Legislature(2019 - 2020)ADAMS ROOM 519
07/22/2019 01:00 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB2001 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB2001 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
SECOND SPECIAL SESSION
July 22, 2019
2:49 p.m.
2:49:53 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 2:49 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Jennifer Johnston, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
Representative Adam Wool
MEMBERS ABSENT
Representative Ben Carpenter
ALSO PRESENT
Erin Shine, Staff, Representative Jennifer Johnston; Brodie
Anderson, Staff, Representative Neal Foster; Representative
Sarah Vance; Representative Sarah Hannan; Representative
Andi Story; Representative Josh Revak.
SUMMARY
HB 2001 APPROP: ERA FOR PERMANENT FUND DIVIDENDS
CSHB 2001(FIN) was REPORTED out of committee with
a "do pass" recommendation.
Co-Chair Foster reviewed the agenda for the meeting.
HOUSE BILL NO. 2001
"An Act making a special appropriation from the
earnings reserve account for the payment of permanent
fund dividends; and providing for an effective date."
2:50:51 PM
Vice-Chair Ortiz MOVED to ADOPT the proposed committee
substitute for HB 2001, Work Draft 31-LS1103\H
(Wallace/Caouette, 7/22/19).
Co-Chair Johnston OBJECTED for discussion.
Co-Chair Foster asked staff to address the committee.
ERIN SHINE, STAFF, REPRESENTATIVE JENNIFER JOHNSTON,
explained the changes in the CS. She read from a prepared
statement. She stated that the proposed Committee
Substitute (CS) would remove all capital budget
appropriation items and some capital budget items in the
previous bill version. The CS additionally removed some of
the operating budget items that were included in version K
of the bill. The CS removed the Constitutional Budget
Reserve (CBR) section that had included the reverse sweep,
deficit filling language, and the headroom language. The CS
also added a language section to access the Statutory
Budget Reserve (SBR); and appropriated $901,470,000 to the
Permanent Fund Dividend Fund; which in version K had been
$641,151,000.
2:52:57 PM
BRODIE ANDERSON, STAFF, REPRESENTATIVE NEAL FOSTER,
addressed additional changes to the bill. The previous
version of the bill had restored the complete list of
vetoes provided by the governor. The CS restored $278.7
million of the vetoes. He highlighted $110 million restored
to the University, Senior Benefits were restored for FY 19
supplemental and FY 20 budget. Funds were restored for
public assistance Medicaid including adult preventative
dental. The CS kept approximately $100 million of the
governor's vetoes.
Mr. Anderson continued to address changes to the bill
reflected in the CS. He reiterated that sections removed
including the capital budget, supplemental capital budget,
and mental health capital budgets. The last change was
related to the Permanent Fund. The SBR was added to the
deposit to the PFD account, to increase the size of the
fund over a surplus PFD. After calculating the vetoes that
remained, the surplus deposit to the dividend account was
increased. With the changes the size of the surplus would
be approximately $1,336. Including the SBR deposit as
outlined in the CS, the PFD payment would be $1,605.
2:54:58 PM
Co-Chair Foster provided clarifications for the public. He
summarized that the capital budget had been removed from
the bill. The original version of the bill had included a
restoration of all of the governor's vetoes. The CS
restored most of the vetoes, save for a few items. The CS
restored up to $110 million to the University, which
resulted in a $20 million cut. School bond debt had been
vetoed by 50 percent by the governor, which had been
accepted, as well as the cut to the Regional Educational
Attendance Area (REAA) of about $19 million.
Co-Chair Foster continued to discuss the changes to the
bill. The CS also accepted some of the governor's smaller
vetoes including cuts to executive branch travel, except
for travel for the Office of Public Advocacy (OPA). He
reiterated the changes. The bill would use the Statutory
Budget Reserve (SBR), which had a balance of $172 million;
however, unless the reverse sweep was in effect it would be
hollow authority. He explained that Mr. Anderson had cited
two PFD numbers to reflect the two different scenarios.
2:58:50 PM
Representative Knopp pointed to page 2 of the sectional
analysis and asked if the header version K was a typo.
Ms. Shine agreed there was a typo, and the sectional
analysis was for version H.
Representative Knopp asked if there was a summary of the
items that had been excluded. He asked about the State
Council on the Arts.
Ms. Shine replied that the State Council of the Arts was
included in the bill, and that she could provide a list of
items that were and were not included in the bill.
Representative Knopp would like to see it but would leave
it to the co-chairs to decide whether to compile and share
the information.
Co-Chair Foster asked for a simple list of what was
included and excluded. Everything had been restored with
the exception of the University, REAA, school bond debt
reimbursement, and a host of small items. Items restored in
the bill included Medicaid adult preventative dental, the
Online with Libraries (OWL) internet program, public
defenders, and Department of Law (LAW) support staff.
3:01:16 PM
Representative Knopp asked about funding for the Court
System.
Co-Chair Foster replied that the funding was included.
Vice-Chair Ortiz seconded the request to receive a list of
things that were not included in the budget.
Mr. Anderson replied that he had an internal draft that
listed all items not included in the committee substitute
and offered to provide it to the committee.
Co-Chair Foster agreed.
Co-Chair Foster spoke to items in the bill including public
broadcasting, Alaska Legal Services, Pre-K and Head Start,
Alaska State Council on the Arts, live homework help, OWL,
Department of Fish and Game surveys and assessments, public
assistance, behavioral health treatment grants, LAW support
staff and prosecutors, senior benefits, the agricultural
revolving loan program, $3 million for Village Public
Safety Officers (VPSO), the Council on Domestic Violence
and Sexual Assault (CDVSA), Department of Transportation
and Public Facilities funds, civil air patrol, $110 million
for the University, and therapeutic courts. Cuts included
agency travel. He asked if there were further items not
included.
3:04:23 PM
Mr. Anderson replied there were roughly 74 items that were
not included in the new version of the bill - the majority
of which were travel reductions. The list was approximately
10 to 15 items outside of travel.
Co-Chair Foster relayed that the bill had started with a
surplus PFD of $929. The bill version considered how to
increase the PFD while trying to meet somewhere in the
middle with individuals who wanted to see some cuts and a
larger PFD. Consideration was also given to balancing the
wishes of individuals who did not want to access the ERA or
draw down on savings such as the Constitutional Budget
Reserve (CBR). While the bill did access the SBR, the goal
was to balance the interests of all parties.
3:06:39 PM
Representative Tilton asked for the total amount for items
left in the bill. She believed all the other vetoes would
be restored by the bill.
Mr. Anderson answered the total sum of vetoes not restored
by the bill was $91,994,400; of which $89.3 million was
UGF, $226.3 million was DGF, $1.6 million was other funds,
and $684.8 million was federal funds. He reiterated that
the amounts he listed were remaining out as vetoes.
Co-Chair Foster referenced the governor's veto of $444
million. The $444 million had included a grand total of
UGF, DGF, and other funds. He asked about total vetoes of
state dollars.
Mr. Anderson responded that included in the CS was $259.9
million in UGF.
Co-Chair Foster noted that the governor had vetoed $444
million, of which only part was UGF. He thought there was
about $90 million in cuts. He wanted to understand the
total amount of UGF vetoes.
Ms. Shine stated that there was $259,990,700 in vetoes. She
noted that the number was preliminary, and staff would
provide final numbers to the committee.
Co-Chair Foster stated that the governor vetoed
approximately $259 million of UGF, of which $91 million UGF
in vetoes was being accepted in the CS.
3:10:35 PM
Representative Wool referenced the statement about the veto
amount. He thought Mr. Anderson had stated that the CS
reinstated $278 million of the vetoes, which would leave
$162 million. He wanted clarification.
Ms. Shine answered that $91 million was all funds and the
UGF was $89,387,000 million. She reiterated that the
numbers were preliminary, and the Legislative Finance
Division would provide transaction compare detail to verify
the total amounts in the bill.
Mr. Anderson added that the director of LFD was present to
answer questions. He stated that of the original $440
million in vetoes by the governor, there was approximately
$380 million in UGF. He continued that of the $380 million,
the proposed CS had restored $259 million in UGF, allowing
for $89 million to remain cut.
Representative Wool replied that the explanation was
helpful.
3:12:51 PM
Representative Merrick looked at item 144 on the
spreadsheet that had been handed out related to a subsidy
for the University. She thought the president had reported
that the University could withstand a cut of up to $50
million to $60 million. She wondered where the $20 million
cut had come from.
Representative Josephson replied that the University
president had reported that the University could withstand
the cuts over a period of three or four years. He thought a
$50 million cut would put the University in a state of
exigency.
Co-Chair Johnston added that in discussions with the
University she had learned that because the fall semester
was starting soon, there was already enrolled students, and
the University would have to move forward as there had been
no cuts. By spring, the cuts would be doubled.
3:15:09 PM
Representative Wool recalled conversations with the
University president in the past and had understood that
$40 million could be sustained over a period of four years.
He recalled that the president had talked about a worst-
case scenario of a $60 million cut, which could result in
having to close a campus. He pondered the question of what
was "sustainable" and thought even a cut of $25 million or
$30 million would require a declaration of exigency.
Co-Chair Foster drew attention to the list of vetoed items
that had been accepted.
Representative Sullivan-Leonard had concerns with the PFD
component. She asked for the ERA balance.
Ms. Shine deferred the question to the LFD.
Representative Sullivan-Leonard recalled the ERA balance
was close to $19 billion. She noted there was a request to
transfer $9.4 billion to the corpus, which would leave a
balance of $8 billion to $10 billion. She wanted to know
why ERA funds were not being used to fund the full
statutory PFD.
3:18:17 PM
Ms. Shine answered that the bill was following the 5.25
percent of market value (POMV) draw from the ERA; and the
surplus PFD was appropriated after state funds were
expended to appropriate the leftover for PFD. She cited AS
37.13.140.
Representative Sullivan-Leonard clarified she was asking
about the statutory PFD formula.
Co-Chair Johnston replied that as far as putting the vetoed
amount back in the corpus of the Permanent Fund would leave
approximately three years of structured draw in the ERA so
there would be a cushion. She acknowledged market
fluctuations, and thought the cushion would protect more of
the ERA and the corpus, but not so much that there was not
a structured draw.
Co-Chair Foster recognized Representative Steve Thompson in
the audience.
3:20:01 PM
Representative Knopp asked about the $9.5 billion that was
in the original budget, of which $5 billion was vetoed. He
thought that by signing the operating budget, it should
have transferred $4.5 billion from the ERA to the corpus to
bring the fund balance of the ERA be closer to $14 billion.
He thought Mr. Anderson had stated that the $380 million
was the amount of UGF in the $440 million originally
vetoed. He thought the bill restored $259 million in UGF.
He calculated that there was $121 million cut, not $80
million.
Mr. Anderson answered that LFD had clarified the
information in a note. He reported the numbers the governor
had vetoed: $367.7 million of UGF, $8.1 million DGF, $13.8
million in other funds, and $3.8 million in federal funds.
He continued that there had been $11.7 million separately
vetoed for Alaska Housing Finance Corporation (AHFC)
homeless assistance (the Alaska Mental Health capital
projects), and $800,000 vetoed from the FY 19 supplemental
budget that showed on the list of adds but was calculated
into FY 19 transactions.
Representative Knopp asked if LFD had sent a new total of
UGF funds that remained vetoed. He thought the amount was
on top of the $200 plus million cut in the operating budget
by the legislature. He wanted to know the total UFG cut
from the budget.
Mr. Anderson replied that LFD confirmed that the amount of
remaining veto was $89.3 million UGF.
3:24:10 PM
Representative Knopp was curious about the total UGF cut
from the FY 19 base to the current version being
considered.
Mr. Anderson did not have the number on hand. The
information would have to be provided by LFD.
Representative Tilton thought there was $4.5 million left
in to transfer from the ERA to the corpus and asked if
there was another $9.5 million in the CS, or if it was a
total amount of $9.5 million.
Co-Chair Johnston referred to page 16 of the bill, Section
8(h) that put back in the amount that had been vetoed.
3:26:04 PM
Representative Josephson noted that the largest item vetoed
and not restored was school bond debt reimbursement. He
clarified that the legislature wanted to honor the moral
promise, and though it had the funds to do so. The
administration had believed the funds were not available,
and the effort to override the veto had failed.
Co-Chair Johnston WITHDREW her OBJECTION.
There being NO OBJECTION, Work Draft 31-LS1103\H was
ADOPTED.
Representative Knopp wanted to express that there was a
certain amount of unease when he did not have familiarity
when he didn't know what was going into a bill draft. He
stated that after going through the CS, he liked the draft
and thought it was appropriate.
3:28:16 PM
Co-Chair Johnston MOVED to REPORT CSHB 2001(FIN) out of
committee with individual recommendations.
Representative Sullivan-Leonard OBJECTED. She spoke to her
objection. She did not find the CS to be a compromise bill,
and hoped there would be some necessary changes made when
the bill reached the floor.
Representative Josephson mentioned meetings around the
state and many communications from residents. He thought
Alaskans overwhelmingly supported taking the action in
version H, to restore funds. He thought the restored funds
were affordable and supported moving the bill out of
committee.
Co-Chair Foster added that the operating line items that
were being restored had been discussed in sub-committee, in
full committee, and on the floor. He thought a lot of the
issues had been discussed extensively. He discussed public
testimony and recalled a PFD debate when two amendments
came before the body. He acknowledged that the bill moved
fairly quickly but reiterated that there had been robust
discussion on the topics.
3:30:54 PM
A roll call vote was taken on the motion.
IN FAVOR: Josephson, Knopp, LeBon, Ortiz, Wool, Johnston,
Foster
OPPOSED: Merrick, Sullivan-Leonard, Tilton
The MOTION PASSED (7/3). There being NO OBJECTION, it was
so ordered.
CSHB 2001(FIN) was REPORTED out of committee with a "do
pass" recommendation.
ADJOURNMENT
3:31:51 PM
The meeting was adjourned at 3:31 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 2001 ver H Sectional.pdf |
HFIN 7/22/2019 1:00:00 PM |
HB2001 |
| HB 2001 CS WORKDRAFTvH.pdf |
HFIN 7/22/2019 1:00:00 PM |
HB2001 |
| HB2001 Public Testimony Emails July 20-21.pdf |
HFIN 7/22/2019 1:00:00 PM |
HB2001 |
| HB 2001 CS vH veto list.pdf |
HFIN 7/22/2019 1:00:00 PM |
HB2001 |