.                                                                                   
Ms. Rehfeld discussed the pie  chart on Slide 12 highlighting                                                                   
the   requests  before   the   committee.   She  noted   that                                                                   
transportation represents 42 percent  of the items requested.                                                                   
Water   and   sewer   projects  under   the   Department   of                                                                   
Environmental Conservation (DEC)  represent eleven percent of                                                                   
the items  requested.  A research vessel  funded through  the                                                                   
stimulus  act for the  University from  the National  Science                                                                   
Foundation equals 18 percent of the total.                                                                                      
Co-Chair  Hawker  asked about  the  18 percent  dedicated  to                                                                   
University. Ms.  Rehfeld reported  that the 18  percent would                                                                   
be directed entirely to the research vessel.                                                                                    
Co-Chair  Hawker noted  that the  project  has been  underway                                                                   
since 2005. Ms. Rehfeld concurred.                                                                                              
Representative  Austerman  asked  if  the  percentage  is  an                                                                   
earmark in the bill specifically  for the vessel. Ms. Rehfeld                                                                   
stated that the percentage was not technically an earmark.                                                                      
Co-Chair  Hawker  asked if  the  vessel  is identified  as  a                                                                   
dedicated application  of the science  funds or is  it within                                                                   
the latitude  of the  science foundation  to pick and  choose                                                                   
and  they  prioritized  the  research   vessel.  Ms.  Rehfeld                                                                   
responded the latter.                                                                                                           
9:05:27 AM                                                                                                                    
Vice-Chair  Thomas wondered  why the  funds are requested  by                                                                   
the legislature if  the research vessel is funded  by another                                                                   
agency.  Ms.  Rehfeld  explained  that the  funding  must  be                                                                   
authorized by the legislature.                                                                                                  
Co-Chair Stoltze  recalled a previous research  vessel of the                                                                   
University's  that was  since sold. He  cautioned about  such                                                                   
purchases. Co-Chair  Hawker pointed  out that each  component                                                                   
can be rejected or accepted.                                                                                                    
9:08:00 AM                                                                                                                    
Ms. Rehfeld  discussed policy  issues equaling $73.2  million                                                                   
of  the pending  items  before  the committee.  These  policy                                                                   
issues  encompass  statewide  policy and  code  changes  that                                                                   
affect individuals  and/or businesses,  statute changes  that                                                                   
impact the  way a state  agency does business,  and permanent                                                                   
increased liability for the state and employers.                                                                                
Ms.  Rehfeld  continued  with operating  and  capital  issues                                                                   
totaling $214.4  million. She highlighted the  onetime nature                                                                   
of the  funds, the  necessity of  managing expectations,  and                                                                   
opportunities to  benefit Alaska, but will not  increase long                                                                   
term costs to the state.                                                                                                        
Ms.  Rehfeld discussed  the governor  assurances energy.  She                                                                   
explained that additional information  is now available about                                                                   
the  programs.  She  listed  the  program  amounts  as  $28.6                                                                   
million  for   the  state  energy  program,   $18.5  for  the                                                                   
weatherization   program,  and   $8.5   million  for   energy                                                                   
efficiency  grants. She did  not know  if all three  programs                                                                   
are  subject  to  the  assurances.  She  explained  that  the                                                                   
department  is attempting  to sort out  the requirements  and                                                                   
future costs.                                                                                                                   
9:11:08 AM                                                                                                                    
Co-Chair  Hawker asked  if Ms.  Rehfeld  has received  advice                                                                   
from DOE  as to  whether the  assurances are  limited to  the                                                                   
State Energy Program.                                                                                                           
9:11:49 AM                                                                                                                    
JO ELLEN HANRAHAN, ANALYST, OFFICE  OF BUDGET AND MANAGEMENT,                                                                   
reported that  the assurance applied  to all three  programs.                                                                   
She informed that OMB is awaiting  a legal response. Co-Chair                                                                   
Hawker added  that his office  has spoken to  program leaders                                                                   
and he  believes there is  a distinct difference  between the                                                                   
programs. He  expected to see  ongoing clarity.  Ms. Hanrahan                                                                   
agreed and is seeking written guidance from the department.                                                                     
9:14:05 AM                                                                                                                    
Representative Joule  commented on the energy  assurances. He                                                                   
asked about  prior conversations with Alaska  Housing Finance                                                                   
Corporation (AHFC). Ms. Rehfeld  reported that the department                                                                   
has communicated with AHFC. She  emphasized the importance of                                                                   
written advice regarding the energy code.                                                                                       
Representative  Joule asked  about a  potential timeline  for                                                                   
the   written  request.   Ms.   Rehfeld   replied  that   the                                                                   
administration is engaged in obtaining  the written guidance.                                                                   
9:16:03 AM                                                                                                                    
Representative  Austerman asked  about the  May 12 date.  Ms.                                                                   
Rehfeld  informed that  she  was advised  that  the March  23                                                                   
deadline was  not important, but  the May 12,  2009 guideline                                                                   
must be adhered to.                                                                                                             
Co-Chair Hawker commented that  once the guidance is received                                                                   
regarding the  applicable topics, the interpretation  must be                                                                   
made regarding  constraints and  compliance requirements.  It                                                                   
has  been characterized  that Alaska  would have  to adopt  a                                                                   
statewide  building  code.  He   maintained  that  the  state                                                                   
already has  a building code.  He voiced concerned  about the                                                                   
myth and stated that it is not true.                                                                                            
Ms. Rehfeld  maintained that the  requirement is  a statewide                                                                   
energy   building  code,   which   is  specific   to   energy                                                                   
requirements.  She  opined  that  the  debate  is  about  the                                                                   
application  of the  energy code  on a  statewide basis.  The                                                                   
public debate  on energy building  code includes  cost versus                                                                   
potential  savings to  homeowners, cost  to enforce  at state                                                                   
and local  levels, local  control concerns,  and cost  to the                                                                   
state to continue  funding renovation programs  for buildings                                                                   
that are not built to energy efficiency standards.                                                                              
Co-Chair Hawker  wanted to dispel  the myth that  this entire                                                                   
component  of   the  stimulus  package  is   contingent  upon                                                                   
adopting  a statewide  building  code.  Ms. Rehfeld  believed                                                                   
that  significant  decisions   must  be  made  prior  to  the                                                                   
acceptance of  the energy dollars  on a statewide  basis. Co-                                                                   
Chair  Hawker  wanted  to  be   very  clear  about  what  the                                                                   
constraints are.                                                                                                                
Co-Chair Stoltze  thought the  myth had repercussions  in his                                                                   
district. He expressed interest in dispelling the myth.                                                                         
9:19:29 AM                                                                                                                    
Ms.  Rehfeld  noted  that  the  Unemployment  Insurance  (UI)                                                                   
statute  change   requires  policy  discussion.   The  change                                                                   
including an estimated increase  in the number of individuals                                                                   
that  are potentially  eligible for  UI would  result in:  $2                                                                   
million annual impact  on UI trust fund, $10  per worker cost                                                                   
to the  employer, and .03%  employer rate increase.  Co-Chair                                                                   
Hawker asked if  the $2 million impact to the  trust fund was                                                                   
on the state,  a single employer, or the universal  aspect of                                                                   
the statutory changes.                                                                                                          
Ms. Hanrahan reported  the $2 million impact on  the UI trust                                                                   
fund creates  a liability  for the  state and employers  that                                                                   
affects  the  calculation  of  the  employer  rate.  Co-Chair                                                                   
Hawker  asked who  the employer  rate  affects. Ms.  Hanrahan                                                                   
answered all employers subject to UI taxes.                                                                                     
9:21:47 AM                                                                                                                    
Co-Chair Hawker  summarized that the  $10 per worker  rate is                                                                   
the estimated  cost to the employer  based on the  $2 million                                                                   
amount.  He asked  if UI rates  are expected  to increase  or                                                                   
decrease this  year. Ms.  Hanrahan stated  that the  UI rates                                                                   
would decrease even with the addition  of the incentive money                                                                   
because of  changes to  the law that  shifted some  tax share                                                                   
from  the  employer  to  the  employee.  The  reductions  are                                                                   
implemented  in  2009  and  2010.  The  employer  rates  will                                                                   
continue to decrease  even with the addition  of the stimulus                                                                   
9:23:14 AM                                                                                                                    
Co-Chair  Stoltze  requested  a  comprehensive  list  of  the                                                                   
legislation  necessary to complete  the application  process.                                                                   
Ms.  Rehfeld reported  that three  areas  were identified  as                                                                   
requiring legislation:  statewide area code, UI  base change,                                                                   
and   environmental   conservation  funding   would   require                                                                   
granting authority.                                                                                                             
Co-Chair  Stoltze asked  if the legislature  would be  tasked                                                                   
with the  issues. Ms.  Rehfeld acknowledged  that there  is a                                                                   
great  deal to  accomplish in  a  short amount  of time.  She                                                                   
noted that the  debate about the acceptance of  the funds was                                                                   
the priority today.                                                                                                             
9:25:41 AM                                                                                                                    
Representative Crawford  questioned the $2 million  match. He                                                                   
wondered  what the benefit  from the  federal government  for                                                                   
the match would be. Ms. Rehfeld  explained that the impact of                                                                   
changing the base rate would be  in the unemployment payments                                                                   
out of the  UI trust fund. The  $2 million is an  estimate of                                                                   
the requirement.                                                                                                                
9:26:47 AM                                                                                                                    
Ms. Hanrahan clarified  that $15.6 million was  available for                                                                   
modernization  of  the  UI  system.  Representative  Crawford                                                                   
concluded that if employers come  up with $2 million over the                                                                   
next year,  the state  receives $15.6  million in  additional                                                                   
funds  from the  federal government.  Ms. Hanrahan  explained                                                                   
that  the  change  would  be permanent  and  estimated  a  $2                                                                   
million annual  impact on  the UI Trust  fund resulting  in a                                                                   
permanent   increase   in  employer   taxes.   Representative                                                                   
Crawford assumed  that there would  be more leeway  regarding                                                                   
the benefits.  He recalled  raising unemployment  benefits in                                                                   
Alaska recently.  He did  not see how  the increase  could be                                                                   
permanent.  Ms. Hanrahan  thought that  DOL could answer  the                                                                   
9:29:19 AM                                                                                                                    
Representative Fairclough  asked about the decline  in the UI                                                                   
employer and employee  benefits. Ms. Rehfeld  deferred to Mr.                                                                   
Bell in DOL.  Co-Chair Hawker suggested placing  the question                                                                   
on hold as this hearing is simply an overview.                                                                                  
9:30:11 AM                                                                                                                    
Ms.  Rehfeld  referred to  the  pie  chart  on Slide  18  and                                                                   
focused  on the  education stabilization  funds estimated  at                                                                   
$93  million.  The ARRA  items  are pending  discussion.  The                                                                   
largest  chunk is  available for  education funding,  divided                                                                   
into  two pieces.  The  money would  be  available to  school                                                                   
districts based on  Title I qualifications. A  subpart of the                                                                   
stabilization  fund   was  not  allocated  to   any  specific                                                                   
project. The  governor has not  rejected, only put  forth $20                                                                   
million.  She  listed  requirements   the  governor  and  sub                                                                   
recipients would have to certify to the use of these funds.                                                                     
9:33:24 AM                                                                                                                    
Ms.  Rehfeld  spoke  of  allocations  for  special  education                                                                   
funds, technology  grants and the  arts in addition  to those                                                                   
currently  in the FY10  budget. Co-Chair  Hawker returned  to                                                                   
the topic of  education fiscal stabilization  funds. He noted                                                                   
that  one  portion of  the  issue  is the  "mandatory  toward                                                                   
education" fund,  which is not included in  the proposal. The                                                                   
second  portion  is the  fiscal  stabilization  fund at  18.2                                                                   
percent, which has been included.  He wondered if they can be                                                                   
split or must all be used.                                                                                                      
Ms. Rehfeld  agreed that  if the decision  was to  accept the                                                                   
$20 million  instead of  the $93  million. She expected  that                                                                   
the  state  would  have  to  work   with  the  United  States                                                                   
Department   of   Education   to   further   understand   the                                                                   
requirements. The bigger question  is asking school districts                                                                   
how they intend to manage the money.                                                                                            
9:36:10 AM                                                                                                                    
Representative  Austerman  asked about  the  administration's                                                                   
hesitancy  to receive  the $78.5 million  for education.  Ms.                                                                   
Rehfeld responded  that the programs  included in the  27% or                                                                   
$78  million  represent existing  ongoing  federal  education                                                                   
funding.  She  noted talk  of  doubling the  allocation  that                                                                   
annually goes through to school  districts. She expected that                                                                   
the school  districts could report  on the intentions  to use                                                                   
the funds, as well as the plan  for the future when the funds                                                                   
are no longer available.                                                                                                        
Representative  Austerman asked if  the programs  are formula                                                                   
driven  and  would  cost  the  state  additional  money.  Ms.                                                                   
Rehfeld  explained that  the formulas  exist  on the  federal                                                                   
level and  do not impact state  funding. The question  is how                                                                   
to manage  the expectation  at the end  of two years.  Future                                                                   
implications  must  be clarified.  Co-Chair  Hawker  reminded                                                                   
that the topic is better suited for a future conversation.                                                                      
9:38:34 AM                                                                                                                    
Ms. Rehfeld  continued to discuss  the pie chart  and revenue                                                                   
portion.  Child  support  enforcement  is  an  area  that  is                                                                   
somewhat  similar  to  Medicaid  where the  state  can  count                                                                   
federal  incentive  payments  as match  under  child  support                                                                   
helping relieve  general fund pressure  on the state.  In the                                                                   
case  of FY10  budget the  administration arrived  at a  $1.9                                                                   
million  general fund  increment to continue  to operate  the                                                                   
child support enforcement division.  This item was not rolled                                                                   
into the operating budget.                                                                                                      
Co-Chair  Hawker   noted  that  there  are   several  similar                                                                   
programs.  Ms.  Rehfeld reported  that  most  items would  be                                                                   
included in the regular budget process.                                                                                         
9:42:12 AM                                                                                                                    
Ms. Rehfeld  talked about  items in  the Department  of Labor                                                                   
(DOL)  such as  employment  services and  independent  living                                                                   
services.  The  Department  of  Health  and  Social  Services                                                                   
(DHSS) encompasses  approximately 3  percent. She  listed the                                                                   
items.  The health  and  social  services portion  exists  in                                                                   
addition to that currently in the operating budget.                                                                             
Ms. Rehfeld  addressed one concern about  future expectations                                                                   
that the  state will begin to  fund these items in  two years                                                                   
when the federal  money is spent. Co-Chair Hawker  shared the                                                                   
concern about the long term consequences  that the acceptance                                                                   
of the federal funds might have.                                                                                                
9:44:25 AM                                                                                                                    
Ms. Rehfeld listed items in the  Department of Public Safety.                                                                   
The department  would be  applying for competitive  projects.                                                                   
The discussion  is about continuing general fund  support for                                                                   
the additional  troopers. Co-Chair Hawker responded  that the                                                                   
state will increase  the number of public safety  officers in                                                                   
the next five years to meet Alaska's needs.                                                                                     
9:45:57 AM                                                                                                                    
Ms.  Rehfeld reported  on the  Department  of Commerce  (DOC)                                                                   
additions.  She  talked  about  Department  of  Environmental                                                                   
Conservation (DEC)  and the $2  million available  for diesel                                                                   
emission program.  The DOT  has received  funds but  does not                                                                   
have  granting  authority.  Ms. Rehfeld  mentioned  the  $1.5                                                                   
million for  the Consolidated  Omnibus Budget  Reconciliation                                                                   
Act (COBRA).                                                                                                                    
Co-Chair Hawker asked for a definition  of COBRA. Ms. Rehfeld                                                                   
explained that COBRA  provides for people who  have been laid                                                                   
off and require health insurance.  She noted that the federal                                                                   
government has  offered to provide  a portion of  the program                                                                   
funding.  She mentioned  additional funds  available for  the                                                                   
violent crimes compensation board.                                                                                              
9:48:09 AM                                                                                                                    
Ms.  Rehfeld summarized  that  the  onetime nature  of  these                                                                   
funds is the  priority for discussion. She noted  that if the                                                                   
funds are used  for salaries, layoffs may be  delayed but not                                                                   
prevented.  She stated  that the expansion  of services  will                                                                   
abruptly  end.   She  noted   that  public  safety   capacity                                                                   
increases  will create  on-going position  costs. She  stated                                                                   
that permanent  changes in  programs may create  expectations                                                                   
for continuing programs once the  federal funds are no longer                                                                   
9:49:06 AM                                                                                                                    
Ms. Rehfeld  highlighted that  significant responsibility  is                                                                   
incumbent upon the state for pass  through funds as well. She                                                                   
commented on the  discussion about making funds  available to                                                                   
various sub-grantees  through agencies,  they should  be held                                                                   
to  the same  assurances that  the  state must  make. All  of                                                                   
these assurances  are attached to the governor.  Decisions to                                                                   
receive these  funds along  with moving  them to the  correct                                                                   
recipients, must  meet the  same assurances, allowing  Alaska                                                                   
to  report proper  use  of the  funds  including tracking  of                                                                   
expenditures and reporting requirements.                                                                                        
9:50:26 AM                                                                                                                    
Representative  Joule  asked  about  accountability  and  the                                                                   
impacts of spending the money.                                                                                                  
Ms. Rehfeld  replied that budget  preparation must  be result                                                                   
driven.  She  asked  if  the state  is  fully  utilizing  the                                                                   
federal funds that are currently  available. She asked if the                                                                   
state is ready  and willing to accept these  as onetime funds                                                                   
or will there be an expectation  that the state will backfill                                                                   
the hole when  federal funds are gone. She  insisted that the                                                                   
public understand  the decisions  made by the  administration                                                                   
and  the  legislature.  She  welcomed  discussion  about  the                                                                   
potential opportunities  for funds targeted one  time for the                                                                   
benefit of Alaska.                                                                                                              
9:52:46 AM                                                                                                                    
Representative Joule concurred  that the public must be fully                                                                   
informed.  He  wondered  if  the   state  would  provide  the                                                                   
information regarding  the money available to  non-profits or                                                                   
other entities.                                                                                                                 
Ms.  Rehfeld  recommended  ample discussion  for  sources  of                                                                   
information for  individuals and other organizations  wishing                                                                   
to  apply for  funds  available  from federal  agencies.  She                                                                   
mentioned the OMB website as a source of information.                                                                           
9:54:44 AM                                                                                                                    
Co-Chair  Hawker  stated  that  his office  has  received  an                                                                   
ongoing stream  of inquiries  for stimulus fund  information.                                                                   
He commended OMB for their heavy work load.                                                                                     
9:56:16 AM                                                                                                                    
Representative  Joule   commented  that  another   agency  or                                                                   
organization   such  as  the   Denali  Commission   might  be                                                                   
determined  as the  necessary "clearing  house." Ms.  Rehfeld                                                                   
agreed with  Representative Joule's suggestion.  She referred                                                                   
to the ARRA  Web Site at Alaska.gov/Recovery as  a source for                                                                   
Alaska Federal Economic Stimulus  Information including links                                                                   
to Federal Recovery.Gov  web site, grant  information, Alaska                                                                   
legislation, and department fact sheets.                                                                                        
Co-Chair Hawker  wished to discuss  the possible uses  of the                                                                   
federal  funds   without  incurring   long  term   costs.  He                                                                   
recognized that  much discussion was necessary.  He expressed                                                                   
interest in utilizing  the funds without incurring  long term                                                                   
costs  or unreasonable  public  expectations.  He shared  the                                                                   
anxiety over incurring unsustainable long term commitments.                                                                     
Ms. Rehfeld  agreed that  the committee  process will  reveal                                                                   
opportunities  to benefit from  ARRA. The overall  discussion                                                                   
centers on whether  ARRA was designed to preserve  and create                                                                   
Co-Chair  Hawker commented  that the history  of the  package                                                                   
dictates  that the  stimulus  package relieve  the  financial                                                                   
burden  for  the  states.   He  wished  to  avoid  the  false                                                                   
impression  that if the  stimulus package  does not  create a                                                                   
new job then it is not part of the federal intent.                                                                              
10:00:10 AM                                                                                                                   
Ms.    Rehfeld    referred    to   the    ARRA    web    site                                                                   
Alaska.gov/Recovery.   She  offered  to  address   individual                                                                   
agencies  in regard  to  HB 199.  Co-Chair  Hawker wished  to                                                                   
defer the detailed discussion to a future meeting.                                                                              
10:01:29 AM                                                                                                                   
Representative  Kelly  commented   on  the  various  opinions                                                                   
regarding  ARRA.  He  preferred   jobs  rather  than  welfare                                                                   
programs. He  asked about potential consequences  for denying                                                                   
the federal funds.                                                                                                              
Co-Chair  Hawker  asked about  surface  transportation  money                                                                   
being available for redistribution  to other states. He asked                                                                   
if  the redistribution  concept  applied  to other  programs.                                                                   
Ms. Rehfeld reported  that there are other  existing programs                                                                   
that  fall  into  that  category. She  stated  that  she  was                                                                   
unprepared to inform about specific  programs whose funds are                                                                   
available for  redistribution. She noted that  under existing                                                                   
programs, unused dollars are made  available to other states.                                                                   
10:06:10 AM                                                                                                                   
Co-Chair Hawker requested additional information.                                                                               
Representative   Kelly   spoke   of   placeholders   allowing                                                                   
Legislative  Budget and Audit  (LB&A) to add  to the  list of                                                                   
proposed  programs  for  the stimulus  funds,  following  the                                                                   
legislative  session. He  expressed  concern about  releasing                                                                   
the authority  because it may  be difficult for LB&A  to deny                                                                   
requests leading to an increased operating budget.                                                                              
10:08:05 AM                                                                                                                   
Co-Chair  Hawker  noted  he has  had  discussions  about  the                                                                   
authority  of LB&A. LB&A  is a  screening process and  cannot                                                                   
appropriate  funds.  The  legislature  must  appropriate  the                                                                   
money   first.  If   the  legislature   does   not  want   to                                                                   
participate,  they  should  not  appropriate  the  funds.  He                                                                   
agreed that the mechanism was undesirable.                                                                                      
Representative Kelly  expressed concern about running  out of                                                                   
time to  vet all  of the  attractive uses  for the  funds. He                                                                   
stated  that   the  public  should  understand   as  much  as                                                                   
possible. He compared  the stimulus plan to  the introduction                                                                   
of credit card debt to an ailing family.                                                                                        
10:11:36 AM                                                                                                                   
Representative Austerman asked  if the additional items in HB
199 would  be rolled  into a new  Committee Substitute  (CS).                                                                   
Co-Chair Hawker supposed that  HB 199 would be the vehicle or                                                                   
the companion Senate bill. He emphasized the time factor.                                                                       
HB  199  was   heard  and  HELD  in  Committee   for  further                                                                   
10:12:58 AM                                                                                                                   
HOUSE CONCURRENT RESOLUTION NO. 13                                                                                            
     Certifying  that the State  of Alaska requests  and will                                                                   
     use any funds  provided to the state, a  state agency, a                                                                   
     municipality,  or a political  subdivision of  the state                                                                   
     under  the American  Recovery  and  Reinvestment Act  of                                                                   
Co-Chair  Hawker returned  to  HCR 13.  The resolution  would                                                                   
allow  the legislature  to certify  that the  funds would  be                                                                   
used. He  read from  the bill. The  resolution is  a backstop                                                                   
resolution  intended  to  be sympathetic  to  the  governor's                                                                   
bill.  After April  3,  2009 a  legislative  effort would  be                                                                   
necessary.  He  reiterated  that  the  legislation  does  not                                                                   
obligate  the legislature  to accept  funds. The  legislature                                                                   
cannot  mandate that the  executive branch  spend the  funds.                                                                   
The  legislature can  only appropriate  funds.  He termed  it                                                                   
"keeping our options open".                                                                                                     
10:15:59 AM                                                                                                                   
Co-Chair  Stoltze  MOVED  to ADOPT  HCR  13  with  individual                                                                   
recommendations and the accompanying fiscal note.                                                                               
Co-Chair Hawker OBJECTED.                                                                                                       
10:16:31 AM   At-Ease:                                                                                                        
10:17:40 AM   Reconvened:                                                                                                     
Co-Chair Hawker reviewed the question before the committee.                                                                     
Representative  Kelly   commented  that  the   resolution  is                                                                   
necessary   to  continue   the   discussion.   Representative                                                                   
Austerman  echoed Representative  Kelly's  remarks. He  noted                                                                   
concerns, but  the resolution  places the legislature  in the                                                                   
role of discussing ARRA without committing the state.                                                                           
10:19:44 AM                                                                                                                   
Representative  Joule  asked when  the  public  will have  an                                                                   
opportunity  for  public  hearings.  He  labeled  the  public                                                                   
process as an important piece.  Co-Chair Hawker agreed that a                                                                   
full public dialogue  must occur. He noted that  other policy                                                                   
issues compete with the economic issues.                                                                                        
10:21:01 AM                                                                                                                   
Vice-Chair  Thomas  stated  that  he was  available  for  the                                                                   
discussion. He  was cautious  about displacing federal  funds                                                                   
and obligating the state's general funds.                                                                                       
Co-Chair  Hawker   exemplified  a  paradox  of   the  federal                                                                   
stimulus  program.  The  program  was  allegedly  founded  on                                                                   
strengthening the states, but  it has weakened states in some                                                                   
cases. He suggested that a careful look was warranted.                                                                          
10:24:10 AM                                                                                                                   
Representative  Fairclough  reported  on an  email  regarding                                                                   
funds  that  the  governor denied.  She  wondered  if  intent                                                                   
language was  necessary to  ensure public understanding  that                                                                   
the administration  has made  applications during  the policy                                                                   
discussions. She  stated that she was pleased  to receive the                                                                   
email as  the April  3, 2009 deadline  would not  confine the                                                                   
10:25:22 AM                                                                                                                   
Co-Chair Hawker pointed out that state agencies have been                                                                       
directed to fully facilitate receipt funds available without                                                                    
making decisions to accept funds.                                                                                               
Co-Chair Hawker WITHDREW his objection.                                                                                         
HCR 13 was REPORTED out of Committee with a "do pass"                                                                           
recommendation and with a new zero fiscal note by the                                                                           
The meeting was adjourned at 10:26 AM.                                                                                          

Document Name Date/Time Subjects
Economic Stimulus Not Included Op and CIP items 3-22-09.pdf HFIN 3/24/2009 8:30:00 AM
HB 199
CSG Final Analysis of ARRA 02-20-09.pdf HFIN 3/24/2009 8:30:00 AM
HB 199
Economic Stimulus Program Funding Summary March 20 2009.pdf HFIN 3/24/2009 8:30:00 AM
HB 199
Economic Stimulus Sectional March 19, 2009.xls HFIN 3/24/2009 8:30:00 AM
HB 199
House Finance March 24 2009OMB Presentation.ppt HFIN 3/24/2009 8:30:00 AM
HB 199
OMB Economic Stimulus Summary As of March 22 2009.pdf HFIN 3/24/2009 8:30:00 AM
SFIN 3/23/2009 9:00:00 AM
HB 199
SB 161
New HCR13-LEG-COU-3-23-09.pdf HFIN 3/24/2009 8:30:00 AM
HCR 13