Legislature(2023 - 2024)ADAMS 519
01/25/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Overview: Governor's Fy 2024 Operating Budget | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
HOUSE FINANCE COMMITTEE
January 25, 2023
1:34 p.m.
1:34:00 PM
CALL TO ORDER
Co-Chair Johnson called the House Finance Committee meeting
to order at 1:34 p.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
Representative Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
Representative Neal Foster, Co-Chair
ALSO PRESENT
Neil Steininger, Director, Office of Management and Budget,
Office of the Governor; Representative Andrew Gray.
SUMMARY
OVERVIEW: GOVERNOR'S FY 2024 OPERATING BUDGET
1:34:07 PM
Co-Chair Johnson offered information about the appropriate
titles for the co-chairs of the committee.
Co-Chair Johnson reviewed the meeting agenda.
^OVERVIEW: GOVERNOR'S FY 2024 OPERATING BUDGET
1:36:02 PM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, introduced himself and gave a brief
history of his work at the Office of Management and Budget
(OMB). He introduced a PowerPoint presentation titled,
"FY2024 Governor's Budget HB 39, HB 40, and HB 41," dated
January 25, 2023 (copy on file). He relayed that the
presentation focused on some of the more significant
challenges facing the state in the development, planning,
and execution of the budget.
Co-Chair Johnson ensured there were no questions before Mr.
Steininger began his presentation.
1:37:38 PM
Mr. Steininger began the presentation on slide 2, "Budget
Lookback." The governor inherited the FY 19 budget,
detailed on the far left side of the slide. Including
supplementals, the FY 19 budget was slightly over $4.8
billion with around $4 billion dedicated to agency
operations and $663 million to statewide operations. State
operations included items like debt service and deposits
into savings accounts. He relayed that the capital budget
for FY 19 was $168 million. In the FY 24 proposal, the
budget totaled just under $4.8 billion in unrestricted
general funds (UGF), which was roughly a 1.3 percent
decrease since 2019. The majority of the decrease came from
statewide operations. The $132 million increase in agency
operations from FY 19 to FY 24 represented a net reduction
in some areas and investments in others. The savings were
used to invest in priority areas like the protection and
investment in the development of the state. The goal was to
make Alaska a good place to live.
Mr. Steininger continued that on the operating side, there
was just short of a 4 percent reduction from FY 19 to FY
24. There was an increase of about 2.9 percent in revenue
as reported by OMB, which excluded the Permanent Fund from
the total revenue. The proposed transfer into the dividend
fund would come out of the percent of market value (POMV)
draw. The overall POMV calculation had increased over time,
however the amount that was proposed to be used for
government items had decreased. There were some other
adjustments that he would discuss later on in the
presentation.
1:40:50 PM
Representative Hannan recalled that there was a focus in
the prior year on catching up on oil and gas tax credits
owed by the state. She asked if Mr. Steininger could
provide more detailed information on oil and gas credit
catchups. She asked if the state was caught up from the
prior year.
Mr. Steininger responded that when the appropriation bill
for FY 23 was passed, projections indicated that the
credits would be paid off completely. The calculation for
the payment included in the appropriation was based on
revenue, and the number of credits represented in the
calculation were less than the total amount owed. There was
$42.7 million pushed into FY 24 due to the reduced revenue
projections. He indicated that Representative Hannan was
correct in that the credits were intended to be paid off
completely.
1:42:11 PM
Mr. Steininger moved to slide 3 relating to the usage of
funds. Previously, the section would have had a different
name, but it was changed to better align with statutory
language and provide more clarity. In non-formula agency
operations, the budget was effectively flat from year to
year. The agency non-formula spending referred to more
direct agency activities, which included items like
discretionary grant programs, travel for state employees,
and the core costs of doing business. Items like the K-12
education program, Medicaid, and public assistance programs
were covered under the agency formula operations, which was
down about $52 million year over year. The programs were
defined separately because there was a formula in statute
that defined the amount the state would pay out. There was
less discretion in the programs in terms of increasing or
decreasing the amount spent.
Mr. Steininger continued that in the FY 24 budget, there
was a proposal to pay the full statutory formula for K-12
at the base student allocation (BSA) level which was
increased by a bill that had passed in 2022. Under
statewide operations, there was a significant drop off for
oil and gas credits in the "capitalizations and others"
category. There was also a small reduction in debt service
due to paying off bonds and a slight increase in retirement
system costs, which came from market returns on retirement
investments.
Mr. Steininger reported that the capital budget was down
about $460 million year over year. The previous budget was
fairly significant and involved a substantial amount of
revenue that had built up over the years and needed to be
distributed to meet some previously unmet capital needs. He
explained that OMB had included a placeholder on the slide
for FY 23 supplementals of $85 million. The supplemental
budget was statutorily due on January 31, 2023, and OMB
would be releasing more detail in the near future. The $85
million figure was an initial estimate made in December of
2022, but more information was now available and it had
become clear that $85 million was an optimistic estimate.
When the appropriation bill for FY 23 was passed, revenue
estimates were significantly higher than the estimates were
currently. It had appeared that education would be fully
forward funded; however, due to a decline in projected
revenue only about $49 million would be available to
forward fund education instead of the originally expected
sum of $1.2 billion.
Representative Ortiz asked if there was a known minimum
figure for the FY 23 supplementals.
Mr. Steininger responded that OMB was working with various
departments in anticipation of the bill being released in
the following week. He could not give an exact number but
thought that $85 million was optimistic and it would likely
be in the $100 million range.
1:47:38 PM
Mr. Steininger moved to slide 4 to discuss the sources of
funds. The unrestricted revenue was an additional revenue
to the state that was currently coming from the oil
industry. There was a reduction in unrestricted revenue
from FY 23 to FY 24 of about $455 million due to the
projected outlook of oil prices in the future. The POMV
draw was increasing and made up for some of the losses on
the traditional revenue side. The restricted revenue
referred to the revenue coming in from federal sources and
direct agency collections for items like direct fee for
service. The draws, deposits, and adjustments section
reflected elements that were not current year revenue
collections, but were monies that were available for
appropriations to support state programs. In FY 23, there
was a direct appropriation from a savings account that was
a statutory budget reserve. Another important element was
prior year carry forward, which was a term to describe
times when the legislature made an operating appropriation
that covered multiple years. The K-12 draw in FY 24
reflected that the $49.4 million was available to be
deposited for the forward funding of education. The federal
government gave the state about $1 billion through American
Rescue Plan Act (ARPA) to offset general operating costs.
It was assumed that the state had used all available ARPA
funds, but as FY 22 came to a close the state found about
$10 million that was unspent.
Representative Stapp asked for a clarification on the $49.4
million figure under UGF on slide 4. He asked if the figure
still existed or if it had changed.
Mr. Steininger responded that $49.4 million was the
estimate based on the most recent official forecast from
the Department of Revenue (DOR) released in December of
2022. There had not been another official forecast released
since then. The figure could increase based on the changing
price of oil, but it was a volatile projection.
Representative Stapp asked if it would impact the $263.9
million deficit objective.
Mr. Steininger responded in the affirmative. Updated
revenue projections were typically released in mid to late
March, and at that time OMB would update its public reports
to show the new revenue estimate.
Co-Chair Johnson indicated that she intended to finish the
meeting by 3:00 p.m.
1:52:39 PM
Mr. Steininger moved to slide 5 to discuss the savings
balances. The deficit projected for FY 24 was managed
through a few transactions within the state's savings
account. The department proposed that the $49.4 million be
used on K-12 education in FY 24, the remaining $20 million
from the statutory budget reserve be used to pay for the
$20 million projected deficit, and the Constitutional
Budget Reserve (CBR) be used for the remainder of the
deficit. The CBR balance was projected to be about $2.2
billion at the start of FY 23 based on the large amount of
revenue received in FY 22. He acknowledged that FY 23 began
six months ago, but the surpluses from FY 22 were still
subject to audit. There would be updates to the projections
once the audit was complete. There were no projected CBR
draws in FY 23, but the account would earn some interest on
the money. The draw in FY 24 would result in about a $2.2
billion projected ending balance for the CBR. Generally
speaking, the minimum CBR balance to manage cash flow and
maintain the functionality of the state was about $500
million, which would put the state in a more comfortable
range than it would have been projections in prior years.
Representative Josephson noted that at a recent rally for
education, he heard that K-12 needed to be funded $260
million more than it was in 2017. He asked if the only
source of revenue for education would be the CBR if there
was no new revenue.
Mr. Steininger responded that if no other aspects of the
fiscal picture were addressed, any increase would come from
the CBR.
Representative Coulombe was surprised that $500 million was
the figure determined to be the minimum savings balance to
maintain cashflows. She asked where the number came from.
Mr. Steininger responded that OMB met with the Division of
Finance to discuss the functional management of cash flow
as the state collected revenue. The division and OMB
discussed how much money would be required to simply keep
the state functioning. Other elements like revenue
volatility were not taken into account. The number that was
decided upon was just over $400 million, and he rounded up
to $500 million for the sake of prudence. When it came to
federal programs, the state paid out of pocket and got
reimbursed by the federal government later. The $400
million figure represented the maximum amount the state
would be able to spend in advance of collecting the federal
dollars. If other elements were taken into account, such as
revenue volatility, the figure would be significantly
larger than $500 million.
1:58:08 PM
Representative Galvin asked about the minimum savings
balance on the CBR. She asked if there was any indication
of the credit rating and how the rating would be affected
if the CBR was drawn down to $500 million.
Mr. Steininger clarified that the administration was not
recommending that the account be drawn to $500 million. The
administration saw the $2.2 billion figure to be much more
stable. He deferred her question on the credit rating to
DOR.
Representative Galvin asked if she could get more
information after the meeting.
Mr. Steininger would follow up in writing.
1:59:34 PM
Mr. Steininger advanced to slide 6 which illustrated one of
the bigger budget challenges facing the state. The
volatility of the state's traditional revenue made it
difficult to make a plan to fund state government. The
graph on the slide represented DOR's FY 23 UGF traditional
revenue forecast amounts over time. The FY 23 revenue
estimates were $2.2 billion higher than they were when the
governor released his initial budget proposal. The
projections were showing fully forward funded education and
oil and gas tax credits when the budget was originally
signed; however, as revenue and projections dropped, the
ability to forward fund items dropped as well. From the day
the FY 23 budget was signed to the day the governor's FY 24
budget was released, the projections had dropped by $1.8
billion. The reduction showed how quickly things could
change and how quickly revenue could drop. It was important
to maintain flexibility in order to manage unforeseen
events.
Mr. Steininger advanced to slide 7 to discuss the
recruitment and retention issues in state positions. He
relayed that one of the biggest challenges was bringing in
the staff necessary to do the work. He highlighted the
table on the left side of the slide which showed the
percent of positions by agency that were vacant in December
of 2022. He noted that some of the numbers were flipped and
he would provide an updated report to the committee. There
were some positions that were seasonal and therefore were
often vacant in the winter or in the summer, but there was
a significant overall reduction in the number of positions
that were filled. Additionally, the state was removing the
positions that could not be filled, and what remained were
only the positions that were necessary for the work that
needed to be done. Another item of note was what would
happen to the money budgeted for a position when the
position could not be filled. He explained that there were
a few appropriations that directed the administration on
what to do with money made available by vacancies. The
money generally went to the working reserve, which was the
state's account to manage workers' compensation claims on
behalf of state employees, the group health and life
account, which helped stabilize health insurance costs for
state employees, and the catastrophic reserve account,
which was the state's self-insurance account for building
insurance. The money was used with the intention of
stabilizing future expenditures for the state.
2:05:42 PM
Representative Stapp asked about the difference between the
vacancy rate and the vacancy factor. To him, the vacancy
rate seemed significantly higher than the vacancy factor.
He asked if Mr. Steininger had an idea of what the number
actually was.
Mr. Steininger responded that the idea behind the vacancy
factor used in OMB's reports was that with natural
turnover, some positions would never be filled at 100
percent. For example, if the vacancy factor was 5 percent
in a 100 employee division, five of the employees would be
completely unfunded. The goal was to allow for a natural
turnover rate while ensuring that there were enough
employees to do the work. He wanted to leave room for an
agency to hire for the positions in the future. He relayed
that OMB was following guidance from previous legislatures
on how the money from unfilled positions should be spent.
Co-Chair Edgmon remarked that slide 7 had caught his
attention and he thought it attempted to encapsulate where
the state was in the vacancy factor. He wanted to focus on
the vacancy issue and thought that it was a pivotal policy
challenge for the entire legislature. He recalled that last
year, Representatives Josephson, Ortiz, and others spent a
good amount of time on the issue and heard from the
Department of Transportation and Public Facilities (DOT)
among other departments about all of the various vacancies
across agencies. He had learned from last year's
presentations that a quarter of the workforce was not
filled. He wanted to hear from the administration what the
plan was to fill the vacancies and the strategies that
would be in place to mitigate the problem. Many people were
unable to get the assistance that they needed because there
were not enough workers to fulfill the needs. Considering
what was happening across the state and nation, the problem
was likely to worsen.
2:12:07 PM
Representative Hannan thought Representative Edgmon set up
her question well. She considered the vacancy rates for the
Department of Health (DOH) and the Department of Family and
Community Services (DFCS), formerly the Department of
Health and Social Services (DHSS). She knew that the
numbers were percentages and that the vacancy rates for the
two new departments could not be added together to estimate
what DHSS rates would have been. She speculated that there
would have been a higher vacancy rate if DHSS was not split
in two. She understood that the legislature funded many
positions that were not even advertised. She wondered what
the vacancy rate would have been if DHSS was not split.
Mr. Steininger responded that he could do the calculations
and speculated that the rate would be an average between
DOH and DFCS. He thought that the vacancy rate would be
closer to 22.8 percent when blended together. In the
Division of Public Assistance (DPA), the commissioner was
now able to focus on public assistance more readily and
more directly. The increased focus was one of the biggest
benefits of the department split.
Representative Hannan wanted to hear from OMB. On paper, it
was known that there was a deadline and it was anticipated
that more employees would be needed. It was important to
deliver the most vital services to the most vulnerable and
the crisis had left families unfed for the winter. In
practice, the state was nowhere near its target.
Representative Josephson was curious about the impacts on
the Department of Law (DOL). He was involved in a bill in
the prior year that focused on giving a substantial pay
raise to attorneys and noted that the vacancy rate at DOL
was only 11.4 percent. He asked if it was possible that
state jobs simply had lost curb appeal. He noted that
defined benefits were a priority of the other body and that
it was an ongoing issue.
Mr. Steininger responded that Representative Josephson was
correct to note that the vacancy rate at DOL was low.
Addressing the pay disparity among attorneys by
implementing 20 percent pay adjustment had an immediate
impact. He did not think that state employment was seen as
unattractive, but he was aware that pay was always an
issue. However, the state tried to make cost of living
adjustments for state employees. The wages that attorneys
were previously earning were a good example because
attorneys were not receiving cost of living adjustments,
and the 20 percent adjustment moved the attorneys up to the
going rate as determined by the bargaining units. The
concerns about executing the plan on paper was why he
included it in the budget challenges. He was sure the
administration would be happy to have a more robust
conversation on the topic.
2:19:36 PM
Representative Ortiz recalled that Mr. Steininger spoke
earlier about the ways resources were used when vacancies
were unfilled. He asked if Mr. Steininger had the ability
to use the resources that came from unfilled positions to
increase recruitment and create incentives in order to stem
the tide.
Mr. Steininger responded in short, yes. The state had used
the strategy in various agencies to create hiring and
recruitment incentives to try to attract more candidates.
In DOT, there was a strategy called mission critical pay
incentives, which was utilized when the department was
experiencing extreme difficulty in staffing. He noted that
all incentives were negotiated through personnel with the
respective bargaining unit associated with the agency.
Representative Ortiz understood that the decision of
whether to use the resources to create greater incentives
would begin with the relevant commissioner.
Mr. Steininger responded that the Division of Personnel was
within DOA and the process would generally begin with a
conversation with the commissioner of DOA.
Representative Ortiz understood that the vacancy
percentages meant more when an agency's ability to contract
and permit projects was inhibited. He asked if someone was
looking at the overall health of the economy and whether
there was a plan to address the impact of the shortages.
Mr. Steininger responded in the affirmative. He explained
that DOA had been working closely with the cabinet to
understand the impacts and the root cause. It was sometimes
difficult to determine why recruitment was more difficult
in some agencies than it was in others. Some solutions
could be seen in the budget, such as rural housing
solutions and pay incentives. However, the issue was a
budgetary execution problem and many solutions were non-
budgetary acts. When an agency was unable to meet its
mission, a problem was created for the public. An important
thing to note was that the slide offered vacancy
percentages as of December of 2022, but many of the
agencies had naturally higher vacancy rates in the winter
due to the seasonality of the work. Even so, the vacancy
rates were higher than OMB preferred.
2:26:24 PM
Representative Galvin calculated that she added the
personal services expenses on the bottom right of slide 7
to be $69.5 million. She was curious to know if Alaska's
process was a common way for states to approach accounting.
She thought it seemed like a very large sum of money. She
noted that many of the agencies were not performing up to
standard and Alaskans were suffering. For example, she
relayed that many Alaskans were concerned about the state
roads not being maintained properly with the influx of
snow, the public bus system not functioning well, safety
officers being unable to respond to a situation quickly
enough, and many other problems. She wondered if a legal
defense fund needed to be implemented. She thought it would
be interesting to know if there was a plan for the funds to
fill in the holes to ensure that the services Alaskans
needed would be available. She did not expect him to have
the answer about other states on hand but wondered if he
could supply the information in the future.
Mr. Steininger responded that the personal services
categories, which consisted of the working reserve, group
health life, and catastrophic reserve, may be called by
different names in other states, but all states had similar
funds. The state took a percentage of the payroll expenses
to fund the accounts. The mechanism for unspent general
funds flowing into the accounts was a structure set up in
the language of the budget and had been established prior
to his time in OMB. He was unsure if the exact mechanism
was used by other states.
Co-Chair Johnson asked for questions to be held until the
end.
Mr. Steininger advanced to slide 8 to discuss another
budget challenge: the match rate for the Medicaid program.
Under the COVID-19 public health emergency, the state
received an enhanced federal medical assistance percentage
match (eFMAP) of 6.2 percent resulting in $17.3 million in
state savings per quarter. On December 29, 2022, the
federal government authorized a phase out of eFMAP over the
course of state FY 23 and FY 24. The phase out was not
incorporated into the state budget crafted in December of
2022 because it was announced after the budget was created.
There would be some budget amendments to address the
updates from the federal government. He relayed that OMB
was working with DOH to determine how the phase out would
impact the state's share of Medicaid. He summarized that
the phase out would allow the state to redetermine Medicaid
eligibility.
Representative Coulombe understood that the eligibility
redetermination would begin on April 1 and asked who would
be doing the determination. She noted that DOH had a high
vacancy rate and she thought that there would need to be an
increased hiring effort. She asked if the plan was to hire
more people to manage the eligibility redetermination.
Mr. Steininger responded that the Division of Public
Assistance would be responsible for the work, which was
within DOH. He explained that OMB was working with the
division to devise a plan. He confirmed that the process
would begin on April 1 and would revolve around rolling
redetermination over the subsequent 14 months.
2:33:18 PM
Representative Josephson asked if the result of the
redetermination would be an increased number of uninsured
people. He asked if the increase in uninsured individuals
might be an argument for increasing behavioral health fund
transfers to nonprofits organizations.
Mr. Steininger responded that he would defer the question
to DOH to determine where the line should be for Medicaid
eligibility. Individuals might have found a job that
provided health insurance and might not know that they were
still on Medicaid.
Mr. Steininger advanced to slide 9, which showed the
relative size of every state agency included in the
operating budget. The largest agency was the Department of
Education and Early Development (DEED), and the vast
majority of the money was going towards the K-12 formula
program. The next largest agency was DOH due to the
Medicaid program. Following DOH was the Department of
Corrections (DOC), which was almost completely funded
through general funds. He indicated that the K-12 formula
and Medicaid made up the bulk of state offerings.
Representative Coulombe asked if the numbers for DEED and
DOH included federal funds.
Mr. Steininger responded that it was just UGF.
Mr. Steininger advanced to slide 10 to cover some high
points from the FY 24 budget proposal. He reported that UGF
operating was down almost 4 percent since FY 19. The budget
proposal included a full statutory Permanent Fund Dividend
(PFD), which was estimated to be $3,860. The budget fully
funded the $5,960 per student BSA, which resulted in a net
UGF reduction of $1.7 million. The reduction was because
the state share was slightly lower due to some changes in
the amount covered by the communities and it resulted in a
larger amount distributed out to the districts. The
proposal included year two funding of $6.4 million for the
Reads Act, fully funded school bond debt and municipal
debt, and fully funded power cost equalization (PCE) and
scholarship programs.
2:37:44 PM
Mr. Steininger moved to slide 11 to continue to speak to
the budget high points. One of the biggest challenges when
recruiting in rural Alaska was finding enough housing. The
problem had existed in the past, but it used to be
experienced only by public safety professionals, and it was
now experienced across multiple agencies. The budget
proposal included $5 million for rural public professional
housing which would apply to a wide variety of workers. The
budget also included $5 million for the Department of
Commerce, Community and Economic Development (DCCED) to
market Alaska and encourage new businesses to come to the
state. Oil and gas tax credits would be fully paid off in
FY 24 to the tune of $42.7 million. The Washington,
Wyoming, Alaska, Montana, and Idaho (WWAMI) program had an
increase of 10 seats since 2022 for medical students, which
would cost $2 million in capital investments and funding.
Mr. Steininger continued to review slide 11. The Alaska
Marine Highway System (AMHS) was funded at a level that
allowed the ships to be running a full schedule if the
capacity was there. The details of the federal funding for
AMHS were still uncertain and OMB was working with the
federal government on some of the match issues. He noted
there may be budget amendments to address the finality of
the negotiation. Additionally, there was $4 million for new
public use cabins and park sanitation. Finally, there was
$56.2 million in net salary adjustments included in the
budget, with $31.3 million of that being UGF.
Co-Chair Edgmon asked how much of the $31.3 million would
flow through the Department of Public Safety (DPS).
Mr. Steininger responded that he would follow up in
writing.
Co-Chair Edgmon thought it was a disproportionate number
relative to the other state agencies.
Representative Galvin asked about the $5 million for
marketing Alaska. She wondered if he could elaborate on
whether the money was intended to be utilized for tourism
in addition to resource development opportunities. She also
asked if there was there a plan to replace or maintain
vessels with regard to the federal funds for AMHS.
Mr. Steininger responded that the marketing efforts would
be through DCCED and the intention was to spread
information to other states about Alaska and the
opportunities in the state. He thought DCCED could offer
more information on the plan to encourage resource
development and industry growth. He assumed that there
would be budget amendments related to AMHS once the details
of the federal funding had been worked out.
2:43:48 PM
Representative Tomaszewski asked for more information about
the $2 million WWAMI funding.
Mr. Steininger responded that the $2 million was intended
to fund a capital project to build out classroom space at
the University of Alaska Anchorage (UAA). He would send
more details in writing.
Representative Ortiz stated his understanding that AMHS was
fully funded through federal dollars and there were no UGF
dollars allocated to it under the governor's budget
proposal.
Mr. Steininger clarified that there was some state funding
in the budget for the ferry system. He did not know the
exact breakdown but could provide it in writing.
Mr. Steininger advanced to slide 12. He indicated that the
statehood defense investments had continued, including $10
million in funding for litigation, expert witnesses,
studies, and outside counsel. Previous appropriations in
the area had been more narrowly focused on litigation but
dedicating the funds to a wider variety of subjects allowed
for a broader look at statewide defense issues.
Additionally, there was funding for the Department of Fish
and Game (DFG) for wildlife research and funding for the
Department of Environmental Conservation (DEC) for air
quality monitoring. In DOH, there was a $9.5 million
initiative to address congenital syphilis and tuberculosis
and provide health coverage to post partum mothers. There
were a few food security investments as well, including
$4.6 million for DFG and the Department of Natural
Resources (DNR) for fisheries and livestock, $3 million for
power infrastructure for the Delta Junction farm region and
co-op, and $3 million for produce processing at Point
Mackenzie.
Mr. Steininger continued to slide 13 and spoke about new
public safety investments. There have been a number of new
Alaska State Trooper (AST) positions added in the last few
years which were becoming filled as new troopers graduated
from the academy. He relayed that the AST academy had been
successful, and the budget was fully funding the new
positions. Additionally, there were 30 new administrative
support positions to allow the troopers to focus on public
safety work. There was also $14.2 million in assorted
capital investments. Other investments included an
appropriation for $2.5 million for the Department of
Military and Veteran Affairs (DMVA) to fund the Alaska
State Defense Force, $10 million for the University of
Alaska's (UA) drone program, and $2 million for the
Business Enterprise Program (BEP). He explained that BEP
was a program to help blind and disabled businesses with
startup costs. The fund was subject to the CBR sweep in
previous years and the proposed $2 million in UGF would
help rebuild the fund.
Mr. Steininger moved to slide 14 which included a clipping
from the ten-year plan. He highlighted rows six and seven
which illustrated two fund sources: total available revenue
and status quo deposit or draw. Under the status quo, there
would be significant deficits going into future years and
all reserves would be eliminated by FY 27. It would also
jeopardize the PFD and require significant reductions in
public services. In the governor's ten-year plan, a target
for new revenue was included, which referred to the amount
of revenue that would be necessary to provide a full
statutory dividend, maintain a healthy CBR balance, and
provide for conservative growth in service levels. He noted
that row four on the slide represented a match-only capital
budget, which would also involve some constraint on the
upward boundaries of state spending.
2:51:59 PM
Representative Ortiz understood that if the increased
revenue goals were reached, the capital budget would not
increase any further. He did not think it would address
growing deferred maintenance costs. He wondered how it was
a ten-year plan in terms of addressing the state's future
needs.
Mr. Steininger responded that the $220 million in FY 25 was
enough to cover the match for programs such as surface
transportation, village safe water, and other primary
capital projects. It also included some room for
discretionary capital to address other needs. There was a
designated fund that was not included in the numbers on the
slide that would produce about $30 million per year to fund
deferred maintenance for state facilities. It also did not
reflect federal programs for which the state might qualify.
Representative Hannan asked about the statehood defense
fund allocation on slide 12. She noted there was a lawsuit
filed last week in Juneau regarding a parcel of land that
was Alaska Native owned. She wondered if such a case would
qualify for statehood defense funds.
Mr. Steininger responded that he was not familiar with the
lawsuit but could say that DOL's civil division had budgets
for pursuing different types of cases. He thought DOL could
offer more information.
Representative Josephson referred to slide 14. He noted
that the projected operating budgets in the ten-year plan
were just slightly higher than the current operating
budget. He thought there could be a higher population in
the state in the future and wanted to know how the world
could look so fiscally similar in eight years.
Mr. Steininger responded that there was more detail in the
expanded ten-year plan. On the agency operating and agency
formula side, the projected spending grew by 1.5 percent
each year. The growth was offset by paying off debts and
the state had not incurred new general obligation debts in
a while. There were a few other statewide items dropping
off the books, such as oil and gas tax credits. While the
overall change in the operating budget from FY 24 to FY 23
looked small, it was netted with reductions in other rows
that were collapsed.
2:58:44 PM
Representative Galvin returned to slide 7. She asked if the
vacancy rate listed for DEED simply referred to the
department, or if it included the vacancy rate for teachers
and other classroom support employees. She had heard from
various districts that they were experiencing the highest
vacancy rates in decades.
Mr. Steininger responded that the number represented just
the department employees, not teachers.
Representative Galvin thought the number would look very
different if it included teachers and other classroom
workers.
Mr. Steininger remarked that OMB did not collect the data.
Representative Galvin noted that in an earlier conversation
about DOC, she was told that there was a line item added to
ensure that recruitment and retention efforts were taking
place in order to maintain an appropriate level of public
safety officers.
Representative Stapp summarized what he had learned from
the presentation. He understood that there would be
substantial Medicaid redetermination efforts which would
involve an additional liability for the state in the
operating budget of $69.2 million; however, the liability
monies would not be included in the budget until the
redeterminations took place. He asked if he had understood
correctly.
Mr. Steininger thought Representative Stapp's understanding
sounded fair.
Representative Stapp asked if there was a resource that
would show the breakdown of Medicaid dollars.
Mr. Steininger responded that OMB had reporting information
on the Medicaid population based on type through DOH, but
there was no way to know how many people would be found
ineligible until the redetermination work was actually
done.
Co-Chair Johnson reviewed the following meeting's agenda.
ADJOURNMENT
3:03:10 PM
The meeting was adjourned at 3:03 p.m. HeHhh