Legislature(2021 - 2022)ADAMS 519
05/17/2021 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB202 | |
| HB70 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 70 | TELECONFERENCED | |
| + | HB 202 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
May 17, 2021
1:34 p.m.
1:34:37 PM
CALL TO ORDER
Vice-Chair Ortiz 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
None
ALSO PRESENT
Tally Teal, Staff, Representative Kelly Merrick; Alexei
Painter, Director, Legislative Finance Division; Neil
Steininger, Director, Office of Management and Budget,
Office of the Governor.
PRESENT VIA TELECONFERENCE
Cliff Groh, Self, Anchorage; Queen Parker, Self, Sterling;
Terri Lyons, Self, Wasilla; Cammy Taylor, Self, Anchorage;
Cris Eichenlaub, Self, Wasilla; Bert Houghtaling, Self, Big
Lake; Jean Holt, Self, Palmer; Alex McDonald, Self,
Fairbanks; Charles McKee, Self, Anchorage; Phillip DeLand,
Self, Anchorage.
SUMMARY
HB 70 APPROP: CAP; REAPPROP; SUPP; AMEND
HB 70 was HEARD and HELD in committee for further
consideration.
HB 202 PERMANENT FUND DIVIDEND; ROYALTIES
HB 202 was HEARD and HELD in committee for
further consideration.
HOUSE BILL NO. 202
"An Act relating to the Alaska permanent fund;
relating to dividends for state residents; relating to
the use of certain state income; and providing for an
effective date."
1:35:50 PM
AT EASE
1:36:31 PM
RECONVENED
REPRESENTATIVE KELLY MERRICK, SPONSOR, introduced the
legislation. She read from the following prepared remarks:
Good afternoon, vice chair Ortiz, co-chair Foster, and
members of the House Finance Committee. For the
record, Representative Kelly Merrick, District 14 in
Eagle River.
Before the committee is House Bill 202, "An Act
relating to the Alaska Permanent fund; relating to
dividends for state residents; relating to certain
state income."
This is a conversation that is necessary as part of
our budgeting process and long overdue in paying a
sustainable dividend into the future.
As this committee is very aware, the state has
struggled to pay for both required services and the
dividend using the 43-year-old formula. Since FY17,
with the actions of former Governor Walker, the
dividend has been an ad hoc draw.
The 2016 legislature recognized this problem, and
restructured our budget around the POMV framework that
meets our constitutional obligations for services and
provides a type of spending cap.
Legislators have since had difficult decisions to
make, as part of our responsibility to make our state
fiscally sustainable in the long-term. There are three
areas we can change to solve our financial problems:
our spending, our revenues, and the PFD.
The operating budget has been cut year after year, and
while I still support a smaller budget, we have
recognized that the big, easy, change-making cuts are
gone. The capital budget has been cut by more than
90%.
When we protect the POMV, we maintain fiscal stability
and a low-tax environment for both families and
businesses. Many don't support additional or increased
taxes, and my district is one of them. That leaves the
PFD.
Mr. Vice Chair, and members of the committee, we have
all heard our constituents say, "Follow the law, or
change the law." This bill changes the law.
While the foundation of the permanent fund is oil
money and other resource development, the dividend is
no longer based on Alaska's natural resources.
Instead, it's based on investments by the Permanent
Fund Corporation.
This bill goes back to the intent of the dividend, and
ties it directly to resource development, by setting
aside a portion of the royalties received by the state
for payout. Specifically, 30% of the royalties
currently going to the General Fund would be paid to
Alaskans before the general fund receives its cut of
royalties outside the POMV.
There's been growing recognition in the last few years
that following the 1982 dividend statute does not make
our state fiscally sustainable and requires violating
the POMV spending cap. HB 202 addresses these problems
by repealing the current formula and replacing it with
one that is simpler and sustainable.
1:39:32 PM
That's the big picture, and that's the tough decision,
Mr. Co-chair. I don't think there's one person in this
building who wants to hand out a small dividend,
especially after the last year of business closures
and unemployment. But putting Alaska on a stable
financial track is just as important.
With that, I'll have my staff, Tally Teal, go over the
bill in more detail.
Vice-Chair Ortiz acted as chair for part of the meeting. He
noted that Representative LeBon and Representative
Rasmussen had joined the meeting.
1:40:03 PM
TALLY TEAL, STAFF, REPRESENTATIVE KELLY MERRICK,
highlighted the two main sections of the bill beginning
with Section 1. She explained that Section 1 removed
language related to the income available for distribution
of the Permanent Fund Dividend (PFD). She pointed to
Section 7, which defined the new PFD formula in HB 202 that
designated 30 percent of all mineral lease royalties
received by the state during that fiscal year for
distribution of dividends. She noted that the language "may
appropriate" in Section 7 rather than shall was more
suitable based on the 2018 Wielechowski case. She
elucidated that the court decided that the dividend was
subject to appropriation and the permissive language was
more appropriate.
Vice-Chair Ortiz noted that Representative Johnson and
Representative Thompson had joined the meeting.
1:41:19 PM
Ms. Teal referenced a handout depicting a flowchart in
members' bill packets from Co-Chair Merrick's office titled
"HB 202" (copy on file). She pointed to the statutory
definition of natural resource income that was collectively
referred to as royalties. The lines underneath the
definition pointed to the distribution of the royalties.
She elaborated that 25 percent of all royalty income would
be deposited into the Permanent Fund (PF) corpus plus an
additional 25 percent from new fields from oil leases
signed after December 1, 1979, that also included the
Percent of Market Value (POMV) payout. She emphasized that
the formula reflected current law and was unchanged in HB
202. She turned to the second line that indicated 30
percent of all income went to dividends and the third line
showed that the remainder was deposited into the General
Fund (GF). She turned to a second handout from the
Legislative Finance Division (LFD) showing a model
[pertaining to HB 202] containing various graphs with
projections (copy on file). She highlighted that on the
bottom left chart the reserve balances continued to grow
through FY 2030. The middle right graph showed that the
value of the PF continued to grow into the future. She
continued that the top right graph depicted a significantly
smaller PFD under HB 202 than the current statutory formula
but grew over time. The top left graph showed a sustainably
balanced budget. She concluded that that the legislation
would create a reasonable, sustainable, and stable fiscal
environment.
1:43:48 PM
Vice-Chair Ortiz OPENED public testimony.
CLIFF GROH, SELF, ANCHORAGE (via teleconference), shared
that he had been involved in creating the Permanent Fund
Dividend in 1982. He believed that the state needed a
comprehensive strategy to address the deep structural
deficit that looked beyond the next fiscal year. The
comprehensive plan should include a revised PFD formula,
protection of the PFD from overspending, and new revenues
to help pay for public services. He commended the sponsor
for introducing legislation that recognized the need for a
sustainable PFD formula. However, he believed the bill went
too far balancing the budget on the backs of PFDs in order
to avoid collecting taxes from high earning individuals
that included non-residents. He referenced the upcoming
special session called by the governor and hoped the
legislature and governor engage in tradeoffs that produced
a fair and sustainable dividend formula and legislation
generating new revenues.
Representative Rasmussen had heard many people mention that
the [lower] dividend placed a burden on the backs of
children. She asked about the level of funding for
kindergarten through twelfth grade (K-12) education and
felt that education spending was a direct benefit for
children and families in the state. Mr. Groh answered that
the state had a constitutional requirement to fund K-12
education. He indicated that LFD had shown that the K-12
budget had been cut over the last 8 years. He supported a
strong and healthy K-12 education system and universal Pre-
K. He was concerned that cutting the PFD to avoid taxes on
high earners was not the correct approach. He advocated for
a revised PFD formula and additional revenues.
1:48:28 PM
QUEEN PARKER, SELF, STERLING (via teleconference), spoke
against the bill. She wanted her statutory PFD. She agreed
with all of those who opposed the bill.
1:49:37 PM
TERRI LYONS, SELF, WASILLA (via teleconference), testified
against the bill. She believed the legislature did not care
and would not follow the law. She thought that the
legislature looked after special interests first. She
supported Governor Dunleavy's plan for a 50/50 split
[between paying for government expenditures and the
dividend].
1:50:54 PM
AT EASE
1:51:44 PM
RECONVENED
CAMMY TAYLOR, SELF, ANCHORAGE (via teleconference),
testified in support of the bill and supported protecting
the principal of the Permanent Fund. She shared that she
was a resident of the state prior to the PFD program and
while income tax was still collected. She believed that HB
202 was sustainable and would protect both the PF corpus
and the POMV draw. She urged support for the bill.
1:53:06 PM
CRIS EICHENLAUB, SELF, WASILLA (via teleconference),
testified against the bill. He believed the state was
grossly mismanaging its resources. He did not support
digging into the pockets of the people to support more
government. He stated that the PFD was last on the
legislature's agenda and thought it should be first. He
emphasized that the people of Alaska owned the resources.
He felt that the POMV model would deplete the fund. He
supported the earnings model that had worked for 42 years
until the legislature had overspent on the budget. He
opposed the bill.
Representative Rasmussen asked if the royalty split was
increased from 50 to 70 percent whether it would be
agreeable. Mr. Eichenlaub replied that he supported the
non-POMV model. He pondered what would happen if the fund
had a 40 percent loss like in 2008. He opined that they
[legislature] were putting all the state's eggs in one
basket. He felt that a POMV model was unsustainable.
1:57:20 PM
Representative Rasmussen shared many of the concerns. She
believed a stronger spending cap was needed and she
believed it should be in the constitution. She believed
that the general feeling from Alaskans was that the PFD was
their share of oil revenues. She believed that if the PFD
was more tied to mineral royalties as in HB 202, it would
incentivize more production. She asked Mr. Eichenlaub if he
thought the bill would be more supported if the majority of
exclusively the resource wealth was paid to Alaskans versus
government. Mr. Eichenlaub stressed that the people of
Alaska owned all the resources. He believed the people
needed to be paid first. He spoke to the reason government
could not be trusted. He thought that the legislature
needed to show some constraint.
2:00:01 PM
Representative Wool believed that the reason for a POMV
model was because oil revenue dropped from $10 billion to
under $1 billion. He reminded the testifier that the PF had
averaged 8 percent in earnings over the last 40 years. He
emphasized that Alaska was not a business it was a state.
2:00:45 PM
Vice-Chair Ortiz noted that Representative Carpenter and
Representative Edgmon joined the meeting.
BERT HOUGHTALING, SELF, BIG LAKE (via teleconference),
testified against the bill. He felt that statements like
the legislature had cut the budget to the max was grossly
misrepresentative of the situation. He believed that the
states healthcare and education costs were the highest in
the nation and would not be the case if more was cut. He
believed in taxing the one percent instead of cutting the
PFD. He opined that a statutory PFD would lift people out
of poverty and that a lower PFD was a tax on children.
2:03:01 PM
JEAN HOLT, SELF, PALMER (via teleconference), spoke against
the bill. She believed the bill was wrong. She thought that
the bill was being fast tracked and would eliminate
Alaskans fair share of the states mineral wealth. She
supported the governor's PFD bills and asked legislators to
vote no in HB 202.
2:05:29 PM
ALEX MCDONALD, SELF, FAIRBANKS (via teleconference),
opposed the bill. He remarked that the state's population
had not changed significantly, but the budget had
increased. He believed that the legislature had mismanaged
the state's money and the budget was bloated. He remarked
that the people knew how to spend their money better than
government.
2:07:07 PM
CHARLES MCKEE, SELF, ANCHORAGE (via teleconference), spoke
against the bill. He referenced a May 4, Alaska Daily News
article about foster youth finding out their money was
being pocketed by state agencies. He mentioned his
personal lawsuit against the state and associated remarks
that were unrelated to HB 202.
2:08:48 PM
PHILLIP DELAND, SELF, ANCHORAGE (via teleconference),
opposed the legislation. He shared that he had lived in
Anchorage his whole life and had graduated from the
University of Alaska. He believed that the PFD was
established to compensate citizens for ceding their mineral
rights to the state. He stated that the people did not have
the rights to minerals on their own property. He stressed
that the PFD was not the state's money but belonged to the
people as a share of their mineral resources. He emphasized
that the Permanent Fund did not belong to the legislature
and its role was to manage the resource for the citizenry.
He believed the law should be followed and wanted full PFD
payouts. He felt that the recent lower PFDs reflected an
unlawful capping of the dividend and was confiscation
of money that belonged to Alaskans.
Representative Rasmussen shared that she had also been born
and raised in Anchorage. Currently the state was
constitutionally mandated to pay 25 percent of oil revenues
to the funds corpus. She asked if he would be more
supportive of a higher percentage of royalties dedicated to
dividends. Mr. DeLand did not support changing the PFD
formula. He supported following the law and not caping the
payout. He stated that he could really use that money.
He did not believe it was the state's decision to
confiscate funds from people's PFDs in recent years. He
supported the way payments were currently working. He
thought there was enough money in the Permanent Fund to pay
out statutory dividend. He listed ways people used the PFD
funds and were dependent on the dividend.
2:13:22 PM
Representative Rasmussen agreed that a sustainable plan was
needed. She shared that a member of the committee had
proposed a full dividend during the budget process, but
staff had pointed out that paying a full dividend without
major cuts and taxes would drain the fund within a few
years. The balance the committee was working towards
ensured there would be a PFD for many generations and
continued resource development.
2:14:45 PM
AT EASE
2:14:59 PM
RECONVENED
Vice-Chair Ortiz CLOSED public testimony.
Representative LeBon thanked Co-Chair Merrick for bringing
forward an option for the committee and legislature to
consider. He hoped that the legislature could reconcile its
differences and acknowledged that a resolution would not
please everyone.
Representative Edgmon echoed the comments by Representative
LeBon. He appreciated that Co-Chair Merrick had brought the
issue forward to consider. He shared that he had been born
and raised in Alaska. He wanted the PFD to be around
forever. He stressed that 72 percent of the governor's
budget was funded using PF earnings. He reported that
Alaska was the only state in the nation and entity in
Western Civilization funding its government through an
endowment. He stressed the importance of protecting the
endowment.
2:17:19 PM
Representative Wool favored the bill and tying the PFD to
the performance of oil. He pointed to the FY 22 to FY 28
projections of $333 million to $477 million that would pay
a PFD and would not be deposited into the GF. He asked if
there was enough surplus in the GF for the out years. He
favored a bill like the one proposed if it was sustainable
and if the state could absorb the reduction to the general
fund.
Co-Chair Merrick replied that Angela Rodell, Executive
Director, Alaska Permanent Fund Corporation (APFC) had
spoken to the issue - the royalties were a small amount in
comparison to the remainder going to a fund with billions
of dollars. She offered that what made the plan unique was
that 100 percent of the POMV would be used for state
services and would not be competing with the PFD. She
thought that many people were having a hard time with the
current situation where state services were competing for
funding. She liked the plan because the PFD was directly
tied to oil and mineral development in the state. She
addressed some of the comments by callers. She emphasized
that the plan paid the PFD first, before government
services and separated it from the POMV draw. She addressed
comments regarding Alaskans share of the mineral rights
and emphasized that the bill utilized Alaska's share of the
mineral rights. She shared that she was also born and
raised in Alaska and had used her PFD money to go to
college, which she otherwise could not afford. She wanted
her kids to be able to have money to go to college with
PFDs. She stressed that the plan was about a sustainable
PFD. She voiced that the other high dollar dividend plans
depleted the dividend in a few years. She reminded the
committee that PFDs were sent to every resident and was not
needs based. She stated that many times Alaskans who relied
on their PFDs also needed state services. The state could
not afford to provide for Alaskans in need and pay a huge
dividend.
HB 202 was HEARD and HELD in committee for further
consideration.
2:21:37 PM
RECESSED
4:01:47 PM
RECONVENED
HOUSE BILL NO. 70
"An Act making appropriations, including capital
appropriations, reappropriations, and other
appropriations; making supplemental appropriations;
making appropriations to capitalize funds; and
providing for an effective date."
4:01:58 PM
Co-Chair Merrick relayed that the committee heard an
overview of HB 70 on May 4, 2021. She shared that she had
been working closely with Senator Click Bishop's office to
craft the capital budget.
Co-Chair Foster MOVED to ADOPT the proposed committee
substitute for HB 70, Work Draft 32-GH1507\G (Dunmire,
5/17/21).
Co-Chair Merrick OBJECTED for discussion.
Co-Chair Merrick explained that the budget was
significantly different than the governor's proposed FY 22
capital budget.
Representative Josephson asked if the changes included the
governor's amendments.
4:03:23 PM
TALLY TEAL, STAFF, REPRESENTATIVE KELLY MERRICK, answered
that she would point out when she was comparing the
Committee Substitute (CS) to the governors amended or
original budget.
Co-Chair Merrick relayed that the meeting was a general
overview and would not focus on individual projects.
Ms. Teal pointed to four reports from the Legislative
Finance Division in members' packets (copy on file). The
reports were labeled 1 through 4. She began with the first
report [report 1] showing the unrestricted general fund
(UGF) expenditures by capital budget agency summary
governor structure compared to the CS. She indicated that
the CS spent roughly $325 million in UGF compared to $120
million in the governors original budget. She explained
that the governor had used 2 non-traditional funding
sources in the original budget that the legislature
rejected. The governor proposed using $86 million of Alaska
Housing Finance Corporation (AHFC) bonds for aviation and
highway matching funds for the Department of Transportation
and Public Facilities. In addition, he proposed using
approximately $18 million of the Village Safe Water
matching funds from the Department of Environmental
Conservation (DEC) totaling $104 million in AHFC bonds. She
furthered that there had been $10.5 million appropriated
from the rural Power Cost Equalization (PCE) funds for
rural fuel projects. Without the non-traditional sources,
the governors proposed UGF spend was about $224 million.
She indicated that the governor proposed a $350 million
general obligation (GO) bond package in HB 93 [HB 93-G.O.
Bonds: State Infrastructure Projects] for capital projects.
Many projects in the GO bond bill had been moved to the
capital budget.
4:06:11 PM
Ms. Teal turned to report 2 showing the capital budget
agency summary governor structure all funding sources.
She pointed to column 4 comparing the governors amended
budget to the House CS and reported that $101 million of
the GO bond funding was removed and $620 million was an
increase in federal receipt authority but was not new
funding. She explained that the committee had heard a
presentation on the Statewide Transportation Improvement
Program (STIP) and reminded the committee of the two
methods the state could provide funding for STIP projects.
She elaborated that one option was to give one lump sum
appropriation; it did not provide legislative oversite of
how the funding was spent. The other option was to break
the appropriations into allocations to show what projects
the department planned on funding with the STIP. Prior STIP
funding had been done both ways and the CS version chose to
use allocations with some modifications. The method added
two accounts: a project acceleration fund and a project
contingency fund. They were separate pots of money that
allowed for administrative flexibility while setting a
more realistic amount for each of the appropriations. She
stressed that the funding was structured differently and
was not an increase for the Department of Transportation
and Public Facilities (DOT).
Vice-Chair Ortiz asked about the project acceleration fund.
Ms. Teal answered that it was in the numbers section. She
restated that the reason the federal authority total was
higher was due to the new funding structure.
Representative Thompson asked if there was a listing
showing which items were different than the original bill.
Ms. Teal replied in the affirmative and noted that the
information was in report 3. She turned to report 3
containing the Capital Budget project detail by agency
governor structure. She noted that the documents were
available online. She explained that column 1 showed the
governor's amended budget, column 2 was the Senate version
CS, column 3 reflected the House CS, column 4 compared the
governors budget to the House CS, and column 5 compared
the House CS to the Senate CS. She highlighted a few
projects. She pointed to the West Susitna Road Access
Project on page 1, that was originally in the GO bond bill
and was funded at the governor's request in the amount of
$8.5 million. She moved to page 2 and reported that the
Alaska Travel Industry Association (ATIA) was originally
funded at $5 million but the funding was eliminated in the
CS because of funding from the American Rescue Plan Act
(ARPA) dedicated to tourism. She referred to the $1 million
appropriation for the Matanuska-Susitna Arctic Winter Games
and noted that it was not in the governors request but was
included in the CS.
4:11:12 PM
Representative Wool asked if the Voice of the Arctic
appropriation on page 2 was in the governors original
request. Ms. Teal replied that the increment had been in
the governor's amended budget.
Ms. Teal turned to page 6 and cited two Department of Fish
and Game (DFG) projects that had not been funded in the
capital budget process the previous year. The projects had
been included in HB 69 [HB 69-Approp: Operating
Budget/Loans/Funds] [the operating budget] and were not
included in the current CS.
Vice-Chair Ortiz asked what specific projects she was
referring to that were not included. Ms. Teal answered that
the projects were the Pacific Salmon Treaty Chinook Fishery
Mitigation and the Wildlife Management, Research and
Hunting Access projects.
Representative Josephson cited the Wildlife Management,
Research and Hunting Access project on page 6. He asked
whether it had been included in the current years
operating budget. Ms. Teal answered in the affirmative and
reminded the committee that supplemental capital items were
included in the operating budget.
4:13:27 PM
Ms. Teal turned to page 8 and pointed to the Statewide
Deferred Maintenance, Renovation, and Repair project and
noted that the appropriation was slightly lower than the
governor's request due to the amount available in the
Alaska Capital Income Fund. She moved to page 9,
referencing the Fairbanks Youth Facility that had been a GO
bond project. She noted the facility was not funded by UGF.
She thought that LFD would be best to speak to the
specifics. She understood that through a bond refinancing
$18 million became available for a capital project,
therefore, the governor chose to appropriate the funds for
the youth facility.
Representative Rasmussen looked at the 1167 fund source and
asked what fund it was.
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
explained that tobacco bonds had originally been sold from
the proceeds of a lawsuit two decades earlier, which
capitalized the Northern Tobacco Security Corporation, a
subsidiary of the Alaska Housing Finance Corporation
(AHFC). The tobacco corporation needed to refinance its
debt, or it could become insolvent in the coming years due
to the decline in tobacco sales. He elucidated that to
obtain a better rate on the refinancing of the tax exempt
bond the proceeds could be appropriated to a qualified
capital project under Internal Revenue Service (IRS) rules.
The proceeds were estimated to be $18 million. The
governor had selected the youth facility because it cost
$18 million, which was a criterion for obtaining the
refinancing.
4:16:01 PM
Representative Josephson had further questions about the
wildlife access research and hunting project on page 6. He
asked about the $10 million. Mr. Painter deferred to the
Office of Management and Budget (OMB) for the answer.
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, stated his understanding of the
question related to the project for $10 million on page 6.
He replied that the funding was either the Dingle Johnson
or Pittman Robertson federal funding for wildlife and
hunting access projects. He reported that the project was
not related to the navigability or statehood defense
project. The project was the annual recurring capital
program through DFG that built out hunting access projects.
Due to a truncated session in the prior year, the
department had not received the funds and it was included
in the supplemental. The administration moved some of the
wildlife management activity funds into the operating
budget because of the characteristics of the appropriation.
4:18:31 PM
Representative Josephson reasoned that the transaction
appeared typical and perfunctory and was not unique.
Representative Wool asked about the Fairbanks Youth
Facility capital upgrade to an existing facility. He asked
which youth facility it was. Mr. Steininger answered that
it was the Juvenile Justice facility in Fairbanks.
Vice-Chair Ortiz asked about the $10 million for wildlife
hunting access. He asked if there was a breakdown of the
$10 million expenditure. Mr. Steininger answered that DFG
posted the solicitations for the spending after the
appropriation was made. He relayed that currently
historical allocations were available.
Representative Rasmussen stated it was her understanding
that the project funding utilized federal receipts and not
UGF. Mr. Steininger answered in the affirmative and added
that receipts from hunting licenses (Fish and Game Fund)
were used as matching funds.
4:20:42 PM
Ms. Teal moved to page 9, under the Department of Health
and Social Services and cited the Palmer Pioneer Home and
Veteran's Home roof replacement increment. She indicated
that the project was originally in the GO Bond bill and was
included in the CS. She moved to page 11 and directed
attention to the $12.5 million line item for the Alaska
Vocational Technical Center (AVTEC), which was originally
in the GO Bond legislation. She communicated that the
appropriation was originally $19.5 million but it was
discovered that the reduced amount was sufficient. She
advanced to page 12 and referenced the Prosecutor
Recruitment and Housing to Address Sexual Assault and
Sexual Abuse of a Minor Case Backlog project. The project
had originally been a supplemental request and was included
in the CS. She moved to the Department of Natural Resources
(DNR) on page 15. She listed the following 4 projects:
Wildland Firefighting Aircraft Replacement, Wildland Fire
Engine Replacement, Statewide Firebreak Construction
Program, and the Statewide Park Sanitation and Facility
Upgrades. She relayed that they were all initially in the
GO Bond package. She pointed to one new project; the
Snowmobile Trail Development Program and Grants, which was
not included in the governor's original request but was
included in the CS.
Co-Chair Merrick believed that it was called the Snow
Tracks Program. Ms. Teal affirmed the statement.
Ms. Teal referenced the last two DNR projects; Alaska
Wildlife Troopers Marine Enforcement Repair and Replacement
and Boating Upgrades, Haul Outs, and Vessel Replacement and
noted that they were originally GO Bond projects.
4:22:58 PM
Ms. Teal turned the Department of Transportation and Public
Facilities (DOT) projects, which accounted for the bulk of
the numbers section.
Co-Chair Merrick asked members to contact her office with
specific questions regarding DOT.
Representative Josephson looked at page 15 and asked about
the Arctic Strategic Transportation and Resource Project
(ASTAR) project. He wondered whether it was a permanent
appropriation item.
Mr. Steininger answered that the ASTAR project had been
appropriated in phases over recent years. It was not
permanent but was a recurring project requiring additional
distinct funding.
Representative Edgmon asked about projects that were not
included. He asked why the Alaska Travel Industry
Association (ATIA) project had been removed. He understood
that the ARPA funding was different than the original
appropriation for marketing. Ms. Teal stated it was her
understanding that the ARPA funds would cover the same
expenses. She added that the original funding was the
vehicle rental tax and with the tourism downturn the
receipts were likely insufficient.
4:25:29 PM
Mr. Painter interjected that the administration directed $5
million in Coronavirus Aid, Relief, and Economic Security
(CARES) Act funding to ATIA for marketing Alaska as a COVID
safe tourism destination. The House added $10 million to
ATIA from ARPA funding as well. The funding may not be for
traditional tourism marketing but $15 million had been
directed to ATIA.
Ms. Teal pointed to page 38 related to two University of
Alaska (UA) projects and noted that they were originally GO
bond projects [UAA Building Energy Performance Upgrades and
Bartlett and Moore Hall Modernization: Restrooms and
Sanitation Infrastructure]. She underlined that the Courts
Statewide Deferred Maintenance item on page 39 was also a
GO bond project. She commented that her remarks on the
numbers section, Section 1 of the CS was complete. She
briefly described Section 2 as a summary of funding in
Section 1 by agency and Section 3 as listing statewide
funding by fund source.
4:26:44 PM
Ms. Teal reported that the language section of the budget
began in Section 4, on page 33 of the CS. She highlighted
that Sections 7 through Section 10 were reappropriations
from agencies to the Alaska Capital Income Fund.
4:28:22 PM
AT EASE
4:29:12 PM
RECONVENED
4:29:51 PM
AT EASE
4:30:33 PM
RECONVENED
Mr. Painter clarified that in Section 4 the typical revised
program receipt language [Revised Program Legislative
(RPL)] referencing AS 37.05.146(a), (b), and (c) was
typical. He noted that in subsection (e) on page 33 the
language was unusual. He explained that it prohibited
increasing receipts received by the Alaska Gasline
Development Corporation (AGDC) and was included in the
Senate version of the bill. He elaborated that (e) (1) on
page 33, the Coronavirus Response and Relief Supplemental
Appropriations Act (CRRSAA) funds for DOT were excluded
from the RPL process. He turned to page 34, Section 2 that
listed the Coronavirus State and Local Fiscal Recovery
Funds, in ARPA as excluded from the RPL process. In
addition, he read the following that was excluded from the
RPL process:
th
(3)funds appropriated by the 117 Congress
(A) for infrastructure, jobs, or part of the
American Jobs Plan, as proposed by the
President of the United States, or a similar
bill or plan;
(B) related to novel coronavirus disease (Covid-
19) or economic recovery; or
(C) for natural gas pipeline expenditures.
Mr. Painter noted that subsection (f) stated that the
exclusions did not apply to prior authorizations made in
January 2021.
Representative Josephson asked if any federal funding
received after session ended and before the coming special
session on August 2, 2021, could not be expended until
August 2. Mr. Painter answered that the funds could also be
appropriated in the coming special session beginning on May
20, 2021.
4:33:20 PM
Ms. Teal turned to Section 5, on page 34 of the bill. She
offered that the language was standard language that was
omitted in the prior year. Section 6 was standard language
related to the Natural Petroleum Reserve-Alaska (NPRA)
impact grants. She reiterated the prior information
regarding Section 7 through Section 10. She moved to
Section 11 and commented that the item had been an
operating item that was moved to the capital budget. She
pointed out that Section 12 through Section 14 returned to
reappropriations to the Capital Income Fund. She
communicated that Section 15 through Section 23 on pages 42
through page 46 included reappropriations within districts
from lapsing grant funds from the Department of Commerce,
Community and Economic Development (DCCED). She turned to
page 46, Sections 24 through Section 26 and noted they
contained lapsing language and effective dates.
Co-Chair Merrick asked if there was anything to highlight
on report 4.
Ms. Teal identified report 4 that included the
reappropriations within district [Section 15 through
Section 23] and noted they matched the language in the
Senate CS version.
Representative Josephson cited report 1 that showed a UGF
spend of $324.6 million. He asked what it did to the
surplus of a similar amount. Mr. Painter answered that the
House's operating budget included some fund changes using
ARPA dollars for debt service that was discovered to be
unallowable. The surplus had included fund changes that
could not occur. However, the same amount of revenue
replacement might be applied to other areas of the budget.
He remembered that the amount of surplus was enough for a
$500 PFD assuming the capital budget was closer to the
governors version. The CS version was $150 million higher
so the surplus would be that much less. However, how the
ARPA funds could be spent was a moving target therefore, it
was difficult to compare the Houses budget to a surplus.
Co-Chair Merrick reminded the committee that unique funding
sources were used originally in the capital budget that
once removed, inflated the House CS.
Representative Wool deduced that the House CS compared to
the Senate CS and was $155 million higher. In addition, the
House CS versus governors version was $200 million higher
and the ARPA funding added $200 million to the House
budget. He noted that the Senate operating budget numbers
were currently unknown, therefore the residual amount was
unknown. Mr. Painter was not prepared to speak about a
fiscal summary on the fly.
4:38:45 PM
Vice-Chair Ortiz referenced Mr. Painter's mention of the
recently released ARPA guidelines. He asked if the
committee would hear a summary about how the guidelines
changed in relation to the budgeting process. Mr. Painter
answered that the new information was improved, and he
believed the committee would hear from Mr. Steininger on
the updates.
Co-Chair Merrick WITHDREW her OBJECTION to the adoption of
the CS.
There being NO OBJECTION, Work Draft 32-GH1507|G was
ADOPTED.
HB 70 was HEARD and HELD in committee for further
consideration.
Co-Chair Merrick reviewed the schedule for the following
morning.
ADJOURNMENT
4:40:23 PM
The meeting was adjourned at 4:40 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 202 Fiscal Model Output REVISED (002).pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 202 |
| HB 202 Public Testimony by 051621.pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 202 |
| HB 202 Flowchart.pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 202 |
| HB 202 Sectional Analysis 5.5.2021.pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 202 |
| HB 202 Sponsor Statement 5.5.2021.pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 202 |
| HB 70 Agency Summary HSC1 All Funds.pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 70 |
| HB 70 AgencySummary HCS1 UGF Only.pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 70 |
| HB 70 HCS WorkDraft vG.pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 70 |
| HB 70 ProjectDetailByAgency HCS1 Supplemental Items Compare to Senate SCS1.pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 70 |
| HB 70 ProjectDetailByAgency HCS1 Compare to Gov Amend Total.pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 70 |
| HB 70 Public Testimony by 051921.pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 70 |
| HB 202 Public Testimony by 051921.pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 202 |
| HB 202 Public Testimony by 052121.pdf |
HFIN 5/17/2021 1:30:00 PM |
HB 202 |