Legislature(2021 - 2022)ADAMS 519

04/20/2021 01:30 PM House FINANCE

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01:34:21 PM Start
01:35:13 PM HB181
02:54:10 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 20, 2021                                                                                            
                         1:34 p.m.                                                                                              
1:34:21 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster called the House Finance Committee meeting                                                                      
to order at 1:34 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Kelly Merrick, Co-Chair                                                                                          
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Ben Carpenter                                                                                                    
Representative Bryce Edgmon                                                                                                     
Representative DeLena Johnson                                                                                                   
Representative Andy Josephson                                                                                                   
Representative Bart LeBon                                                                                                       
Representative Sara Rasmussen                                                                                                   
Representative Steve Thompson                                                                                                   
Representative Adam Wool                                                                                                        
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Neil Steininger, Director, Office  of Management and Budget,                                                                    
Office of  the Governor;  Paloma Harbour,  Fiscal Management                                                                    
Analyst,  Office of  Management  and Budget,  Office of  the                                                                    
HB 181    APPROP: SPECIAL; AMERICAN RESCUE PLAN ACT                                                                             
          HB 181 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
Co-Chair Foster reviewed the meeting agenda.                                                                                    
HOUSE BILL NO. 181                                                                                                            
     "An Act making special appropriations relating to the                                                                      
     American Rescue Plan Act; and providing for an                                                                             
     effective date."                                                                                                           
1:35:13 PM                                                                                                                    
NEIL STEININGER, DIRECTOR, OFFICE  OF MANAGEMENT AND BUDGET,                                                                    
OFFICE   OF   THE    GOVERNOR,   introduced   a   PowerPoint                                                                    
presentation titled  "State of  Alaska Office  of Management                                                                    
and Budget: House Finance HB  181 ARP Budget Bill Overview,"                                                                    
dated April 20,  2021 (copy on file). He noted  there were a                                                                    
handful of items  not currently included in  the budget bill                                                                    
due to a  lack of information from the  American Rescue Plan                                                                    
Act (ARPA).  He explained  that the  items were  included in                                                                    
the  presentation  for   the  committee's  information.  The                                                                    
presentation outlined the reason why  the items had not been                                                                    
put  forward. He  relayed that  once additional  information                                                                    
had been  received from the  federal government,  the Office                                                                    
of Management and Budget (OMB)  would update the legislature                                                                    
and  would  communicate  whether  or  not  the  decision  to                                                                    
include the items had been made.                                                                                                
PALOMA HARBOUR, FISCAL  MANAGEMENT PRACTICES ANALYST, OFFICE                                                                    
OF   MANAGEMENT  AND   BUDGET,  OFFICE   OF  THE   GOVERNOR,                                                                    
referenced  a three-page  handout titled  "COVID-19 Response                                                                    
Funding"  provided by  OMB (copy  on  file), which  provided                                                                    
additional  information  on many  of  the  direct grants  to                                                                    
agencies. She  noted there were  items listed on  page three                                                                    
that were not  included in the bill but would  be covered in                                                                    
the  presentation.  She  turned  to  slide  2  of  the  main                                                                    
presentation related  to direct grants from  ARPA. She began                                                                    
with  grants included  in  the bill  for  the Department  of                                                                    
Education  and  Early   Development  (DEED)  including  $2.2                                                                    
million  in institute  or museum  and library  service funds                                                                    
and $758,700 in National Endowment for the Arts funding.                                                                        
Ms. Harbour addressed  DEED pending items that  were not yet                                                                    
included  in   the  bill.  The  first   item  was  emergency                                                                    
education  relief  funding.  She   explained  that  OMB  was                                                                    
awaiting additional guidance on  state maintenance of effort                                                                    
requirements pertaining  to the item. She  reported that OMB                                                                    
had  received the  requirements  the previous  day from  the                                                                    
U.S.  Department  of  Education.   The  federal  agency  had                                                                    
scheduled a  call with states  later in the week  to discuss                                                                    
the guidance  in further detail.  She stated that  OMB hoped                                                                    
to have additional information shortly.                                                                                         
Co-Chair  Foster  noted  that Representative  Carpenter  had                                                                    
joined the meeting.                                                                                                             
Ms. Harbour  continued to  review slide  2. The  second DEED                                                                    
item not yet included in the  bill was funding for the Child                                                                    
Nutrition  Program; OMB  was  awaiting  further funding  and                                                                    
program   information.  The   bill  did   not  yet   include                                                                    
Department  of Environmental  Conservation (DEC)  Low Income                                                                    
Household  Water  Assistance  Program funds.  She  explained                                                                    
that the program  was brand new and  still under development                                                                    
by  the   federal  government;  OMB  was   awaiting  further                                                                    
information.  She  moved to  the  Department  of Health  and                                                                    
Social  Services  (DHSS)  and   highlighted  that  the  bill                                                                    
included  funding for  the Centers  for Disease  Control and                                                                    
Prevention  (CDC) in  the amount  of $22  million for  COVID                                                                    
testing and  $32.4 million for COVID  vaccinations. The bill                                                                    
also included  funding from the Administration  for Children                                                                    
and  Families in  the amount  of $3.4  million for  pandemic                                                                    
emergency  assistance  to  provide  short-term  nonrecurring                                                                    
support  to   impacted  families.  Additionally,   the  bill                                                                    
included $1.2  million for the  Women, Infant,  and Children                                                                    
program for benefit improvements.                                                                                               
Co-Chair  Foster asked  if the  items included  in the  bill                                                                    
were considered  restricted and there was  no question where                                                                    
the funds could go.                                                                                                             
Ms. Harbour replied in the affirmative.                                                                                         
1:39:54 PM                                                                                                                    
Representative Wool asked if  the presentation was referring                                                                    
to direct  grants that went through  the state appropriation                                                                    
system and not directly to state agencies.                                                                                      
Ms. Harbour  answered that the  grant funding was  direct to                                                                    
state agencies  for a specific program.  She elaborated that                                                                    
the funding had specific criteria  and where it went was not                                                                    
discretionary. She clarified that  the direct grants did not                                                                    
include funding  going directly to  businesses, individuals,                                                                    
or  tribal governments.  The presentation  and bill  did not                                                                    
cover  funding sources  that did  not go  through the  state                                                                    
Representative Wool  asked for  verification that  the money                                                                    
under discussion  for the direct  grant was $1  billion that                                                                    
went  through the  state budget  and not  directly to  other                                                                    
Ms. Harbour replied in the  negative. She clarified that the                                                                    
$1 billion  was the  last page of  the presentation  and OMB                                                                    
was not referring to it  as direct agency grants because the                                                                    
funding was  more discretionary in  terms of where  it could                                                                    
go.  The money  currently under  discussion included  grants                                                                    
above the $1 billion.                                                                                                           
1:41:33 PM                                                                                                                    
Vice-Chair  Ortiz looked  at the  $22  million for  COVID-19                                                                    
testing on slide 2. He  noted that the funding went directly                                                                    
to  DHSS. He  asked if  the  funds could  be distributed  to                                                                    
community  airports  to fund  free  testing  of visitors  to                                                                    
Ms.  Harbour responded  that a  number of  the programs  had                                                                    
very specific requirements and it  would be best to have the                                                                    
agencies  administering  the  programs answer  some  of  the                                                                    
detailed questions. She elaborated  that the majority of the                                                                    
testing [under  the $22 million  increment] was  specific to                                                                    
education testing  to help schools  reopen. She  noted there                                                                    
was  some funding  for  underprivileged individual  testing.                                                                    
She would have to look into  whether the funds could be used                                                                    
at airports.                                                                                                                    
Ms. Harbour relayed  that the bill did  not include anything                                                                    
OMB   had  already   submitted  a   budget  amendment   for,                                                                    
specifically related to housing programs.                                                                                       
Representative Josephson asked  where the housing amendments                                                                    
had been submitted.                                                                                                             
Ms. Harbour answered that the  amendments had been submitted                                                                    
to  the capital  and operating  budgets. The  administration                                                                    
had submitted  amendments for  the Housing  Emergency Rental                                                                    
Assistance  program to  Alaska  Housing Finance  Corporation                                                                    
(AHFC),  a mortgage  assistance program,  and a  home choice                                                                    
vouchers  program.  She believed  there  were  four or  five                                                                    
related amendments.                                                                                                             
Representative Josephson thought Ms.  Harbour had stated the                                                                    
amendments had been submitted through ARPA.                                                                                     
Ms. Harbour  clarified that  she had  meant there  were some                                                                    
ARPA  items   for  the  housing   programs  that   had  been                                                                    
previously  submitted as  amendments.  She  noted the  items                                                                    
were not included in HB 181.                                                                                                    
1:44:55 PM                                                                                                                    
Ms.  Harbour advanced  to slide  3 and  continued to  review                                                                    
ARPA direct  grants for DHSS.  She noted that  the following                                                                    
funds   were   estimates.   The  bill   included   childcare                                                                    
development   fund  grants   of  $28.4   million,  childcare                                                                    
stabilization   grants  of   $45.5   million,  child   abuse                                                                    
prevention funding  of $291,000,  mental health  block grant                                                                    
funding of  $3 million, substance abuse  block grant funding                                                                    
of $4.7  million, Low Income Home  Energy Assistance Program                                                                    
(LIHEAP)   funding   of   $23.7  million,   various   grants                                                                    
supporting  older   Americans  and  their  families   of  $7                                                                    
million, and  pandemic EBT  administrative grant  funding of                                                                    
Co-Chair Foster asked what EBT stood for.                                                                                       
Ms.  Harbour replied  she believed  it  was electronic  bank                                                                    
transfer [electronic benefit transfer].                                                                                         
Representative  LeBon  looked at  the  grants  for DHSS  and                                                                    
asked about  the funding formula  within the  dollar amounts                                                                    
designated  to  the  specific programs.  He  asked  how  the                                                                    
funding allocation was community or population driven.                                                                          
Ms.  Harbour responded  that the  ARPA funding  had specific                                                                    
stipulations.  For example,  the vaccine  funding was  split                                                                    
between education  funding and  underprivileged individuals.                                                                    
She  explained that  the  federal  agency administering  the                                                                    
program made further allocations.                                                                                               
Representative  LeBon looked  at  the Childcare  Development                                                                    
Fund grant  on slide  3. He stated  that Fairbanks  and many                                                                    
communities  had  a  robust childcare  program  including  a                                                                    
variety  of  private   and  public  organizations  providing                                                                    
services. He  asked how  the money would  be spent  and used                                                                    
and how it benefitted a current childcare operator.                                                                             
Ms. Harbour  answered that it  would likely be best  to have                                                                    
the agencies speak to the  specific grants. She did not know                                                                    
what formula would be used to distribute the funding.                                                                           
Representative  LeBon  stated  his  understanding  that  the                                                                    
guidance on how  the money would be spent  had been received                                                                    
by state agencies.  He asked for verification  that DHSS had                                                                    
received the information.                                                                                                       
Ms. Harbour  replied that DHSS  had received  various levels                                                                    
of guidance on  the programs. The department  knew there was                                                                    
no  significant  match  requirement  tied  to  the  funding;                                                                    
therefore, OMB  had put the items  in the bill. She  did not                                                                    
know if DHSS had received all of the program details yet.                                                                       
Representative  Carpenter thought  EBT stood  for electronic                                                                    
benefit transfer in regard to the school lunch program.                                                                         
1:48:30 PM                                                                                                                    
Ms.  Harbour addressed  pending DHSS  items not  included in                                                                    
the  bill on  slide 3.  She detailed  that OMB  was awaiting                                                                    
state  match requirement  guidance for  childcare assistance                                                                    
and  home  and  community-based  services  enhanced  federal                                                                    
participation.  Additionally, OMB  was awaiting  funding and                                                                    
program   information   for   the   Supplemental   Nutrition                                                                    
Assistance Program administrative grant increase.                                                                               
Co-Chair Foster  asked if the  pending items  were mentioned                                                                    
in the  bill as  to be  determined later.  Alternatively, he                                                                    
asked if the items were not referenced in the bill at all.                                                                      
Ms. Harbour confirmed that the  grants were not included [or                                                                    
referred to]  in the  bill. The items  were included  in the                                                                    
presentation for the committee's information.                                                                                   
1:49:33 PM                                                                                                                    
Ms. Harbour  turned to  slide 4  and reviewed  direct grants                                                                    
included  in  the  bill  for the  Department  of  Labor  and                                                                    
Workforce  Development  (DLWD).  The  bill  included  higher                                                                    
education  emergency  relief  funds  for  Alaska  Vocational                                                                    
Technical  Center   (AVTEC)  in  the  estimated   amount  of                                                                    
$441,000. She  noted that  half of the  funding would  go to                                                                    
students  as  grants.  The  bill  also  included  a  capital                                                                    
project for the  Unemployment Insurance System modernization                                                                    
in  the estimated  amount of  $6 million.  She moved  to the                                                                    
Department  of  Military  and Veterans  Affairs  (DMVA)  and                                                                    
highlighted  an emergency  management performance  grant for                                                                    
$882,300  included in  the bill.  The bill  included federal                                                                    
transit administration grants in  the amount of $6.6 million                                                                    
for the  Department of Transportation and  Public Facilities                                                                    
(DOT).  She  noted  the bill  did  not  include  anticipated                                                                    
funding from  the Federal Aviation Administration  (FAA) for                                                                    
airport  rescue  grants.  The  administration  was  awaiting                                                                    
funding information  for the item.  The bill  included $30.8                                                                    
million for higher education emergency  relief funds for the                                                                    
University of Alaska.                                                                                                           
Co-Chair Foster requested to receive  a copy of the bill for                                                                    
all members.                                                                                                                    
Representative Wool  referenced the higher  education funds.                                                                    
He noted  at a previous meeting  he had asked OMB  about the                                                                    
funding  split  between  the  university  and  students.  He                                                                    
remarked that  initially students  had been forced  to leave                                                                    
[due to  the pandemic]  and were  reimbursed for  housing or                                                                    
tuition. He wondered if the  funding going forward was meant                                                                    
to  give students  a break  on  tuition via  grants. He  was                                                                    
trying  to understand  the  reasoning  behind directing  the                                                                    
money  to students  if their  semester  had not  necessarily                                                                    
been disrupted.                                                                                                                 
Ms.  Harbour answered  that  the funds  could  go to  defray                                                                    
students'  costs,  whether  the   costs  were  incurred  for                                                                    
distance learning  or for technology  upgrades to  allow for                                                                    
increased  distance  learning.  She stated  that  the  funds                                                                    
could  potentially go  towards  tuition costs.  She was  not                                                                    
certain how  the university would  grant the funding  out to                                                                    
Representative Wool  asked about  the maintenance  of effort                                                                    
and  noted that  the University  of Alaska  was getting  $30                                                                    
million  in the  bill.  He  asked if  OMB  was assuming  the                                                                    
variance or exemption would be granted.                                                                                         
Ms. Harbour  clarified that  the higher  education emergency                                                                    
relief funds did not require  a state maintenance of effort.                                                                    
She  explained that  the maintenance  of effort  requirement                                                                    
applied  to  education  funds   referenced  earlier  in  the                                                                    
presentation that  had not  yet been  included in  the bill.                                                                    
The   administration  was   still  waiting   for  additional                                                                    
information on the maintenance of effort requirement.                                                                           
1:53:02 PM                                                                                                                    
Representative  LeBon looked  at the  Unemployment Insurance                                                                    
System Modernization funds  at the top of slide  4. He asked                                                                    
if  the  state had  a  need  to modernize  its  unemployment                                                                    
insurance  system. He  wondered if  the funds  would default                                                                    
back to the  federal government if the state did  not have a                                                                    
need to  modernize the system.  He asked if the  state would                                                                    
use the  funds for modernization even  if it did not  have a                                                                    
need to do so.                                                                                                                  
Ms.  Harbour  replied  that  it was  definitely  a  need  in                                                                    
Alaska.  She   detailed  that  the   existing  [unemployment                                                                    
insurance]  system was  old,  and  modernization would  help                                                                    
with  transparency, detecting  fraud and  other things.  She                                                                    
elaborated that  the grant was  a competitive award  for the                                                                    
specific purpose;  therefore, if the state  received a grant                                                                    
it would have to be used for system modernization.                                                                              
1:54:20 PM                                                                                                                    
Ms. Harbour  moved to slide  5 and addressed two  items tied                                                                    
to  the  Coronavirus  State and  Local  Fiscal  Relief  Fund                                                                    
(CSLFRF). The  first item was  for capital  projects funding                                                                    
of  $112.3   million.  She  noted   it  was   a  placeholder                                                                    
appropriation  at  present. She  shared  that  all OMB  knew                                                                    
currently  about  the  funding   was  the  language  in  the                                                                    
[federal]  bill stating  that the  funding was  allowable to                                                                    
carry out critical capital  projects directly enabling work,                                                                    
education, and health  monitoring, including remote options,                                                                    
in response to  the public health emergency  with respect to                                                                    
the Coronavirus Disease. She reported  that initial calls to                                                                    
Treasury indicated  the language  only applied  to broadband                                                                    
projects.  She  stated  that further  federal  guidance  was                                                                    
anticipated by May 10th.                                                                                                        
Representative   Johnson  asked   for   a   repeat  of   the                                                                    
information   related  to   broadband.   She  thought   ARPA                                                                    
originally included water and sewer as well.                                                                                    
Ms.  Harbour complied.  She explained  that the  information                                                                    
about  the rest  of the  CSLFRF funds  in the  amount of  $1                                                                    
billion   was   addressed  on   the   last   slide  of   the                                                                    
presentation.  She detailed  that  one of  the  uses of  the                                                                    
specific  funding   was  on  water,  sewer,   and  broadband                                                                    
infrastructure projects. The item on  slide 5 was a separate                                                                    
allocation in ARPA specifically  for capital project funding                                                                    
to  carry out  critical capital  projects directly  enabling                                                                    
work,  education, and  health  monitoring, including  remote                                                                    
options.   She   shared    that   Treasury   was   initially                                                                    
interpreting the language to mean broadband.                                                                                    
1:56:22 PM                                                                                                                    
Representative   Rasmussen  asked   if   it  would   include                                                                    
telehealth provisions.                                                                                                          
Ms. Harbour did not currently know.                                                                                             
Co-Chair  Foster referenced  the $112.3  million in  capital                                                                    
projects funding on  slide 5. He thought it  was funding for                                                                    
water, sewer,  and broadband. He  surmised that  Ms. Harbour                                                                    
was saying  the funding was  separate from that  purpose. He                                                                    
stated his  understanding there was  a separate  bucket that                                                                    
applied  to  water,  sewer,  and  broadband.  He  asked  for                                                                    
verification  that  the  $112.3 million  was  for  broadband                                                                    
Ms. Harbour replied in the  affirmative. She explained there                                                                    
was a separate  $1 billion in discretionary  funding for the                                                                    
state that  could be  used for  water, sewer,  and broadband                                                                    
infrastructure.  The  $112.3  million   on  slide  5  was  a                                                                    
separate set-aside  that OMB had initially  thought could be                                                                    
used  for   more  than  broadband;  however,   Treasury  was                                                                    
indicating the funding was for broadband only.                                                                                  
1:57:49 PM                                                                                                                    
Ms. Harbour continued  to review slide 5  and explained that                                                                    
the second  item tied  to the CSLFRF  was $185.4  million in                                                                    
pass-through  funding   via  the  Department   of  Commerce,                                                                    
Community and Economic Development  (DCCED). The funding was                                                                    
for  Alaska  communities  defined as  non-entitlement  local                                                                    
governments  and counties.  She  detailed  that the  funding                                                                    
would  be passed  through  [DCCED] as  grants  based on  the                                                                    
allocation  methodology   in  the   act  and   clarified  by                                                                    
Vice-Chair Ortiz  asked for a definition  of non-entitlement                                                                    
local governments and counties.                                                                                                 
Ms.  Harbour answered  that ARPA  tied the  definition to  a                                                                    
federal program. She elaborated  for the most part, counties                                                                    
were the  same as the  state's boroughs. She  explained that                                                                    
non-entitlement   local  governments   were  cities   and/or                                                                    
unorganized communities.                                                                                                        
Representative  Rasmussen asked  for clarification  that the                                                                    
funding was  direct to  nonorganized communities  in Alaska.                                                                    
She  asked  if  there   was  additional  funding  that  went                                                                    
directly to organized municipalities and boroughs.                                                                              
Co-Chair Foster  asked if non-entitlement  local governments                                                                    
and counties included villages.                                                                                                 
Ms.  Harbour answered  that  the non-entitlement  allocation                                                                    
primarily included cities such as  Adak City and Akiak City.                                                                    
She  expounded  that the  U.S.  Senate  provided an  initial                                                                    
allocation that  would be refined by  Treasury before Alaska                                                                    
received  the funding.  The county  allocation included  the                                                                    
state's  boroughs such  as the  Aleutians East  Borough. She                                                                    
noted  the information  had been  provided to  the committee                                                                    
the last  time OMB had  presented on ARPA; however,  she did                                                                    
not have it on hand at the current meeting.                                                                                     
Co-Chair Foster requested a copy of the information.                                                                            
1:59:59 PM                                                                                                                    
Representative  Wool assumed  it was  more of  a per  capita                                                                    
calculation. He asked if the information was in the bill.                                                                       
Ms.  Harbour answered  that  the bill  did  not include  any                                                                    
funding  that would  go  directly to  a  community from  the                                                                    
federal   government,   including    the   Municipality   of                                                                    
Anchorage's allocation.  The bill only included  funding for                                                                    
communities  that would  receive their  funding through  the                                                                    
Representative Wool  asked if  it was  possible to  create a                                                                    
flow chart to show funds  going through the state and others                                                                    
that went directly to communities.  He remarked that some of                                                                    
the funds  in the presentation went  through legislation and                                                                    
others did not.                                                                                                                 
Representative Josephson asked about  the nexus to COVID and                                                                    
surmised  that  it  likely varied  by  item.  He  referenced                                                                    
community pass through  items on slide 5 and  assumed it was                                                                    
not like  community assistance,  which was  unencumbered and                                                                    
could be used liberally by a community for its own purpose.                                                                     
Ms.  Harbour agreed  there were  stipulations  in ARPA  that                                                                    
specified how  funds could be  spent, which were  similar to                                                                    
the  state. She  noted that  the presentation  was about  to                                                                    
cover the topic.                                                                                                                
2:02:13 PM                                                                                                                    
Mr. Steininger turned to slide  6 and addressed CSLFRF state                                                                    
funding uses and  restrictions. He referenced Representative                                                                    
Josephson's  question  and  relayed  that  the  pass-through                                                                    
funding  to communities  was  subject  to ARPA  stipulations                                                                    
outlined on  the slide. He  noted that communities  had more                                                                    
discretion to  use the funding  for COVID-related  items. He                                                                    
read from the slide that  specified how the ARPA funds could                                                                    
be used to cover expenses:                                                                                                      
     A.   to  respond to  the public  health emergency  with                                                                    
     respect to  the Coronavirus Disease 2019  (COVID19)  or                                                                    
     its negative economic impacts;                                                                                             
Mr. Steininger noted that item  A included items benefitting                                                                    
households or businesses impacted by  COVID. He read items B                                                                    
and C:                                                                                                                          
     B.   to  respond to  workers performing  essential work                                                                    
     during   the  COVID-19   public  health   emergency  by                                                                    
     providing  premium pay  to eligible  workers performing                                                                    
     such essential work;                                                                                                       
     C.   for the  provision of  government services  to the                                                                    
     extent of the reduction in  revenue due to the COVID-19                                                                    
     public health emergency  relative to revenues collected                                                                    
     in the most recent full fiscal year;                                                                                       
Mr. Steininger noted  that item C would use  a comparison to                                                                    
revenues from FY 19. He read item D:                                                                                            
     D.   to make necessary investments  in water, sewer, or                                                                    
     broadband infrastructure.                                                                                                  
Mr.  Steininger elaborated  that item  D was  infrastructure                                                                    
mentioned in  ARPA that was  separate from the  $112 million                                                                    
capital project grant. There  were two restrictions included                                                                    
in the Act:                                                                                                                     
     A.   direct or  indirect offsets to a  reduction in net                                                                    
     tax  revenue resulting  from changing  law, regulation,                                                                    
     or  administrative  interpretation during  the  covered                                                                    
     period  that reduces  or delays  the imposition  of any                                                                    
     tax or tax increase;                                                                                                       
     B.   deposits into any pension fund.                                                                                       
Mr.  Steininger  elaborated  that  under  the  reduction  in                                                                    
revenue restriction,  the reduction  could not  be due  to a                                                                    
policy  change by  the state.  Additionally, the  $1 billion                                                                    
could   not  be   deposited  into   the  Public   Employees'                                                                    
Retirement  System  (PERS)  or Teachers'  Retirement  System                                                                    
(TRS) funds. He noted  that the capital projects description                                                                    
indicated  the  capital  project funds  [of  $112.3  million                                                                    
shown  on  slide  5]  narrowly   focused  on  broadband.  He                                                                    
remarked that the federal  interpretation was different than                                                                    
OMB had initially understood. He  advised members to keep it                                                                    
in  mind when  interpreting  the four  guidelines listed  on                                                                    
slide  6. The  state would  be subject  to how  the Treasury                                                                    
read  the guidelines.  He remarked  that  Treasury may  read                                                                    
things a bit differently than the state did.                                                                                    
2:05:10 PM                                                                                                                    
Representative  Rasmussen asked  if Treasury  would consider                                                                    
employees in retail, grocery stores,  and food service to be                                                                    
essential workers.                                                                                                              
Co-Chair Foster replied  that he would interpret  it in that                                                                    
way, but  he did  not know whether  the Treasury  would. The                                                                    
administration  had  included  it  in a  list  of  questions                                                                    
submitted to  the Treasury. He  noted the question  was also                                                                    
included  on   a  list  sent  by   the  National  Governor's                                                                    
Association  and  several   other  organizations.  They  had                                                                    
requested a  better definition of essential  worker and what                                                                    
types of  workers it applied  to. His initial read  would be                                                                    
workers who had  been required to work as a  result of being                                                                    
deemed essential. He stated it was speculation at present.                                                                      
Representative  Rasmussen  stated  it would  be  helpful  to                                                                    
better  understand  the  definition  of  eligible  essential                                                                    
worker.  She  stated  an unintentional  consequence  of  how                                                                    
government  had responded  to the  pandemic  was workers  no                                                                    
longer had the  same incentive to go work  in some positions                                                                    
such  as  retail  at  a  grocery store  due  to  the  amount                                                                    
unemployment benefits  being received. She thought  giving a                                                                    
grant to  companies who  were trying  to bring  in employees                                                                    
could possibly  help offset the unintended  consequence. She                                                                    
hoped  they  would  learn  more about  the  topic  once  the                                                                    
guidance was received.                                                                                                          
2:07:33 PM                                                                                                                    
Representative   Josephson  stated   that  in   the  Capitol                                                                    
Building  there  had  been  some  debate  over  who  was  an                                                                    
essential worker.  He discussed  that if  the state  were to                                                                    
pay  premium  pay,  it  would have  to  follow  the  federal                                                                    
guideline specifying  who qualified as an  essential worker,                                                                    
otherwise the state would violate the guideline.                                                                                
Mr. Steininger  agreed. He expounded  that the state  had to                                                                    
follow the  federal guidelines for  any of the  ARPA funding                                                                    
it received.                                                                                                                    
Ms.  Harbour   clarified  that  the  state   could  be  more                                                                    
restrictive than  the federal  guidelines, but  not broader.                                                                    
She explained  that if  the federal  government's definition                                                                    
of essential workers was very  broad and the state wanted to                                                                    
focus on  retail workers, it  could narrow  the eligibility,                                                                    
but not broaden it.                                                                                                             
Representative  Johnson  observed  there were  a  couple  of                                                                    
missing  pages  in the  presentation.  She  believed it  was                                                                    
being recopied for members.                                                                                                     
Representative Carpenter asked  for verification the handout                                                                    
showed local pass through funding.                                                                                              
Mr. Steininger agreed.                                                                                                          
Co-Chair  Foster  asked  for  verification  the  passthrough                                                                    
funding  fell outside  of the  $1 billion.  He noted  it was                                                                    
outside  of any  discretion  the state  had  [he received  a                                                                    
nonverbal affirmative from the presenters].                                                                                     
Representative Wool  asked about the premium  pay component.                                                                    
He assumed it was  a block grant or a pot  of money going to                                                                    
an  entity   that  people  applied   for.  He   thought  the                                                                    
definition  of  essential  workers would  likely  be  fairly                                                                    
broad  and would  not be  limited to  healthcare, but  would                                                                    
include teachers, grocery  clerks, plumbers, utility workers                                                                    
and  other.   He  noted  that  without   the  aforementioned                                                                    
workers, the state would have  a difficult time functioning.                                                                    
He  imagined  there  would be  substantial  demand  for  the                                                                    
funding. He asked if different  entities would apply for the                                                                    
funds.  He understood  the amount  was capped  at a  certain                                                                    
amount per  hour, per  year. He  asked how  the distribution                                                                    
worked once the allocation was made.                                                                                            
Mr.  Steininger   answered  that  if  the   state  chose  to                                                                    
establish an essential worker premium  pay concept, it would                                                                    
be  determined  in  the  setup   of  the  program.  How  the                                                                    
distribution  would  work  would  depend on  how  the  state                                                                    
structured the program.                                                                                                         
2:11:02 PM                                                                                                                    
Mr.   Steininger  looked   at  the   CSLFRF  state   funding                                                                    
categories from Section 1 of the  bill on slide 7. Section 1                                                                    
of the  bill covered  discretionary funding coming  into the                                                                    
state and  Sections 2 through  8 included direct  grants Ms.                                                                    
Harbour had reviewed. He noted  that the five categories and                                                                    
dollar  values  on  slide  7  were  not  set  in  stone.  He                                                                    
explained  that  OMB had  established  the  categories as  a                                                                    
starting  point  to determine  how  to  best distribute  the                                                                    
funding  in excess  of $1  billion coming  to the  state. He                                                                    
detailed  that  OMB  had  looked   at  different  areas  and                                                                    
categories of impact to the  state that the money could help                                                                    
relieve.  The  first   category  was  "Protecting  Alaskans"                                                                    
centered around individual  security including food security                                                                    
and  health response  that was  not covered  by some  of the                                                                    
direct grants to DHSS. He  pointed out that the dollar value                                                                    
shown on slide  7 was bolstered by direct  grants for health                                                                    
response. The  category included  one specific  funding item                                                                    
of  $6  million for  sexual  assault  and domestic  violence                                                                    
organizations  due  to  an  increase  in  cases  during  the                                                                    
Mr.  Steininger moved  to  the second  category  on slide  7                                                                    
"Alaska Tourism  Revitalization" that included  $150 million                                                                    
to  support  programs  designed  to  help  impacted  tourism                                                                    
businesses to  rebuild the industry  that had been  hit hard                                                                    
over  the  past  year.  The   third  section  was  "Economic                                                                    
Recovery   and  Innovation"   and  focused   on  relief   to                                                                    
businesses and  organizations in  addition to  investment in                                                                    
future economy  and rebuilding out of  the economic downturn                                                                    
resulting from  COVID. The fourth  category "Build  Alaska                                                                      
Infrastructure  Investment" was  focused  on item  D of  the                                                                    
guidance [on  slide 6] for  water, sewer, and  broadband. He                                                                    
noted  that based  on the  forthcoming federal  guidance, it                                                                    
may  be  possible  to  do   other  types  of  infrastructure                                                                    
investment as well.                                                                                                             
Mr.  Steininger reviewed  the fifth  category "General  Fund                                                                    
Offset" on  slide 7.  The category focused  on Section  C of                                                                    
the bill that allowed the  state to fund government services                                                                    
to the extent  of its revenue loss. The  section would allow                                                                    
the state to put ARPA funding  in the bank to compensate for                                                                    
lost  revenue  since  the  beginning  of  the  pandemic.  He                                                                    
reported that  based on the current  guidance, OMB estimated                                                                    
the  state could  utilize the  full $1  billion for  General                                                                    
Fund offset. He remarked that  it may get refined as further                                                                    
guidance came  in and the state  may not be able  to utilize                                                                    
the full  funding for  General Fund offset  in one  year. He                                                                    
relayed that if  there were ideas for use of  the funds that                                                                    
did not  perfectly fit  the federal  guidance, there  was an                                                                    
option to  offset General Fund  costs in one place  in order                                                                    
to  execute on  a program  that may  be better  for Alaska's                                                                    
2:15:36 PM                                                                                                                    
Co-Chair Merrick  asked if the  money came in  two tranches,                                                                    
whether it  would be up  to the  legislature to divvy  it up                                                                    
between the programs.  She used the example  of two payments                                                                    
of  $500  million. She  asked  if  the  payments had  to  be                                                                    
divided equally.                                                                                                                
Mr. Steininger  replied that whether  to appropriate  all of                                                                    
the money upfront for specific  purposes or appropriate some                                                                    
upfront  and   some  later  when  more   information  became                                                                    
available was  one of the  bigger policy questions  that the                                                                    
executive  branch   and  the  legislature  needed   to  work                                                                    
through.  He  reiterated  his  earlier  statement  that  the                                                                    
dollar values [listed on slide 7]  were not set in stone. He                                                                    
stated that if  half the money came in the  current year and                                                                    
half  came in  the  following year,  he  suggested that  the                                                                    
state would likely want to  focus the first tranche of money                                                                    
on things  that were best to  set up soon. For  example, the                                                                    
first tranche  could be used  for workforce  development and                                                                    
things  that   could  prepare  the  state   for  a  possible                                                                    
infrastructure  plan  from  the federal  government  in  the                                                                    
future.  He stated  that  the categories  shown  on slide  7                                                                    
would not all be a clean 50/50 split.                                                                                           
Co-Chair  Merrick asked  about the  General Fund  offset and                                                                    
why it would be beneficial to  do it in the first tranche as                                                                    
opposed to later on.                                                                                                            
Mr. Steininger answered  it was a good idea  to consider the                                                                    
General  Fund  offset  upfront because  the  state's  future                                                                    
revenue projections  were higher than they  were at present.                                                                    
Based on  federal guidance, it  was OMB's  understanding the                                                                    
comparison was  between current year revenue  and revenue in                                                                    
FY 19. He explained that current  year revenue for FY 21 was                                                                    
estimated  at  about  $750  million lower  than  in  FY  19,                                                                    
whereas  it was  only  about $400  million  to $460  million                                                                    
lower in  FY 22.  He elaborated that  the amount  of General                                                                    
Fund  offset  the  state  could  accomplish  in  the  future                                                                    
appeared  to  be  shrinking.  He relayed  that  one  of  the                                                                    
questions  OMB had  submitted to  Treasury  was whether  the                                                                    
state  was allowed  to count  the  revenue loss  from FY  20                                                                    
toward the concept  of General Fund offset; if  so, the lost                                                                    
revenue was  greater than  $860 million in  FY 20  alone. He                                                                    
stated  that with  the uncertainty,  it was  a good  idea to                                                                    
focus the  General Fund  offset in  the early  stages before                                                                    
revenue increased.                                                                                                              
Co-Chair Foster  stated that  it was  possible to  split the                                                                    
money in  two tranches.  He elaborated that  the legislature                                                                    
could elect to receive the money  in two tranches and it was                                                                    
also possible  the federal government  would mandate  it. He                                                                    
explained that the  money could be split  over FY21/FY22 and                                                                    
FY23 as  one scenario.  He asked  for verification  that the                                                                    
governor's bill would  appropriate the full $1  billion in a                                                                    
multiyear appropriation over FY 21 through FY 24.                                                                               
Mr.  Steininger answered  in the  affirmative. He  explained                                                                    
that  primarily  for  the  sake   of  simplicity,  the  bill                                                                    
included  a multiyear  appropriation of  the full  amount if                                                                    
the revenue came in from  the federal government within that                                                                    
appropriation.  He noted  that  the  federal government  may                                                                    
require  the funding  to  come  in two  pots  and the  state                                                                    
should be prepared for that scenario.                                                                                           
2:19:54 PM                                                                                                                    
Representative Wool  referenced the  General Fund  offset of                                                                    
up to $1.019 billion. He asked  if it was primarily based on                                                                    
the oil  revenue reduction over  2019 and perhaps  2020 that                                                                    
totaled a little  over $1 billion (based  on OMB's figures).                                                                    
He asked  if the amount  of $139  million listed on  slide 7                                                                    
had been selected as a policy call by the administration.                                                                       
Mr.  Steininger  responded,  "Roughly  speaking,  yes."  The                                                                    
administration's  understanding  of the  revenue  comparison                                                                    
based on  the federal guidance  was that the state  would be                                                                    
able to  justify revenue loss  well in excess of  $1 billion                                                                    
for  the general  fund offset.  He elaborated  that OMB  had                                                                    
looked at  the state's  operating budget to  determine where                                                                    
to   offset   government   services   with   ARPA   funding.                                                                    
Additionally,  OMB  had  identified about  $2.5  billion  in                                                                    
annual  expenditures  that  it   believed  could  be  offset                                                                    
without   jeopardizing   match   requirements   in   federal                                                                    
programs. He  noted that  generally it  was not  possible to                                                                    
match federal money  with federal money. He  stated that the                                                                    
$139 million  reflected the remainder  of the  funding after                                                                    
adding up  the other pots of  money [shown on slide  7]. One                                                                    
of the  other key  decisions the state  had to  contend with                                                                    
was the balance  between some of the programs  to help build                                                                    
Alaska's economy back  out versus helping to  offset some of                                                                    
the general fund losses.                                                                                                        
Co-Chair Foster  referenced the revenue loss.  He noted that                                                                    
oil prices  and production  had been  down during  COVID. He                                                                    
added that  there had  been revenue  loss in  the Commercial                                                                    
Passenger Vessel head tax and in vehicle rental tax.                                                                            
Representative   Wool   referenced    the   Alaska   tourism                                                                    
vitalization  component  on slide  7.  He  observed that  it                                                                    
appeared the state  may lose another cruise  ship season. He                                                                    
remarked that many  businesses would see major  impacts as a                                                                    
result. He  surmised that certain  communities would  be hit                                                                    
hard. He asked  if some of the funding would  go directly to                                                                    
businesses  to  help  them stay  afloat.  Alternatively,  he                                                                    
wondered  if the  funds  were only  to  promote tourism  and                                                                    
adapt services.                                                                                                                 
2:23:49 PM                                                                                                                    
Mr. Steininger answered that OMB  had not allocated specific                                                                    
programs  under  any of  the  categories.  It was  currently                                                                    
aiming to lay  out a framework to think about  how the state                                                                    
was spending the  money. As more guidance  was received, the                                                                    
state  could work  on specific  programs that  could benefit                                                                    
any  of  the  sectors.  The  Alaska  tourism  revitalization                                                                    
category included impacted  communities dependent on tourism                                                                    
and businesses.  He elaborated that  part of funds  would go                                                                    
towards promotion for  a different type of  tourist to visit                                                                    
Alaska if  there were no  cruise ships in the  current year.                                                                    
He noted  it would not replace  all of the loss  in economic                                                                    
activity. There  would need  to be some  kind of  balance in                                                                    
the  programs under  the  category.  The administration  was                                                                    
working to develop  plans that would fit within  each of the                                                                    
categories  to  share with  the  legislature  and make  some                                                                    
decisions on  what to  move forward. Based  on the  level of                                                                    
federal  guidance received  it  was a  little  early to  put                                                                    
specifics  out  publicly  especially  because  the  guidance                                                                    
could change.                                                                                                                   
Vice-Chair Ortiz had heard from  constituents about the hope                                                                    
that  ARPA  funding  would   be  available  for  significant                                                                    
revenue  replacement  for  municipalities. He  asked  if  it                                                                    
would potentially fall under any  of the categories on slide                                                                    
7. He asked  if some of the $325 million  under the economic                                                                    
recovery and innovation category could go to the effort.                                                                        
Mr.  Steininger  agreed and  relayed  the  use specified  by                                                                    
Vice-Chair Ortiz  was within the guidance  as OMB understood                                                                    
it.  He  elaborated  that impacted  communities  could  fall                                                                    
under   the  categories   of  tourism   revitalization,  the                                                                    
economic  recovery,  and   infrastructure  investment  since                                                                    
there  were  some communities  more  in  need of  water  and                                                                    
Vice-Chair Ortiz  asked if  the administration  had publicly                                                                    
stated  how it  felt  about using  funding  from the  $1.019                                                                    
billion  for  revenue  replacement  for  municipalities.  He                                                                    
asked if the administration was supportive of the idea.                                                                         
Mr. Steininger answered that he  could not speculate without                                                                    
specifics on  how the program  was set up. He  remarked that                                                                    
the  current  stage  was  the  high  level  view  where  the                                                                    
administration  was  aiming to  set  priorities  and find  a                                                                    
balance in the priorities. He  stated they were currently in                                                                    
the "no  bad ideas"  phase. He elaborated  that it  would be                                                                    
interesting  to  talk  through the  details  if  there  were                                                                    
specifics on a proposal.                                                                                                        
Vice-Chair  Ortiz  asked  if  there was  a  vision  for  the                                                                    
mechanics  of how  the distribution  would  take place.  For                                                                    
example, if the  state were to move forward  $325 million in                                                                    
economic recovery  innovation. He  asked if it  would happen                                                                    
through grants coming from agencies in the state.                                                                               
2:27:57 PM                                                                                                                    
Mr. Steininger  replied that he  believed the state  may run                                                                    
the economic recovery and innovation  a bit differently than                                                                    
it had under the CARES  Act program based on lessons learned                                                                    
from  operating  the  program. Additionally,  the  need  had                                                                    
changed  a bit.  He  relayed that  until the  administration                                                                    
received  more detail  on what  the  federal government  had                                                                    
learned from  the last  go-around, it  was difficult  to set                                                                    
specific  mechanics. In  terms of  relief to  businesses and                                                                    
organizations,  it would  likely come  in the  form of  some                                                                    
grant.  The requirements  of the  grant still  needed to  be                                                                    
worked out.                                                                                                                     
Co-Chair Foster  believed under ARPA that  local governments                                                                    
would receive around $185 million,  but there would still be                                                                    
lost revenue  of about $135  million. He explained  that the                                                                    
state  could come  in to  backfill with  other funding.  For                                                                    
example,  the loss  in cruise  ship head  tax of  around $48                                                                    
million and the amount going  to local communities was about                                                                    
$38  million.  He  detailed  that the  state  could  opt  to                                                                    
apportion  some of  the funding  it received  to help  local                                                                    
Mr. Steininger  agreed. He noted  that a  significant amount                                                                    
of  the $185  million  or $230  million  when including  the                                                                    
Municipality  of Anchorage  was based  on population,  which                                                                    
did not scale perfectly to  the lost revenue in the affected                                                                    
2:30:01 PM                                                                                                                    
Representative  Rasmussen looked  at  the economic  recovery                                                                    
and  infrastructure investment  categories on  slide 7.  She                                                                    
referenced  a  presentation  the previous  week  from  Meera                                                                    
Kohler  with the  Alaska Village  Electric Cooperative.  She                                                                    
recalled   that  Ms.   Kohler  had   suggested  a   possible                                                                    
appropriation of  $5 million  to $10  million for  an energy                                                                    
study to  look at a  larger scale energy project.  She asked                                                                    
if the study could fall under the categories.                                                                                   
Mr.  Steininger confirmed  that the  study could  fall under                                                                    
economic   recovery,  infrastructure   investment,  or   the                                                                    
protecting   Alaskans   categories.   He  noted   that   the                                                                    
affordability  and   security  of  the   state's  electrical                                                                    
infrastructure was a protection  of individuals at its root.                                                                    
He relayed  there was significant  overlap in terms  of what                                                                    
could fit  into each of  the categories, which  were loosely                                                                    
Representative Rasmussen  referenced a memorandum  issued on                                                                    
December  16, 2020  from the  acting director  of the  Cyber                                                                    
Security   and  Infrastructure   Security  under   the  U.S.                                                                    
Department of Homeland Security.  She detailed that the memo                                                                    
followed  the essential  worker  guidance  issued in  August                                                                    
2020  and provided  very detailed  information  in terms  of                                                                    
essential workers.  She asked if  it was likely for  some of                                                                    
the categories to be included.                                                                                                  
Mr. Steininger  was unfamiliar with  the memo and  could not                                                                    
speculate as to how it would tie to the federal guidance.                                                                       
2:32:42 PM                                                                                                                    
Representative Rasmussen  read from  the first  paragraph of                                                                    
the memo:                                                                                                                       
     The current  version of this guidance,  Version 4.0 was                                                                    
     released in  August 2002. This guidance  is intended to                                                                    
     help  state, local,  tribal, and  territorial officials                                                                    
     and   organizations    protect   their    workers   and                                                                    
     communities and  ensure the  continued safe  and secure                                                                    
     operation of  critical infrastructure.  It can  also be                                                                    
     used   to  begin   planning  and   preparing  for   the                                                                    
     allocation   of  scarce   resources  used   to  protect                                                                    
     essential workers against COVID-19.                                                                                        
Representative  Rasmussen thought  the  memo may  be a  good                                                                    
starting  point to  look  at  because it  was  23 pages  and                                                                    
related to essential workers.                                                                                                   
Representative Josephson  looked at the categories  on slide                                                                    
7   and  asked   for  verification   they  were   OMB's  own                                                                    
subcategories.   He   asked   for  verification   that   the                                                                    
subcategories were not created  by the federal government as                                                                    
in the CARES Act. He  listed several categories specified in                                                                    
the CARES  Act that  had been strongly  recommended tranches                                                                    
such  as small  business relief  and the  payment protection                                                                    
Mr. Steininger answered in  the affirmative. The information                                                                    
on slide  7 was  a product  of the state  looking at  how to                                                                    
organize the funding  and how to wrangle all  of the various                                                                    
ideas coming  from numerous stakeholders  on how to  use the                                                                    
$1 billion. The  goal was to try to organize  the funds into                                                                    
tranches to  help with the  evaluation of the ideas  and the                                                                    
prioritization in order  to use the funding  for the maximum                                                                    
benefit of the state.                                                                                                           
Representative Josephson stated  that the administration had                                                                    
a reputation  for finding every  opportunity to  cut General                                                                    
Fund spending.  For example, the  FY 22 budget paid  oil tax                                                                    
credits  with  Alaska   Industrial  Development  and  Export                                                                    
Authority  (AIDEA) dollars.  He referenced  Mr. Steininger's                                                                    
testimony  that it  was  possible to  offset  eight or  nine                                                                    
times more  than the  amount shown  on slide  7 and  free up                                                                    
General  Fund  money  for  the   future.  He  observed  that                                                                    
instead,  the  administration's  approach was  to  view  the                                                                    
state  as 730,000  Alaskans and  not as  an institution.  He                                                                    
looked at it  as less selfish for the state  as a government                                                                    
and more beneficial  to the people. He asked  if his remarks                                                                    
accurately  reflected  the administration's  perspective  on                                                                    
how to spend the $1.1 billion.                                                                                                  
2:36:09 PM                                                                                                                    
Mr. Steininger  answered that  it was a  fairly fair  way to                                                                    
characterize  how the  administration  had  put the  initial                                                                    
allocations out.  There was a  balance between the  state as                                                                    
an institution and the opportunity  it provided the state to                                                                    
retain money in the  Constitutional Budget Reserve (CBR) and                                                                    
General Fund. In addition to  the responsibility to care for                                                                    
all Alaskans.  The administration  was trying to  strike the                                                                    
balance in  the use  of the funding.  He noted  that finding                                                                    
the balance would  be the result of a  conversation with the                                                                    
legislature as well. He relayed  that the administration was                                                                    
not  married to  the  proposed allocation.  He suggested  an                                                                    
option was  a balance where  more money was retained  in the                                                                    
General  Fund  to  reduce  General  Fund  expenditures.  The                                                                    
administration  wanted to  avoid  allowing  the windfall  to                                                                    
hide the  structural problems in  the state. He  stated that                                                                    
even  if  the  state  went  with  the  full  $1  billion  of                                                                    
available  offset, it  was  very important  not  to use  the                                                                    
money with the  intent of delaying the  state's other fiscal                                                                    
situations. The  administration had chosen  a bit more  of a                                                                    
balance  towards   assisting  the  Alaskans  who   had  been                                                                    
impacted by COVID and not just the state government.                                                                            
Representative  Josephson   stated  that  even   though  the                                                                    
proposal  would  offset more  than  the  legislature may  be                                                                    
inclined to  do and  help others  with immediate  needs, the                                                                    
legislature had  been stymied other  than percent  of market                                                                    
value  (POMV)  for years  at  advancing  a fiscal  plan.  He                                                                    
stated that  given that  there was  no willingness  to reach                                                                    
agreement on a fiscal plan,  one concern was even though the                                                                    
state  could hold  onto  the  funds and  use  them to  fully                                                                    
offset, it  also had benefit  by forestalling  imposition on                                                                    
the public at some future year  in the form of taxation or a                                                                    
smaller dividend.                                                                                                               
Mr. Steininger  agreed it was  not a cut and  dry situation.                                                                    
He stated that while it had  been a long road trying to work                                                                    
towards a  sustainable fiscal plan,  he wanted to  avoid the                                                                    
$1 billion further delaying the development of a plan.                                                                          
Representative  Johnson looked  at  item B  on  slide 6  and                                                                    
asked  if correctional  officers  were considered  essential                                                                    
workers and eligible for premium pay funding.                                                                                   
Mr. Steininger  answered that  correctional officers  were a                                                                    
presumptively  eligible class  of  state  employees for  the                                                                    
offset of salary costs under  the CARES Act. He assumed they                                                                    
would likely  be considered essential workers  under ARPA as                                                                    
Representative   Johnson   asked    for   verification   the                                                                    
administration   anticipated  ARPA   money   going  to   the                                                                    
Department of Corrections (DOC).                                                                                                
Mr. Steininger answered  that it would be  an eligible cost.                                                                    
He  clarified there  was currently  no  proposal to  provide                                                                    
premium pay to eligible state workers.                                                                                          
Representative  Johnson   asked  if   the  funds   had  been                                                                    
distributed to DOC under the CARES Act.                                                                                         
Mr.  Steininger answered  that CARES  Act  dollars had  been                                                                    
used  to cover  payroll costs  for state  troopers who  were                                                                    
another presumptively  eligible class of  employee; however,                                                                    
the   funds   had  been   used   to   offset  General   Fund                                                                    
expenditures. He  clarified that no additional  pay had been                                                                    
given to the employees.                                                                                                         
Representative  Johnson  asked  for  verification  that  the                                                                    
administration  had  not   directed  substantial  CARES  Act                                                                    
funding to DOC.                                                                                                                 
Ms. Harbour replied  that funding had been  directed to DOC.                                                                    
She  detailed   that  the  administration  had   offset  the                                                                    
department's FY  21 expenses  for the  population management                                                                    
allocation,  which included  correctional officer  salaries.                                                                    
She clarified  that it was  strictly offsetting  the General                                                                    
Fund expenses  on the  costs. She  explained that  the CARES                                                                    
Act could offset the salary  and benefits the state normally                                                                    
paid those  employees, which the administration  had done in                                                                    
order  to  free up  unrestricted  general  funds (UGF).  She                                                                    
highlighted  that under  item B  [on slide  6], it  would be                                                                    
necessary to set up a program  to pay the employees more and                                                                    
ARPA  could  then reimburse  the  state  for the  cost.  The                                                                    
administration  had  not  yet  developed  the  option  as  a                                                                    
2:42:57 PM                                                                                                                    
Representative  Johnson  asked  for verification  there  had                                                                    
been  no premium  pay for  correctional officers  that would                                                                    
fall under item B [on slide 6].                                                                                                 
Mr. Steininger agreed.                                                                                                          
Representative  Johnson  highlighted   there  had  been  $50                                                                    
million under  the CARES  Act for  nonprofits. She  asked if                                                                    
the   administration  was   aware  of   any  set-aside   for                                                                    
nonprofits under ARPA.                                                                                                          
Mr.  Steininger  replied  that the  administration  had  not                                                                    
proposed  any specific  nonprofit relief  within the  fiscal                                                                    
relief  state  funding  categories;  however,  the  programs                                                                    
would  fall  under  the  economic  recovery  and  innovation                                                                    
category [on  slide 7] within  the relief to  businesses and                                                                    
organizations impacted by the pandemic.                                                                                         
Representative Johnson  noted that  the governor  had spoken                                                                    
about food  security a number  of times. She asked  where it                                                                    
would fall under the bill if it were to be included.                                                                            
Mr.  Steininger answered  that the  administration had  been                                                                    
collecting   ideas   regarding    food   safety   from   the                                                                    
departments. He relayed that food  security would fall under                                                                    
the  protecting   Alaskans  category   [on  slide   7].  The                                                                    
administration  did not  have any  specifics  to release  at                                                                    
present  because it  was still  trying to  determine how  to                                                                    
tailor a  program that would  fit within the  guidelines. He                                                                    
confirmed  that  food  security   was  an  interest  of  the                                                                    
2:44:40 PM                                                                                                                    
Co-Chair   Foster   referenced  Representative   Josephson's                                                                    
comments related to the state's  fiscal challenges. He asked                                                                    
if it was  safe to say the governor's proposal  for the ARPA                                                                    
funds did not  increase the state's budget.  For example, if                                                                    
DOC   had   an   annual   budget  of   $100   million,   the                                                                    
administration  may be  replacing $10  million of  the total                                                                    
with   ARPA  funding,   but  it   was  not   increasing  the                                                                    
department's  overall budget.  He  stated  that perhaps  the                                                                    
department's  annual budget  had increased  slightly because                                                                    
more  had  been  spent  on   vaccinations  for  inmates  and                                                                    
physical care.  He asked for verification  that overall, the                                                                    
administration's goal was to avoid increasing the budget.                                                                       
Mr. Steininger  agreed. He believed  slide 8 went  into more                                                                    
detail on  the administration's  proposal to  offset general                                                                    
funds. He  stated that  administration did  not want  to use                                                                    
the one-time  federal funding to generate  more programs the                                                                    
state would  have to  pay for in  the future.  He elaborated                                                                    
that  there needed  to be  clarity that  when the  money was                                                                    
deployed it  was a short-term  relief for one-time  or short                                                                    
duration projects.                                                                                                              
Mr. Steininger turned to slide  8 and detailed that Sections                                                                    
(f) and  (i) were related sections  in the bill. One  of the                                                                    
sections was  a $120  million unallocated  federal increment                                                                    
and the  other was a corresponding  unallocated decrement of                                                                    
$120 million. He explained that  when areas in the operating                                                                    
budget were  found where General Fund  expenditures could be                                                                    
offset, the  specific General Fund  budget would  be reduced                                                                    
and the  federal funds budget would  be increased, resulting                                                                    
in a net  zero change. The two  unallocated increments would                                                                    
have to be  allocated in the same place  to avoid increasing                                                                    
a budget with the ARPA funding.                                                                                                 
Mr.  Steininger continued  to review  slide  8. He  detailed                                                                    
that  Sections (f)  and (g)  included the  remainder of  the                                                                    
$139  million.  He highlighted  that  cruise  ship head  tax                                                                    
decreased dramatically  down to zero  as a result  of COVID.                                                                    
There were other similar funds  in the state budget that had                                                                    
created significant  holes due to low  collections that were                                                                    
not UGF.  The administration  had set  aside $19  million of                                                                    
the  General   Fund  offset  for  revenue   collections  for                                                                    
designated  general   fund  (DGF)  fund  sources   or  other                                                                    
restricted revenue sources. He  noted that priority would be                                                                    
given to areas  where there would be  significant impacts to                                                                    
programs if the revenue was not backfilled.                                                                                     
Mr. Steininger  highlighted Section 9  of the bill  on slide                                                                    
8. He  noted that Section  9 was a nonstandard  section that                                                                    
was  different  than  something typically  in  appropriation                                                                    
bills. He  explained that because  the federal  guidance was                                                                    
anticipated  late in  the appropriation  process and  it may                                                                    
take  the  state  time  to   interpret  and  understand  the                                                                    
language,  there would  be some  uncertainty around  how the                                                                    
money was  to be  allocated. He  communicated the  desire to                                                                    
have  specific appropriations  for the  ARPA funding  in the                                                                    
final appropriation  bill. He noted  that the  more specific                                                                    
the budget was  and the more guidance  the legislature gives                                                                    
the executive branch on how  to deploy the funding, the more                                                                    
the  state's hands  would be  tied if  the federal  guidance                                                                    
changed.  Section 9  would utilize  the General  Fund offset                                                                    
concept to  ensure a  program, if  found unallowable  by the                                                                    
federal  guidance, could  be  fulfilled  using General  Fund                                                                    
dollars. He  explained that the  General Fund  dollars would                                                                    
then be backfilled  with ARPA funding. He  detailed it would                                                                    
be a  net zero to  the state's  bottom line and  would avoid                                                                    
getting into compliance issues with the federal government.                                                                     
2:49:58 PM                                                                                                                    
Representative  Wool referred  to  Sections (f)  and (i)  on                                                                    
slide 8. He  asked if the administration could  have used FY                                                                    
22 instead of FY 21.  He wondered why the administration was                                                                    
using ARPA funds for the FY 21 budget.                                                                                          
Mr.  Steininger   responded  it  was   the  administration's                                                                    
understanding  that  ARPA  funding   could  be  used  on  an                                                                    
expenditure  occurring  after  March 3.  The  administration                                                                    
believed there was more opportunity  for General Fund offset                                                                    
in FY  21 than in FY  22. He elaborated that  if the General                                                                    
Fund  offset  amount increased,  it  would  be necessary  to                                                                    
reevaluate  which fiscal  year to  apply it  to and  perhaps                                                                    
spread the amount across two fiscal years.                                                                                      
Representative Wool  asked if it  was based on the  lost oil                                                                    
revenue from  the particular year. He  acknowledged that Mr.                                                                    
Steininger  was nodding  his head  in agreement.  He pointed                                                                    
out that  the amount was $120  million [shown at the  top of                                                                    
slide 8], while  the lost revenue was $700 million  in FY 19                                                                    
and  $400   million  in  FY   20.  He  observed   there  was                                                                    
significant latitude.  He thought  it would be  allowable to                                                                    
use the funds in FY 22  since the guidelines were coming out                                                                    
May 10, 2021.                                                                                                                   
Mr. Steininger  thought it was  possible the funds  could be                                                                    
used in  FY 22. He noted  there was a risk  that if revenues                                                                    
increased substantially in FY 22,  it may not be possible to                                                                    
offset  nearly  as much  General  Fund  expenditure in  that                                                                    
2:52:05 PM                                                                                                                    
Representative  Josephson referred  to page  2 [of  HB 181],                                                                    
subsections C, D,  and F. He stated that  the sections stuck                                                                    
him  as ambiguous.  He observed  that in  total the  amounts                                                                    
added  up to  a substantial  part  of the  $1.1 billion.  He                                                                    
assumed    the   items    were   placeholders    while   the                                                                    
administration  was trying  to  figure out  what ARPA  would                                                                    
award  the state.  He interpreted  the language  to indicate                                                                    
the  legislature  should  appropriate the  funding  and  the                                                                    
administration would decide.                                                                                                    
Mr. Steininger replied  that the subsections A, C,  D, and E                                                                    
were   placeholders    to   start   the    discussion.   The                                                                    
administration anticipated  that the legislature  would pass                                                                    
much  more   specific  appropriations  that   were  tailored                                                                    
towards  programs that  were  homed in  on  over the  coming                                                                    
HB  181  was  HEARD  and   HELD  in  committee  for  further                                                                    
Co-Chair  Foster thanked  the  presenters.  He reviewed  the                                                                    
agenda for the following day.                                                                                                   
2:54:10 PM                                                                                                                    
The meeting was adjourned at 2:54 p.m.                                                                                          

Document Name Date/Time Subjects
HB 181 ARP CSLFRF Plan Summary_4.16.2021.pdf HFIN 4/20/2021 1:30:00 PM
HB 181
HB 181 ARP Direct Agency Grant Detail_4.16.2021.pdf HFIN 4/20/2021 1:30:00 PM
HB 181
HB 181 HFIN OMB ARP Bill Overview 4.20.21.pdf HFIN 4/20/2021 1:30:00 PM
HB 181