Legislature(2023 - 2024)ADAMS 519
04/22/2024 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB187 | |
| Presentation: Fiscal Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 187 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 22, 2024
1:39 p.m.
1:39:08 PM
CALL TO ORDER
Co-Chair Edgmon called the House Finance Committee meeting
to order at 1:39 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
Tim Grussendorf, Staff, Senator Lyman Hoffman; Alexei
Painter, Director, Legislative Finance Division.
SUMMARY
CSSB 187(FIN) am
APPROP: CAP; REAPPROP
CSSB 187(FIN) am was HEARD and HELD in committee
for further consideration.
PRESENTATION: FISCAL UPDATE
Co-Chair Edgmon reviewed the meeting agenda.
CS FOR SENATE BILL NO. 187(FIN) am
"An Act making appropriations, including capital
appropriations, supplemental appropriations, and other
appropriations; making reappropriations; making
appropriations to capitalize funds; amending
appropriations; and providing for an effective date."
1:39:32 PM
Co-Chair Edgmon reviewed the meeting's agenda.
1:41:07 PM
TIM GRUSSENDORF, STAFF, SENATOR LYMAN HOFFMAN, reviewed the
changes in the first Committee Substitute (CS) released by
the Senate Finance Committee. He relayed that the
governor's General Fund (GF) Capital Budget request was
$302 million. The co-chairs of both the House and Senate
Finance Committees had been meeting to agree on the scope
and size of the budget. He delineated that part of the
agreement was that the Senate would reduce the amount by
$50 million. He began listing the reduced or deleted
projects.
Co-Chair Edgmon interjected and asked what list he was
referring to. Mr. Grussendorf replied that it was from the
governor's capital request.
1:42:21 PM
AT EASE
1:43:05 PM
RECONVENED
Representative Ortiz asked if there was a document
available to the committee that listed the projects. Mr.
Grussendorf responded that he had an internal working
document, but he did not produce a document for the
committee.
Co-Chair Edgmon noted that the plan was for Mr. Grussendorf
to offer a verbal overview and then discuss two
spreadsheets he provided to the committee.
Mr. Grussendorf continued that the first project eliminated
was the Advanced Commercial Investment of the Alaska LNG
(liquefied natural gas) in the Department of Commerce,
Community and Economic Development (DCCED) totaling $4.5
million. The second item that was eliminated and moved to
the Operating Budget was $2.5 million for the Alaska Travel
Industry Association (ATIA). He indicated that the
Statewide Security Doors and Windows project at $2.2
million for the Department of Corrections (DOC) was
eliminated as well as the Statewide Security Perimeter
Fences and Gates for $2.3 million. The Alaska Military
Youth Academy (AMYA) Safety and Security Preparedness item
for $500 thousand in the Department of Military and
Veterans Affairs (DMVA) was eliminated. He delineated that
in the Department of Natural Resources (DNR) the
Silviculture Treatments and Precommercial Thinning to Boost
the Timber Industry item was eliminated for $3.5 million.
The Pilatus PC12NG Aircraft Acquisition was removed from
Department of Public Safety (DPS) for $6.2 million. He
reported that in the Department of Revenue (DOR) the Alaska
Housing Finance Corporation (AHFC) Down Payment Assistance
Grant Program for $25 million was eliminated. Additionally,
the Copper River Highway Wood Canyon Bridges and Trails
project for $4.2 million was eliminated from the Department
of Transportation and Public Facilities (DOT) project list.
The committee [Senate Finance Committee (SFC) or committee]
removed the University of Alaska Fairbanks - Achieve
Research 1 Status totaling $10 million from the University
of Alaska (UA) budget and added it to the Operating Budget.
In addition, $4 million from the Capital Supplemental for
the Dalton Highway was eliminated and a reduction of $1
million was taken from the Renewable Energy Grants Fund
from $5 million to $4 million. He commented that the
department's first and second priorities were left in the
budget unchanged.
Co-Chair Edgmon interjected that that the governor's
Capital Budget request included $302 million GF and the
Senate Finance Committee reduced it by $63 million but
built it back to $550 million in Unrestricted General Funds
(UGF) with some of the money reserved for the priorities of
the House.
1:46:46 PM
Representative Ortiz asked for more information regarding
the forestry project. Mr. Grussendorf responded that it was
for Silviculture Treatments and Precommercial Thinning
amounting to $3,5 million. He delineated that the committee
added the majority of the project back and reduced it from
$3.5 million UGF to $1.5 million and changed roughly $2.5
million to timber receipts. The action reduced the amount
approximately $500 thousand less than the original project.
He offered that the governor liked the project and
requested that the committee reinstate it. In addition, the
committee added the Dalton Highway project in the
supplemental.
Representative Galvin asked if the list included of all of
the reductions. Mr. Grussendorf answered in the
affirmative. Representative Galvin asked specifically about
the Copper River Highway Wood Canyon Bridges and Trails and
wondered what the amount was. Mr. Grussendorf answered that
the amount was $4.2 million.
Representative Stapp recalled that the Achieve Research 1
Status request for UA was moved to the Operating Budget. He
asked whether Mr. Grussendorf was aware that the funding
was recently removed from the Operating Budget. Mr.
Grussendorf was aware of the issue and explained that it
was moved to the operating budget in order to address it in
Conference Committee.
1:49:17 PM
Mr. Grussendorf continued that the committee added some
items back. He referred to the Down Payment Assistance
Program removed from the budget and elucidated that the
committee thought there needed to be houses available
before people could get help with a down payment.
Therefore, the $25 million was added back under new housing
construction.
Mr. Grussendorf proceeded with a high level overview of the
Senate Finance Committee's additions to the capital budget.
He explained that the budget added $200 million UGF on top
of the governor's $250 million totaling $450 million. Some
of the highlights included $68 million for K-12 and UA
deferred maintenance. He noted that $9 million was for K-12
construction of the top two schools on the school
construction list and some funding for the third school in
the Regional Educational Attendance Areas (REAA). In
addition, $38 million was appropriated to schools numbering
1 through 15 on the schools major maintenance list plus
two projects for Mt. Edgcumbe High School. He indicated
that $26.5 million was added for the top 6 projects on UA's
major maintenance list. The budget included $30 million for
Housing and Weatherization, $15 million for Life, Health,
Safety, $9.7 million to leverage federal funding in match
money, $8 million to DOT for the Harbor Match Program and
emergency funds to address state owned harbor liability,
$7.5 million for food security, and $50 million in
discretionary spending.
Mr. Grussendorf turned to the spreadsheets he provided both
attachments titled as SB 187 Capital Supporting Document
040224 (copy on file). He began with the first item [The
items referenced the bill page.] and read the list as
follows that were included in Section 1 of the bill:
page 4, line 9 - Denali commission housing program
$7,000.0
Page 4, line 11 - Iditarod Trail Committee $750.0
Page 16, line 16 - Skagway ore terminal
decontamination $1,000.0 AIDEA Div
Page 4, line 31 - Mt Edgecumbe Deferred Maintenance
$2,806.0
Page 5, line 4 - School const. first 2 schools plus
phase 1 of # 3 schools $3,986.0 gf $26,300.0 REAA
fund
page 7, line 18 - elections voting booths, Gov
amendment $250.0
Page 8, line 33 - critical minerals mapping earth
$2,000.0 GF
Page 9, line 18 - Silviculture treatments and tree
thinning $1,500.0 gf 2 million timber receipts
page 10, line 15 - AHFC weatherization $5,000.0 AHFC
Div
page 10, line 27 - AHFC rural professional housing
$5,000.0 AHFC Div
page 10, line 33 - AHFC Alaska Housing New
Construction $7,000.0 AHFC Div
page 16, line 11 - Surface Transportation Program
Amendment
[Secretary Note: There were errors on some of the page
and line numbers.]
1:53:28 PM
Representative Hannan interjected that she did not think
the page numbers matched the bill. Mr. Grussendorf
suggested that it might not be a perfect match due to a
technical amendment added on the Senate floor.
1:54:24 PM
AT EASE
1:55:23 PM
RECONVENED
Co-Chair Edgmon reported that the committee was trying to
sort out some discrepancies on the list. He indicated that
it could be sorted out later. He wanted to focus on the
larger picture of the items in the budget.
Mr. Grussendorf continued on the list and noted that all
three AHFC items totaled $17 million and represented some
of the funding from the downpayment program he discussed
earlier. He reported that the Alaska Statewide
Transportation Improvement Program (STIP) amendment was
received from the governor two days before the CS was
introduced and all items were added and approved. He
pointed out that one of the governor's amendments was not
approved that was for computers for the Permanent Fund. The
reason for the disapproval was the funding source was the
Permanent Fund Dividend that would reduce the dividend
amount by $10.00 to $12.00. The committee felt that it did
not have adequate time to resolve the matter.
Co-Chair Edgmon interjected that the item was a DOR $7.5
million request for an IT upgrade that would expedite the
dividend distribution process. He furthered that it was a
last minute request and caught the other body off-guard. He
believed that it was important and should be considered in
the House.
Representative Ortiz asked why there was no dollar figure
for the STIP amendment and whether there was no fiscal
impact for the program. Mr. Grussendorf replied that there
was a substantial fiscal impact, but the number was not
readily available.
Co-Chair Edgmon alerted the committee that they would delve
into the STIP in more detail.
1:59:12 PM
Representative Hannan asked about the civil rights program
under the surface transportation appropriation she
discovered in the bill and wondered what the $280 thousand
was for. Mr. Grussendorf answered that he did not know the
answer.
Mr. Grussendorf continued with items found in Section 4 of
the bill that were in the FY 24 supplemental budget.
Co-Chair Edgmon asked Mr. Grussendorf to explain what
constituted statewide projects.
Mr. Grussendorf replied that a statewide project was not
specific to one community. The project would either be for
a region of the state or served residents from all parts of
the state. He exemplified the Alaska Native Tribal Health
Consortium (ANTHC) skilled Nursing facility that was
located in Anchorage but served a population from other
parts of the state. He referenced project lists like the
School Construction, Major Maintenance, and Renewable
Energy Fund and indicated that the committee honored the
rankings and did not "jump the list" or favor one project
over another. He added that all projects had to be in the
Capital Project Submission and Information System (CAPSIS)
and there were some things that did not appear to be
regional but were shown to be a regional project.
Representative Josephson understood how the Operating
Budget and Supplemental worked regarding budget reductions.
He did not understand the motivation to fund items in a
Capital Supplemental Budget. He guessed that the governor
could spend the funding a few weeks faster than Capital
Budget items. He wondered why there was a Capital
Supplemental Budget. Mr. Grussendorf replied that the
Senate and House had worked on and agreed to a spending
plan. He explained that the SFC had worked backwards from
the operating budget for the FY 25 budget and in order to
accommodate the $450 million [GF] in the Capital Budget
they needed to use surplus funds from the FY 24 budget. He
alerted the committee that there was not excess money in
the FY 25 budget. He remarked that the margins would be cut
tight in in 2025. He observed that the House took a
different approach for the surplus money from 2024's
budget. He indicated that the Senate intended to use the
"waterfall" funds as specified from the prior year and
direct them into the Capital Budget. He noted that $117
million was the amount of surplus money from FY 24. The
House appropriated the portion of money that was meant for
the Constitutional Budget Reserve (CBR) to the Permanent
Fund Dividend (PFD).
2:05:32 PM
Co-Chair Edgmon interjected that another way to think about
it was that the prior year's budget was based on $73.00 per
barrel of oil (bbl.) and embedded in the language section
was a provision that was based on a surplus; any amount
higher than between $73.00/bbl. and $78.00/bbl. would be
split (50/50) between 50 percent CBR and 50 percent PFD. He
delineated that the projected amount of $73/bbl. was raised
to $83/bbl. in the spring forecast. The projected surplus
was projected at $440 million and was broken up into 3
buckets: $143 million into the PFD, $143 million for the
CBR and the remaining surplus of $116 was open for
appropriations or savings. The price of oil continued to
climb, and the allotments could continue to increase
through the end of the fiscal year on June 30, 2024.
Mr. Grussendorf continued with the additions for the
Supplemental Capital Budget in the same document. He read
the additions:
page 33 line 25 Housing Alaskans $6,000.0
page 33 line 30 AFN Navigator Program $1,500.0
page 34 line 5 AML Grant Writing $1,250.0
page 34 line 11 ANTHC Skilled Nursing Facility
$15,000.0
page 35 line 33 Blood Bank $1,500.0
Page 36 line 21 Denali Commission non Fed Match
$7,000.0
page 38 line 32 Seashare Food Security $7,500.0
page 44 line 13 School Major Maintenance
$36,190.7
page 45 line 22 Dalton Hwy $8,000.0
page 45 line 29 Harbor matching Grants $7,000.0
page 45,46 line 31 UA 1-6 of list $26,625.6
page 46 line 22 Palmer Court House $3,200.0
page 46 line 23 Stratton building acquisition
$2,000.0
Co-Chair Edgmon pointed out an error and noted that the
Palmer Court House was actually $3.2 million.
Representative Stapp asked if the AFN Navigator Program was
using Covid Relief Funding. Mr. Grussendorf responded that
the program used GF from the prior year to leverage the
Covid funds and the Infrastructure Investment and Jobs Act
(IIJA) funding. The goal of the program was to learn how to
leverage federal funds for rural Alaska projects.
2:09:37 PM
Mr. Grussendorf reported that there was $50 million in
discretionary spending and all the projects that fell
within the allocations, were in ranking order on CAPSIS.
Representative Galvin cited line 9, the Critical Minerals
Mapping Earth project. She asked for more information. Mr.
Grussendorf responded that it was requested by the Chairman
of the Department of Natural Resources (DNR) Senate Finance
subcommittee. He reported that it was in the budget the
prior year and was a three year program. However, it was
not funded in the current year. The $2 million was
appropriated from the $2 million GF that was changed to
timber receipts from the Silviculture program.
Representative Galvin recalled discussions regarding the
geothermal bill (HB 74 Geothermal Resources) and thought it
might be related. She offered to do research on her own.
Co-Chair Edgmon interjected that he did not think the $2
million was related to HB 74.
Representative Galvin wanted more information regarding the
appropriation and how it was placed in the budget.
Mr. Grussendorf understood that that the appropriation was
not for hiring staff and was funded in the prior year. He
reiterated that it was a 3 year project that was not funded
in the current year. He recalled that there was one more
reduction from the governor budget that he failed to
report earlier. He noted that it was the University of
Alaska Fairbanks - Alaska Railbelt Carbon Capture &
Sequestration Project for $2.2 million GF match.
2:13:34 PM
Co-Chair Edgmon mentioned the University of Alaska Drones
Program - Year Three for $5 million in University Receipts
that was initially funded by UGF. He wondered if it was
eliminated. Mr. Grussendorf responded that they did not
alter or delete the program.
Co-Chair Edgmon voiced that there would be more discussion
on the Capital Budget. He explained that the Governor,
Senate and House all had priority items that were melded
together. He noted that the House Finance Committee had not
worked on a Capital Budget since FY 2019.
Representative Galvin asked about the Alaska Energy
Authority's project, Grid Resilience and Reliability (GRIP)
funding. She recalled that the amount totaled $32 million
and wondered if the appropriation had changed. Mr.
Grussendorf replied that the $12.7 million appropriation
was comprised of $6.9 million from the FY 24 Alaska
Industrial Development and Export Authority (AIDEA)
dividend, a reappropriation for $2.2 million from AIDEA
2012 projects, and the FY 25 AIDEA dividend for $3.4
million that totaled $12.7 million and remained unchanged.
The $12.7 million plus the $20 million of bond authority
was the total amount initially requested.
2:16:58 PM
Representative Josephson pointed to the AEA Dock
Electrification AEA Ocean Ranger Fund project listed on one
of the handouts under non-UGF items and asked for
information. He noted receiving an email regarding the
justification for use of the funds. Mr. Grussendorf replied
that the dollars were being collected but not being used.
He elaborated that the reasoning to use the funds for dock
electrification was to reduce cruise ship emissions. The
communities that were ready to use the funds would be
appropriated the funding for the project. Representative
Josephson did not believe that the proposed use was what
the 2006 initiative had intended. He thought it was
"mission creep" and wondered how cruise ship pollution was
being policed and by what entity.
2:19:27 PM
Representative Hannan clarified that the current $10
million appropriation was a separate allocation than the $5
million for dock electrification for Whittier noted in the
memo [email] was from the prior year's budget that was
erroneously reappropriated. The memo reported that the
money was moved from the wrong fund in the prior year and
would be backfilled by Ocean Ranger funding, which was a
separate issue.
Representative Josephson asked if Representative Hannan
understood that it was $10 million of new money and
suggested that the industry was not paying its own way. He
believed that the state was subsidizing the clean air
project. Representative Hannan answered that the state was
still collecting the per capita fees that went into the
Ocean Ranger fund. The fund was not being used for
monitoring and the $10 million was an appropriation from
the fund for the purpose of electrifying docks.
Representative Coulombe pointed to the Stratton library
acquisition and asked for more information. Mr. Grussendorf
replied that the building was part of Sheldon Jackson and
was a library. Currently, it was being used as storage for
the Sheldon Jackson museum. In the prior year's budget,
there was an appropriation for renovating the building for
Court System use. The building could be purchased through
an agreement with the Department of Education and Early
Development (DEED) and Judiciary would rather purchase the
building. In response to further questions by
Representative Coulombe, Mr. Grussendorf answered that the
building was being sold, but would remain on the Sheldon
Jackson campus.
2:24:31 PM
Representative Stapp reported that he could not find the
ANTHC facility on the CAPSIS list. Mr. Grussendorf
responded that it was added to the list by two Senators,
one being Senator Hoffman. He recalled that the other
Senator was Senator Dunbar.
Representative Galvin asked if all schools with the highest
needs were being addressed. She was unaware of how many
schools were on the major maintenance list. Mr. Grussendorf
answered that the list was extensive and regarding school
construction, the budget "barely touched" the list. He
elucidated that the list had $395 million for 19 projects
and the state's share was $265 million. Representative
Galvin asked if the list was informative on where student
learning space was impacted. She asked if the priority was
decided by DEED. Mr. Grussendorf replied in the
affirmative. He disclosed that the districts submitted
requests and DEED compiled and ranked the list.
Representative Galvin pointed to the AHFC funding for
downpayment assistance. She recounted that the money was
redirected to weatherization, rural professional housing,
and new housing construction. She wondered how many more
Alaskans would be housed by the redirection of the funds
versus using it for downpayment assistance. Mr. Grussendorf
answered that he was uncertain if any research had been
done to be able to provide an answer. He was aware that
housing was a need all over the state.
2:29:35 PM
Representative Galvin cited the $5 million for AHFC Alaska
Housing New Construction Home Rebate Program she wondered
if the funds were being directed to the Homeless Assistance
Program (HAP). Mr. Grussendorf responded in the affirmative
and noted that it was half the amount of their request.
2:30:44 PM
AT EASE
2:33:52 PM
RECONVENED
2:34:10 PM
^PRESENTATION: FISCAL UPDATE
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
introduced the PowerPoint presentation "Fiscal Update"
dated April 22, 204 (copy on file). He elucidated that the
presentation showed where the FY 25 budget presently stood
and the current surplus projections. He began on slide 2
titled FY 24 Budget - House. The slide showed information
on the budget passed in FY 24. He pointed out that all
budgets plus the PFD totaled $6 billion. There was a
surplus of $578.1 million in FY 24 based on projections
that did not include energy relief. He delineated that the
FY 24 budget had a provision that split any revenue that
was above the spring 2023 revenue forecast surplus 50/50
percent between the CBR and an energy relief payment that
was to be added to the PFD as part of the FY 25 dividend.
Based on the spring 2024 forecast, the estimate was $286.6
million above the spring 2023 forecast, which would be
split 50/50. However, the House's budget redirected half of
the amount assigned to the CBR for additional energy
relief. He referred to the slide that showed the $143
million appropriated to energy relief and $143 million CBR
deposit also appropriated to energy relief with an
additional $116.5 million of the surplus going to energy
relief from the FY 24 surplus. He calculated that the total
estimate was $403.1 million, all appropriated to energy
relief based on the spring 2024 revenue forecast. The house
had $121.7 million in supplementals in the Operating
Budget. The governor had requested additional supplemental
funding of $25.4 million for the Department of Corrections
that the house had not included as well as additional
governor amendments that were received after the House
Operating Budget was passed along with some capital
supplementals that also were not included. Therefore, the
total supplemental spend could be $174.9 million. The
remaining surplus was approximately $100 million for FY 24.
He reminded the committee that if revenue came in low, it
reduced energy relief and if income was higher than
projected it would increase energy relief. He maintained
that there would be sufficient revenue for the budget and
any swing in revenue would only affect energy relief. He
added that typically a $100 thousand surplus was tight but
because of the energy relief payment that could increase or
decrease, the risk was mostly eliminated. He concluded that
the House had allocated the entire FY 24 surplus to either
supplementals or energy relief.
2:38:46 PM
Representative Ortiz asked historically, had the
legislature ever experienced a $100 thousand surplus
before. Mr. Painter responded that it was unusual not to
have access to savings accounts as a deficit filler.
Currently, there was no money in the Statutory Budget
Reserve (SBR) and the vote threshold prevented access to
the CBR. He observed that using the energy relief as a
deficit filler was unusual. He characterized it as forward
funding that could "scale up or down" and recalled that it
was conceived and adopted in FY 23. He elucidated that in
FY 23 extra revenue was slated for forward funding
education and when oil dropped more than expected, the
appropriation was eliminated and a CBR vote was obtained.
He concluded that appropriations that could scale up or
down was unusual, but it was in response to the difficulty
in obtaining a CBR vote.
2:41:22 PM
Representative Josephson believed that there was a "cynical
piece" involved in budgeting by using appropriations
through a Supplemental Budget, which allowed for "bragging
rights" that the next fiscal budget was cut. He deduced
that by spending any surplus there would be no excess to
lapse into the CBR. He wondered if it was the best reason
to spend down any surplus in the current fiscal year. Mr.
Painter affirmed that it was one of the reasons. He
recalled that in FY 23 the legislature appropriated surplus
into the SBR, but the governor vetoed the appropriation and
the funding lapsed into the CBR leaving the legislature to
obtain a three quarters vote. He reiterated that there was
more certainty about the FY 24 budget than the FY 25 budget
and it would take a wild swing in revenue to eliminate any
surplus. He advised that when budgeting with oil price
volatility the best approach was to build the budget
conservatively for the current year and spend surplus in
the supplemental to avoid cutting at the end of the year.
He thought that it was much more difficult to cut the
supplemental therefore, a conservative approach in the
current year while spending surplus funds in the
supplemental was the approach being driven by current
forces.
Mr. Painter continued to slide 3 titled "Progression of FY
25 House Operating Budget" and relayed that the governor
had a series of amendments that increased UGF in the
operating budget by $30.9 million on February 13, 2024.
The original governor's request totaled $4.676 billion. He
had submitted other amendments on March 13, 2024, totaling
$2 million leaving the total for consideration $4.7 billion
UGF. He elaborated that the House Finance subcommittees
collectively reduced the operating budget by $7.3 million.
The House Finance Committee then increased it by $251.8
million mostly due to the $175 million increase for
education. He continued that the House Floor added another
$20.5 million to arrive at a total budget of $4.974 billion
UGF and pre-Permanent Fund Dividend (PFD), about $300
million UGF higher than the governor's original request.
2:45:39 PM
Mr. Painter continued to slide 4 titled "FY 25 Budget
House." He listed the figures for the House Operating
Budget as follows: Agency Operations $4,581 billion;
Statewide Items $393 million; Permanent Fund Dividend 1,100
billion; and Fund Transfers $5.3 million. Presently, there
was $368.7 million left over as a potential surplus. He
reminded the committee that the numbers did not account for
the Capital Budget, or anything else that might be added to
the bill. He advanced to slide 5 titled "Outstanding
Items:"
Governor's 4/9 amendments ($1.2 million UGF for FY25
operating budget)
• Fiscal notes (added in Conference Committee)
HB 193 (Broadband) signed by Governor with
$39.4 million fiscal note
SB 170 (Senior Benefits) has $23.5 million
fiscal note
Other bills passing one body have combined
$14.5 million UGF fiscal notes as of 4-19-24
• Salary adjustments: four unions currently
negotiating
Supervisory Unit, Correctional Officers, Labor,
Trades and Crafts, and new University of Alaska
Graduate Student Union
If the three non-UA unions agreed to a 5%
increase, LFD estimates the UGF cost would be at
least $26.0 million
• Federal Education Maintenance of Equity Requirement
($11.9 million for FY22 shortfalls, $17.5 million
total)
• Senate additions to Operating Budget
• Capital Budget
Mr. Painter elaborated that the four unions listed on the
slide were currently negotiating new contracts. The
statutory deadline for completion was the sixtieth day of
legislative session. However, the deadline was rarely met,
and the amounts could be added to the budget during
conference committee. He recounted that there was a
statutory tie between the Supervisory Unit and the exempt
employees whose salaries were tied to the Supervisory Unit
contract negotiated raises, which would have a further
budget impact. He noted that excluding the new Graduate
Student Union, the UGF estimated impact to be at least $26
million at an estimated 5 percent salary increase but that
could be higher.
2:51:17 PM
Representative Galvin referred to the fiscal note bullet
point of $14.5 million and asked if it included SB 88
(Retirement Systems; Defined Benefit Opt.). Mr. Painter
responded in the negative. He reported that the original
fiscal note was negative but there was a new fiscal note
forthcoming based on more recent actuarial information.
Representative Galvin asked if it included HB 89 (Child
Care: Tax Credits/Assistance/Grants.) Mr. Painter responded
in the affirmative. Representative Galvin asked whether the
$26 million estimate for bargaining units included the 500
Alaska Graduate Student Union members. Mr. Painter
responded in the affirmative. He added that since there was
not a contract yet and it was new, the amount was unknown.
Representative Galvin thought it was important to note that
the amount did not likely include the graduate students.
She offered that guessing from other states with a graduate
union, it could add $5 million to $10 million. Mr. Painter
replied that the graduate union was under the umbrella of
the United Auto Workers (UAW). He observed that the
graduate students that were unionized made much more than
non-unionized students. He concluded that it was more
complicated than merely salary increases depending on what
other benefits were negotiated and he had not seen recent
updates on the negotiations and could not make an estimate.
2:54:35 PM
Representative Josephson thought he had heard that some of
the R1 [Doctoral Universities] monies were meant to go to
Ph.D. students. Mr. Painter replied that the R1 money was
for additional stipends and paying for graduate students.
He commented that it was difficult to determine how that
would intersect as he had not seen clarifying information
from the university.
Mr. Painter highlighted the Federal Education Maintenance
of Equity Requirement ($11.9 million for FY22 shortfalls,
$17.5 million total) item on slide 5. He explained that the
federal government deemed that the state owed school
districts certain amounts based on the equity requirement
attached to some COVID funds. The state Department of
Education and Early Development (DEED) had disputed the
findings. The funding would be paid to individual school
districts. The total of $116.5 million was the amount of
potential additions that were not included the House bill.
2:57:28 PM
Mr. Painter moved to slide 6 titled "FY 25 House Budget
with Added Items." He indicated that considering the $368.7
million estimated surplus and adding the $116.5 million of
potential items, $252.2 million was remaining for the
Capital Budget. He calculated that it was not enough to
fund the Senate's nor the Governor's Capital Budget.
Mr. Painter continued to slide 7 titled "Adding Senate
Capital Budget." He communicated that there was $27.9
million remaining in FY 24, which was the amount of the
governor's supplementals and adding the Senate Capital
Budget, the house would be short by $165 million in FY 24.
The FY 25 Senate Capital Budget would be short by $3.6
million.
Co-Chair Edgmon asked whether the $270 million shortfall
would get to the $550 million UGF Capital budget. Mr.
Painter answered in the affirmative. He corrected his
answer that it would be $100 million over the Senate's
budget and the amount would be roughly $546 million.
3:00:02 PM
Representative Josephson voiced that the house in the prior
year passed an unbalanced budget and passed a balanced
budget in the current year. He deduced that unless there
were Capital Budget cuts by the House Finance Committee,
they would be sending an unfunded Capital Budget to the
floor. He asked for confirmation. Mr. Painter responded
that reductions were one option. Alternatively, either the
conference committee would have to find reductions between
the two bodies budgets or borrow from savings.
Representative Josephson asked if Mr. Painter was talking
about the CBR. Mr. Painter responded in the affirmative.
Representative Ortiz asked if the budget included any
headroom for the next year. Mr. Painter answered in the
affirmative.
3:02:10 PM
Representative Stapp asked how many projects in the budget
were vetoed by the governor in prior years. Mr. Painter
responded that he did not know which projects were
previously vetoed. He offered to provide the information.
Co-Chair Edgmon recalled that the governor vetoed some
funded projects from the maintenance list in FY 24 with
items that were reappearing in FY 25. The total of all the
vetoes were approximately $350 million. Mr. Painter replied
that the total was in the range of $200 million.
Representative Josephson asked whether every dollar added
via amendments to the Capital Budget would need to be
"covered in some way." Mr. Painter responded in the
affirmative. Representative Josephson noted that the House
had taken a position on the PFD. He asked if the amount of
the PFD could be amended via the Capital Budget in order to
reduce it. Mr. Painter replied that it would be difficult
to amend something in the Operating Budget via the Capital
Budget. The other body had different numbers and a
different method to fund the PFD. He explained that the
other body directed the entire Percent of Market Value
(POMV) draw to the general fund and funded the PFD out of
GF. The House split the POMV draw between GF and PFD. The
conference committee would reconcile the differences and be
able to make changes. Representative Josephson deemed that
the committee would take up amendments to the Capital
Budget and unless cuts were made, the Capital Budget would
not be balanced when it reported out of committee. Mr.
Painter answered in the affirmative and furthered that
depending on the timing, the Capital Budget would be sent
to the floor with an unbalanced budget prior to the
conference committees action on the Operating Budget.
3:06:23 PM
Co-Chair Edgmon reviewed the agenda for the following day's
meeting.
CSSB 187(FIN) am was HEARD and HELD in committee for
further consideration.
ADJOURNMENT
3:07:27 PM
The meeting was adjourned at 3:07 p.m.