Legislature(2019 - 2020)ADAMS ROOM 519
02/13/2020 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB74 | |
| HB234 | |
| Fy 20 Supplemental Budget Overview by Legislative Finance Division | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 234 | TELECONFERENCED | |
| += | SB 74 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
February 13, 2020
1:39 p.m.
1:39:08 PM
CALL TO ORDER
Co-Chair Johnston called the House Finance Committee
meeting to order at 1:39 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Jennifer Johnston, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Erin Shine, Staff, Representative Jennifer Johnston; Pat
Pitney, Director, Legislative Finance Division; Alexei
Painter, Analyst, Legislative Finance Division; Neil
Steininger, Director, Office of Management and Budget,
Office of the Governor; Kelly Cunningham, Analyst,
Legislative Finance Division.
SUMMARY
HB 234 APPROP:SUPP; REAPPROP; CAP; AMEND; CBR
HB 234 was HEARD and HELD in committee for
further consideration.
CSSB 74 (FIN)
INTERNET FOR SCHOOLS
HCS CSSB 74 (FIN) was REPORTED out of committee
with five "do pass" recommendations, one "do not
pass" recommendation, and four "no
recommendation" recommendations and with one new
fiscal impact note by the Department of Education
and Early Development.
FY 20 SUPPLEMENTAL BUDGET OVERVIEW BY LEGISLATIVE FINANCE
DIVISION
Co-Chair Johnston reviewed the agenda for the day.
CS FOR SENATE BILL NO. 74(FIN)
"An Act relating to funding for Internet services for
school districts; and providing for an effective
date."
1:39:56 PM
Co-Chair Foster MOVED to ADOPT proposed committee
substitute for CSSB 74 (FIN), Work Draft 31-LS0600\E
(Caouette, 1/31/20)(copy on file).
There being NO OBJECTION, it was so ordered.
1:40:23 PM
ERIN SHINE, STAFF, REPRESENTATIVE JENNIFER JOHNSTON,
reviewed the Committee Substitute (CS) work draft changes.
She reported that the CS contained two changes. She
explained that the first change on page 1, line 1
eliminated the language, and providing for an effective
date. The other change eliminated Section 2 and Section 3
of the prior version of the bill.
1:40:59 PM
Co-Chair Foster MOVED to report HCSCSSB 74 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal note.
Representative Carpenter OBJECTED.
Representative Carpenter MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Josephson, LeBon, Merrick, Ortiz, Sullivan-
Leonard, Tilton, Wool, Foster, Johnston
OPPOSED: Carpenter, Knopp
The MOTION PASSED (9/2).
HCS CSSB 74 (FIN) was REPORTED out of committee with five
"do pass" recommendations, one "do not pass"
recommendation, and four "no recommendation"
recommendations and with one new fiscal impact note by the
Department of Education and Early Development.
1:42:23 PM
AT EASE
1:42:28 PM
RECONVENED
HOUSE BILL NO. 234
"An Act making supplemental appropriations,
reappropriations, and other appropriations; amending
appropriations; capitalizing funds; making
appropriations under art. IX, sec. 17(c), Constitution
of the State of Alaska, from the constitutional budget
reserve fund; and providing for an effective date."
1:42:39 PM
Co-Chair Foster indicated that the committee would hear the
Legislative Finance Division's (LFD) perspective of HB 234.
^FY 20 SUPPLEMENTAL BUDGET OVERVIEW BY LEGISLATIVE FINANCE
DIVISION
1:42:53 PM
PAT PITNEY, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
introduced the PowerPoint Presentation: "Governor
Supplemental Request Overview." She began with Slide 2
titled Governor's Supplemental Requests, which contained
some highlights of the governor's supplemental budget:
Governor proposed $270.5 million in FY 20 UGF
Supplemental Requests
UGF budget reduction from FY 19 after Governor's
proposed Supplemental items would be $216 million
FY 20 est. deficit has increased from $157 million
when the budget was enacted (July 1, 2019) to $610
million with revenue projection updates and
Supplemental requests
CBR est. balance after FY20 Supplemental and
Governor's FY 21 request is $572 billion [million]
Ms. Pitney expounded on the second bullet point. She
explained that agency appropriations between FY 19 and FY
20 were similar with the notable differences of community
assistance, school debt reimbursement, and oil tax credits.
The cuts to the Department of Health and Social Services
(DHSS), University of Alaska (UA), and the Marine Highway
System were offset by the added $100 million expenditure
for fire suppression. She elaborated that in June 2019, the
estimated budget deficit was $157 million. Due to a change
in revenue projections compounded by the supplemental
request, the FY 2020 deficit was currently estimated at
$610 million. The Constitutional Budget Reserve (CBR) was
just over $2 billion and by the end of FY 21 would be $572
million. She pointed out that the slide erroneously had
$572 billion instead of million.
Ms. Pitney continued to slide 3 titled Governor's
Supplemental Requests:
? 52 items totaling $504.1 million
? $270.5 UGF $264.9 operating, $5.7 capital
? $ 17.6 DGF $10.7 operating, $6.9 capital
? $ 0.2 Other $0.2 operating
? $215.7 Federal $173.2 operating, $42.5 capital
? 7 ratification totaling $2.4 million
Ms. Pitney indicated that the slide listed the governor's
supplemental request by fund source. She noted that the
LFDs total differed from the governors total based on the
divisions way of accounting for reappropriations and
another federal item it believed was accounted for. She
explained that ratifications were appropriations of state
funds for unrealized or over expenditure of federal funds
in a prior closed fiscal year.
1:48:30 PM
Representative Carpenter asked a question about
ratifications. He wondered if there was a length of time in
which the items had to be paid. Ms. Pitney responded that
if left unpaid, they remain open in the accounting system
and remain state liabilities. Representative Carpenter
asked whether there was an accounting requirement to pay
them in the current year. Ms. Pitney responded that it
could potentially show up as an audit finding.
Representative Carpenter was attempting to understand what
was required versus what would be nice to do.
Representative Knopp cited slide 2 and referenced the third
bullet point. He was aware of excess spending for Medicaid
and fire suppression. He wondered if the original revenue
projection was wrong due to either less production or lower
prices than originally forecasted.
ALEXEI PAINTER, ANALYST, LEGISLATIVE FINANCE DIVISION,
replied that the forecasts were adjusted downward in both
price and production and increased costs due to increased
investment on the North Slope resulting in decreased
revenues. Representative Knopp asked what the decreased
amount of revenue was from the original projections. Mr.
Painter responded that the amount was approximately $250
million.
1:50:50 PM
Ms. Pitney turned to the spreadsheet on slide 4 titled
Short Fiscal Summary FY 20 with Governor's
Supplementals/FY 21 Governor's Budget. She highlighted
line 9 that reflected the supplemental appropriation in the
operating budget totaling $264.9 million in Unrestricted
General Funds (UGF) in FY 20 and line 12 showing $5.7
million in Capital Budget supplemental requests. She
pointed to line 16 depicting the deficit amount of $610.2
million. She referenced line 18 on the lower right showing
a CBR balance of $2 billion at the end of FY 20. The
balance of the CBR at the end of FY 21 was shown at $572.5
million.
Representative Wool referenced line 14 depicting the
Permanent Fund Dividend (PFD) expenditure in FY 20 at
$1.068 billion and $2.005 billion in FY 21; a difference of
$1 billion. He wondered whether the balance of the CBR
would increase by $1 billion if the FY 21 PFD payout was
similar to the FY 20 payout. Ms. Pitney responded in the
affirmative.
Co-Chair Foster asked Ms. Pitney to walk through the
information again.
Ms. Pitney referred to line 14 and noted that in FY 21 the
governors request for PFDs was $2.005 billion. She
explained that the amount was the difference between a $1.6
thousand dividend and a $3 thousand dividend.
1:54:14 PM
Mr. Painter explained that the straight line comparison
between FY 20 and FY 21 on line 14 would use the dividend
only figures of $1.068 billion and $2.005 billion, which
was a difference of $936 million.
Co-Chair Foster referred to line 15 for the funds
inflation proofing and other deposits that showed $5.014
billion in FY 20, which reflected the over $4 billion
transfer into the fund plus the amount for inflation
proofing of $641 million. He noted that inflation proofing
was originally expected to be $943 million. He asked
whether he was correct. Mr. Painter responded that $642
million was the new estimate. He confirmed that the
budgeted number remained $940 million which included the
royalties above the constitutional minimum that were
accounted as UGF in FY 20. He added that beginning in FY
21, inflation proofing funds would be included as
Designated General Funds (DGF). The 67.9 thousand in FY 21
was the inflation proofing DGF figure on line 15. Co-Chair
Foster restated that in FY 20 the legislature appropriated
a $1.6 thousand dividend totaling $1.007 billion. The cost
for a $3 thousand dividend that the governor proposed
totaled about $2 billion. He detailed that if the PFD
payout amount in FY 21 was $1.6 thousand the CBR draw would
be less and the balance would be approximately $1.5 billion
versus $572 thousand. He believed that Representative
Wools point was important.
1:56:31 PM
Representative Sullivan-Leonard believed that in the prior
year, instead of using a fifty-fifty percent PFD model it
was roughly sixty-eight to thirty-two percent; the 32
percent was distributed as dividends. It appeared that the
governor was proposing a true statutory 50/50 payout in FY
21. She pointed to the FY 21 Earning Reserve Account (ERA)
balance of $15.5 billion and surmised that the balance was
healthy.
Ms. Pitney replied that although the ERA funds were
accessible, the Point of Market Value (POMV) statute
prescribed the percentage that could be expended from the
ERA. She noted that the analysis assumed the POMV statute
was followed. Representative Sullivan-Leonard questioned
the response. She commented that following the POMV model
and using the governors 50/50 split the ERA balance
remained healthy at $15.5 billion.
Co-Chair Foster commented that the meeting was on the
supplemental budget rather than the PFD. He thought the
point of the slide was that the $264 million was the
current supplemental balance rather than the prior $224
million.
1:59:31 PM
Co-Chair Johnston commented that Representative Sullivan-
Leonards point that the ERA would grow in FY 21 was due to
the governor drawing down the CBR for dividends and not
withdrawing from the ERA. She referenced prior testimony
from the Alaska Permanent Fund Corporation (APFC) pointing
out that the Permanent Fund (PF) could grow to over $85
billion in ten years if the state worked at growing the
fund. She wondered what the projections were for the
settlements and earnings for the CBR in the next year.
Mr. Painter responded that Department of Revenue (DOR)
estimated that settlements would amount to $75 million and
earnings were approximately 3 percent of the balance of the
CBR amounting to over $100 million. Co-Chair Johnston
commented that if the CBR was only used as a cash
management account there would be no earnings left.
2:01:29 PM
Representative LeBon referred to the lower right section of
the slide that depicted the states reserve balances. He
noted that the Statutory Budget Reserve (SBR) had a zero
balance. He reminded the committee that the SBR was emptied
in the prior year to prop up the dividend amount.
Co-Chair Foster agreed that Representative LeBons point
was significant. He asked Ms. Pitney what the highest
balance in the SBR had been.
2:02:24 PM
Ms. Pitney directed attention to slide 6 showing a bar
graph of the End-of-Year Reserve Balances since FY 07. She
remarked that in FY 12 and FY 13 the SBR balance,
represented by the green bar, peaked and the CBR peaked in
FY 14. She recounted that the drop in the CBR balance in FY
15 was due to a draw from the fund for paying down the
retirement liability.
Representative Carpenter commented that the legislature had
made the decision to make the PFD an expense. He
disagreed with statements maintaining that a certain fund
was drawn on to help pay for a dividend. He opined that if
the PFD were not considered a government expense and was
paid via the 50/50 statute as was historically done, it
would not be a choice nor an expense, rather it would
automatically happen. He believed that the decision to pay
for the PFD out of a certain fund was no different than
paying for education, or health and social services, or the
ferry system, etc.; it was merely a line item expense. He
believed that it was inaccurate to say money was drawn down
from a certain account specifically to pay for the PFD.
2:04:53 PM
Co-Chair Johnston brought attention to the supplemental
budget where an attempt to cut the budget was made. She
noted that the state currently had two main revenue
sources: the structured POMV draw and oil resource
revenues. She pointed out that in the prior year there had
been an attempt to use the revenues from the POMV draw to
pay a larger dividend. The legislature was currently
discussing a very large supplemental appropriation even
though reductions were made in the prior year. She
emphasized that the governor had presented a very large
supplemental because the budget he had presented was not
large enough to meet the needs of Alaskans.
2:06:18 PM
Ms. Pitney continued with comments on Slide 5. She turned
to the graph that displayed the Unrestricted General Fund
Revenue and Budget. She detailed that the green background
denoted traditional UGF revenue and the gray background
depicted the ERA amount of POMV and PFD draw, which was
currently 5.25 percent, soon decreasing to 5 percent. The
pink bar represented the deficit. She pointed to the FY 20
deficit of $610 million and the projected FY 21 $1.5
billion deficit. The blue bar represented agency spend
showing FY 20 roughly equal to FY 19. The remaining bar
colors depicted statewide operations, Capital Budget, and
PFDs.
Representative LeBon asked about the projection on the far
right bar [representing FY 21]. He asked what the oil
revenue and production forecasts were for FY 21.
Mr. Painter responded that the oil price was $59/per barrel
and he failed to remember what the production forecast was.
Representative LeBon asked what the price of oil was
currently. Mr. Painter responded that it was approximately
$55.
Co-Chair Johnston asked Ms. Pitney to provide a brief
review of what was included in statewide operations. Ms.
Pitney offered that statewide operations included non-
agency expenditures that were not associated with a
particular agency. The majority in FY 21 was comprised of
the retirement liability payment of $330 million. She noted
that typical items not included in FY 20 was oil tax
credits, Community Assistance, and Regional Educational
Attendance Area (REAA) school funding.
2:09:46 PM
Co-Chair Johnston commented that one of the largest items
was the unfunded liability of the state pension system. She
stated that the unfunded liability was something the state
had no control over. She asked whether her statement was
correct. Ms. Pitney answered that the liability was viewed
as a general obligation debt of the state by credit rating
agencies. Co-Chair Johnston clarified that the full faith
and credit of the state backed the payments. Ms. Pitney
responded in the affirmative.
Representative Josephson asked if the grey background
increased between FY 19 and FY 21 because of the passage of
SB 26 [SB 26 - Approp Limit & Per Fund: Dividend; Earnings
Chapter 16 SLA 18 - 06/13/2018]. Ms. Pitney answered in the
affirmative. Representative Josephson described the
intensity and seriousness of the retirement debt
regarding repayment. He wondered if Ms. Pitney agreed with
the serious nature of the debt. Ms. Pitney responded that
the retirement benefits were constitutionally guaranteed.
2:12:17 PM
Ms. Pitney moved to Slide 7 titled CBR Access and
Headroom:
Typically, CBR Access for balancing the budget has
been limited to the bills passed that session
However, restricting access to specific bills caused
problems for any sort of Supplemental appropriations
"CBR Headroom" is included to allow additional
appropriations beyond the enacted acts up to a limit
E.g. for FY20 the limit is $250 million
Ms. Pitney discussed Slide 8 titled FY 20 Supps and CBR
Headroom. She reiterated that the governor's FY 20
supplemental request totaled $270 million. She relayed that
the headroom was $250 million as specified in the FY 20
budget language adopted by the legislature. The headroom
was exceeded by $20.5 million.
Co-Chair Foster clarified the difference between the CBR
and deficit filling language. He voiced that the CBR filled
a shortfall in a budgeted appropriation. He provided an
example of Medicaid that had a $20 million budgeted
shortfall. The CBR could be used to fill the shortfall
versus deficit filling language that was meant to cover a
shortfall in revenue. He asked whether he was correct.
Mr. Painter interjected that in a typical year the CBR
could accomplish both shortfalls. He explained that in the
FY 20 budget the CBR language allowed for a gap between
revenue and expenditures to be covered by the CBR. In
addition, if supplemental funds were needed the language
allowed CBR funds to cover the supplemental expenses up to
$250 million. Access to the $250 million required an
appropriation but not another CBR vote. He furthered that
the deficit filling language was intended for a planned
deficit or an unexpected shortfall if revenue declined
below projections.
2:16:09 PM
Co-Chair Foster mentioned that typically headroom was in
the amount of $100 million. He noted that the reason for
having a larger headroom number from the previous year was
because the legislature doubted the amount of proposed
Medicaid reductions were obtainable. He asked whether he
was correct. Mr. Painter responded that he was not privy to
the budget negotiations between the bodies and could not
speculate as to the reason. Co-Chair Foster confirmed his
statement as the reason for the increased headroom.
2:17:07 PM
Representative Wool asked for clarification regarding the
deficit projection on slide 8. He could not account for
approximately $230 million. Ms. Pitney answered that the
CBR balance was large enough that it was still receiving
earnings and in addition, all oil tax settlements were
deposited into the CBR and together they accounted for the
difference. Representative Wool ascertained that even
though funds were drawn on the CBR it was still earning.
Ms. Pitney responded in the affirmative.
Ms. Pitney reviewed the supplemental items considered
urgent by the Office of Management and Budget (OMB) on
slide 9 titled Governor's Supplemental Requests:
Noted by OMB as Urgent - $241.9 million UGF
? Medicaid Services; Medicaid: $128,273.6 UGF
? Fire Suppression: $110,500.0 UGF
? DOTPF-Highway, Aviation and Facilities;
Northern Highways Dalton Highway/Atigun Pass:
$158.1 UGF
? Knik-Goose Bay Road:
$2,000.0 Reappropriation/Scope Change
? Earthquake Relief Federally Ineligible:
$3,000.0 UGF
? DMVA - Mass Notification System: $900.0
Reappropriation Full Supplemental list for Q&A
Ms. Pitney indicated that Medicaid was the most urgent item
and funding was projected to run out by March 23, 2020
without the supplemental funding. The Department of Health
and Social Services (DHSS) would need to delay provider
payments. The Medicaid figure covered both the Medicaid
reduction and the Adult Dental Program. She elaborated that
the fire suppression request included the cost of fighting
the prior summer and fall fires and the projected $16
million for a normal spring season.
Ms. Pitney concluded her presentation and offered to answer
any questions.
2:21:56 PM
Vice-Chair Ortiz asked how urgency was determined for the
Northern and Dalton Highways and Knik-Goose Bay Road
Reappropriation/Scope Change items. Mr. Painter responded
that the first request was considered urgent because the
work was completed, and the money was expended leaving the
entity with a shortfall in funding for the remainder of the
fiscal year unless paid. He was unable to answer regarding
the second item.
2:23:14 PM
Representative Tilton wanted to address the Knik-Goose Bay
Road Scope Change. She explained that several fatalities
occurred due to road maintenance issues. Deep ruts were
pushing drivers into other lanes. The $2 million had been
appropriated for another portion of the Goose Bay road a
few years prior. However, maintenance was urgently needed
in the Mile 1 to Mile 7 area due to the fatalities. She
emphasized that it was a scope change only and additional
funding over the 2 million already appropriated was not
requested.
2:24:40 PM
Representative Josephson asked what would happen if the $16
million for the spring fire suppression was addressed in
the FY 21 budget. Ms. Pitney responded that the Division of
Forestry had authority to fight fires when they occur,
which was the reason for the over $100 million supplemental
request. She elucidated that $80 million was already spent
and the division would continue to fight fires. The worst
ramification was that the item became a ratification, which
had happened in the past.
Representative Josephson asked whether there was such a
thing as a negative supplemental. He wondered if there
was the possibility of addressing an FY 20 appropriation
that the legislature deemed unnecessary. Mr. Painter
answered in the affirmative and added that negative
supplementals were quite common in prior years.
Representative Knopp asked what the $3 million in
earthquake relief was targeted for. Ms. Pitney replied that
the items listed were specifically for Department of
Transportation and Public Facilities (DOT) state
properties. The money was not used in communities with an
expectation of federal disaster relief. Representative
Knopp asked whether DOT had a list of eligible projects.
Mr. Painter answered that he would provide the list.
2:28:05 PM
Representative Wool further questioned fire suppression
dollars. He thought that the spring fire suppression
funding was for fire prevention measures and not for
fighting fires. Mr. Painter answered that the fire
suppression money was only used for fighting fires. Funding
for fire prevention was in a separate allocation.
Representative Wool presumed that the supplemental request
was only for past fires that occurred and anticipated fires
in the coming spring. Mr. Painter replied in the
affirmative and added that $94.5 million of the
supplemental appropriation was already spent. The other $16
million was for anticipated fires in the spring of the
current year. Representative Wool requested further
clarification regarding paying the costs for future fires.
Mr. Painter related that in FY 19 the state did not fully
fund fire suppression and expected a roughly $30 million
ratification in the future. The legislature could ignore it
hoping the governor declared a disaster, but it was more
prudent to include the fire suppression costs in the
budget.
Representative Merrick informed the committee that in the
Department of Natural Resources finance subcommittee,
Representative Hopkins offered an amendment for $5 million
for fire prevention.
Co-Chair Johnston noted that in past years the legislature
had a $50 million supplemental for fire suppression. She
wondered if this was the most expensive season for fire
suppression. Mr. Painter answered in the affirmative.
Ms. Pitney moved to discuss the FY 2020 Supplemental
Spreadsheet (copy on file). She highlighted item 2 on page
1, DHSS Adult Preventative Dental Medicaid Services and
noted that the governors request included both UGF and
federal funds. She reported that the federal funds had been
appropriated in the prior years budget and suggested that
they exclude the federal funds. She mentioned item 3 that
included the fire suppression request.
2:32:47 PM
Vice-Chair Ortiz referenced the $18.730 million in federal
funding for item 2 and asked if it should not be included
in the request. Ms. Pitney answered in the affirmative and
restated that the amount was included in the FY 20 budget.
The governor vetoed the UGF portion only.
Representative Sullivan-Leonard asked whether the item on
line 2 was time sensitive or if it could wait for the
following budget cycle. Ms. Pitney responded that the
program was reinstated by the governor and the Medicaid
program would run out of money by the end of March.
Co-Chair Johnston noted that there had been some question
about the time sensitivity of the Anchorage Division of
Motor Vehicles (DMV) office move. She inquired when the
current lease expired. Mr. Painter understood that a rent
increase was expected very soon, and the DMV wanted to move
quickly. He would provide further information.
Representative Sullivan-Leonard asked if someone from OMB
was available to answer questions.
2:35:15 PM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, responded that he was uncertain
when the lease expired and relayed that the item was not
included in the list of urgent items. The Department of
Administration (DOA) could manage its cash flow until the
time the typical supplemental funds would become available.
2:36:07 PM
Representative Knopp asked if the $16 million in fire
suppression dollars were urgent. He thought that there was
a historical average that was applicable. Mr. Painter
responded that the $16 million represented a 5 year
average for spring fire suppression costs. Representative
Knopp asked about the balance for fire suppression. Mr.
Painter answered that currently the state overspent by
$94.5 million and without an infusion of funds above that
amount there would be a zero balance in fire suppression
funds. In response to a question by, Representative Knopp,
Mr. Painter responded that if the legislature did not
appropriate the fire suppression dollars it would create a
large ratification. He recounted that a statute directed
the authority to continue to fight fires lacking an
appropriation if the governor declared an emergency.
2:37:52 PM
Co-Chair Johnston reported that historically there had been
a balance leftover in the fund, but not in the current
year. She asked if she was accurate. Mr. Painter responded
that in FY 19 the state overspent the balance by $30
million. He commented that the last year the state had a
fire suppression balance was in FY 17.
Representative Wool inquired how the $94.5 million in fire
suppression was covered. Mr. Painter responded that the
money was appropriated from the CBR as part of the deficit.
The statutory language allowed the governor to continue to
spend General Funds (GF) to protect the health, life, and
safety for fire suppression even if funds were lacking for
such purpose.
2:39:20 PM
Representative Josephson asked if the governor had to make
a formal announcement or could he simply expend the funds.
Mr. Painter recalled that the governor had to declare an
emergency and notify the presiding officers of the
legislature. He offered to provide the exact language in
statute.
2:40:04 PM
Ms. Pitney highlighted page 3 containing several items for
the Department of Public Safety (DPS). She drew attention
to line 16 with a request for $4.3 million. She noted that
items 16, 17, 18, 25, and 26 were significant public safety
items in the supplemental. On Page 4, line 21 there was a
supplemental request for the Alaska Marine Highway System
(AMHS) for $7 million. The item was one of 2 AMHS requests
and both did not add service to the current schedule. The
items covered only service through the current fiscal year
making up for DOT's shortfall. She drew attention to page
5, line 27 containing capital requests, which contained the
additional $5 million DOT request.
2:42:11 PM
Ms. Pitney addressed page 6 reflecting the supplemental
requests by the Department of Corrections (DOC). She
explained that the federal government had an agreement with
the state to cover the costs of housing federal prisoners
in Alaska state prisons. The money is kept in a separate
account and the legislature appropriated the funding. The
department requested to utilize the unexpended and
unobligated balance of $8 million for funding inmate
healthcare [page 6, item 29].
2:44:06 PM
Co-Chair Johnston ascertained that the money was comprised
of federal receipts the state had previously received over
several years. She thought that the funding should be
considered as a one-time funding item. She was concerned
whether the transaction would survive an audit.
Mr. Steininger responded that the federal manday revenue
regulation was intended to cover all costs associated with
housing a federal inmate including longer term costs like
maintenance. He offered that the amount was roughly $80 per
day and there was not an expectation to use the entire
amount in the same day. The department was confident they
could use the revenues for the requested purpose. Co-Chair
Johnston maintained her concerns. She asked if the money
could be used for the healthcare costs of inmates in other
years and weather OMB viewed the funding as one-time
funding. Mr. Steininger responded that clearly the money
was a one-time amount that had built up over several years.
The department and OMB were looking into sustainable fund
sources to meet long term needs. However, to meet the one-
time supplemental need, OMB believed it was an appropriate
use of the funds.
2:47:05 PM
Co-Chair Johnston queried that since the money would be
used for a one-time need in FY 20 it reflected an increased
need for healthcare or an underbudgeted situation. Mr.
Steininger deferred to DOC for an answer.
Ms. Pitney continued that most supplemental items were
clearly presented on the spreadsheet. She was going to jump
to page 9, items 45 through 51 to highlight the
ratifications. She explained that items 45 through 50 were
DOT ratifications from FY 10 to FY 17 from federal
emergency projects. The last item resulted from an
appropriation in FY 07 for the Medicaid Management System
completion.
2:49:42 PM
Representative Josephson referred to page 6, [item 30]
regarding the Palmer Correctional Facility. He recounted
that a short time ago the Palmer Correctional Facility
closed. At the time, the facility was acceptable for
housing inmates and currently it was not. He wondered what
had changed. Ms. Pitney answered that when the facility
closed there were known maintenance issues. The legislature
appropriated money for maintenance to reopen the facility.
However, there was a delay in reopening the facility, so
the appropriation had to be moved into the next fiscal
year. She delineated that through further study, the amount
for repairs were greater than originally anticipated.
Representative Josephson deduced that it was typical to
move the amount into the base of the budget. He asked
whether the appropriation was left up to the discretion of
the body. Ms. Pitney answered in the affirmative.
2:52:15 PM
Vice-Chair Ortiz referenced the appropriation for the
Pioneer Homes payment assistance on page 2, line 10 and
read the following, Add authority to meet the mission of
serving elders regardless of ability to pay based on the
new rate structure that was implemented September 1, 2019.
He asked what the original appropriation in the FY 20
budget was and what percentage increase did the $1 million
supplemental request represent.
KELLY CUNNINGHAM, ANALYST, LEGISLATIVE FINANCE DIVISION,
asked Vice-Chair Ortiz to repeat his question. Vice-Chair
Ortiz restated his question. She replied that the FY 20
budget included $25.9 million UGF for payment assistance.
Representative Tilton referenced the ratifications. She
thought the amount of $1.2 million for item 49 was high.
She wondered what the project was. Mr. Painter indicated
LFD would provide the answer to her office.
2:54:46 PM
Representative Carpenter asked when amendments for the bill
were due.
Co-Chair Johnston responded that the committee would have a
public hearing in the following day. She would let members
know when amendments were due.
Co-Chair Johnston thanked the presenters and reviewed the
agenda for the following day.
ADJOURNMENT
2:55:51 PM
The meeting was adjourned at 2:55 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 234 HFC Presentation Governor Supps 2-13-20.pdf |
HFIN 2/13/2020 1:30:00 PM |
HB 234 |
| HB 234 FY20 Gov Supplemental List LDF.pdf |
HFIN 2/13/2020 1:30:00 PM |
HB 234 |
| H CS for CS for SB 74 FIN work draft ver. E.pdf |
HFIN 2/13/2020 1:30:00 PM |
SB 74 |