Legislature(2025 - 2026)ADAMS 519
01/27/2025 01:30 PM House FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Overview: Governor's Fy 2026 Operating Budget by the Office of Management and 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 27, 2025
1:32 p.m.
1:32:27 PM
CALL TO ORDER
Co-Chair Josephson called the House Finance Committee
meeting to order at 1:32 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Andy Josephson, Co-Chair
Representative Calvin Schrage, Co-Chair
Representative Jamie Allard
Representative Jeremy Bynum
Representative Alyse Galvin
Representative Sara Hannan
Representative Nellie Unangiq Jimmie
Representative DeLena Johnson
Representative Frank Tomaszewski
MEMBERS ABSENT
Representative Will Stapp
ALSO PRESENT
Lacey Sanders, Director, Office of Management and Budget;
Eric Demoulin, Administrative Services Director, Department
of Administration; Hannah Lager, Administrative Services
Director, Department of Commerce, Community, and Economic
Development; April Wilkerson, Deputy Commissioner,
Department of Corrections; Dianna Thornton, Administrative
Services Director, Department of Public Safety.
PRESENT VIA TELECONFERENCE
Amber LeBlanc, Administrative Services Director, Department
of Law; Bob Ernisse, Administrative Services Director,
Department of Military and Veterans Affairs; Dom Pannone,
Administrative Services Director, Department of
Transportation and Public Facilities.
SUMMARY
OVERVIEW: GOVERNOR'S FY 2026 OPERATING BUDGET BY THE OFFICE
OF MANAGEMENT AND BUDGET
Co-Chair Josephson relayed that the meeting was a
continuation of the meeting from the previous Friday,
January 24, 2025. The committee would continue hearing a
presentation from the Office of Management and Budget (OMB)
on the governor's FY 26 operating budget.
^OVERVIEW: GOVERNOR'S FY 2026 OPERATING BUDGET BY THE
OFFICE OF MANAGEMENT AND BUDGET
1:33:46 PM
LACEY SANDERS, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
continued the PowerPoint presentation titled "State of
Alaska Office of Management and Budget" dated January 24,
2025 (copy on file) on slide 10. She explained that the
graph on the slide was provided to outline the unrestricted
general fund (UGF) breakdown for the proposed capital
budget for FY 26, as proposed by the governor. She relayed
that the Department of Transportation and Public Facilities
(DOT) was the primary financial driver of the capital
budget, accounting for 46 percent of the proposed budget.
She also highlighted that 55 percent of the capital budget
was attributed to general fund match, particularly for DOT,
but also in the Department of Environmental Conservation
(DEC), which would be matching federal grant awards. She
provided the slide as a high-level overview and noted that
she would continue by discussing several agencies in the
following slides, focusing on key capital projects within
each of their budgets.
Ms. Sanders moved to slide 11 and addressed the first item
under the Department of Administration (DOA), which was a
$7 million state request for a statewide time and
attendance management system. She explained that the
Division of Finance under DOA was seeking to implement a
new time and attendance management system to improve
payroll processing for approximately 14,000 executive
branch employees across various state departments. She
outlined the current system, which relied on the IRIS
accounting system and an attached human resource management
system. While the current setup allowed for basic timesheet
entries, it was inadequate for addressing the complex
timekeeping needs that had arisen from various bargaining
agreements and payroll arrangements. The goal of the new
system would be to streamline the processing of timesheets
and ensure accuracy.
Representative Galvin asked for clarification on what the
$7 million would specifically cover. She noted that the
issue had needed attention for some time and asked whether
the funding would be used for hardware, software, or
personnel.
Ms. Sanders responded that she would defer the question to
DOA's Administrative Services Director to explain in more
detail how the $7 million would be allocated.
1:36:58 PM
ERIC DEMOULIN, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF ADMINISTRATION, responded that the $7 million would
primarily address system needs, focusing on the time and
attendance system. He explained that the system would need
to account for the various collective bargaining agreements
in place across the state. The goal was to implement
software that could aggregate payroll data from different
bargaining unit agreements and streamline the entire
process.
Representative Galvin asked if the new system would
eliminate the need for employees to manually record and
process payroll, noting that some payroll procedures had
involved a "pen-to-paper" method. She asked whether the
state had already developed the request for proposal (RFP)
to ensure the $7 million estimate would cover the system
for all 14,000 employees.
Mr. DeMoulin responded that the $7 million estimate was
based on initial information obtained from a previous
request for information (RFI). He noted that while the RFP
for a complex time and attendance system needed to be
carefully defined to ensure payroll accuracy and timely
payments, the $7 million was the best estimate with the
current information provided to vendors. He added that the
final cost could vary depending on the project's scope.
Representative Tomaszewski asked whether the new system
would replace the IRIS system or add to it.
Mr. DeMoulin clarified that the new system would not
replace IRIS. He explained that IRIS was the state's system
of record for payroll, and the new system would be a time
and attendance module integrated with IRIS to support the
payroll process.
Representative Tomaszewski asked if there had been any
discussions about potentially replacing IRIS altogether.
Mr. DeMoulin responded that there were no current plans to
replace IRIS.
Representative Hannan asked for more information about the
current hardware and software provisions for the payroll
office, as there had been concerns from constituents in the
past about insufficient or outdated equipment. She asked
whether the payroll office had the necessary equipment to
run the new system, and if the new system would address the
payroll issues that had been ongoing for a couple of years.
Mr. DeMoulin responded that the payroll office was fully
equipped with the necessary hardware. He explained that in
2024, all payroll technicians had been provided with new,
tablet-style laptops. The laptops would allow the
technicians to process electronic timesheets while still
being able to annotate and make corrections digitally,
eliminating the need for paper-based timesheets.
Additionally, the payroll office had been relocated to the
Alaska State Office Building and was now fully provisioned
with the equipment necessary for the tasks.
1:41:12 PM
Representative Hannan understood that some payroll
responsibilities had been delegated to individual
departments, particularly for departments with more complex
payroll needs, such as the Department of Transportation and
Public Facilities (DOT) for the Alaska Marine Highway
System (AMHS). She asked if the new time and attendance
management system would centralize payroll responsibilities
back to the DOA or if the services delegated to other
departments would remain at the departmental level.
Mr. DeMoulin responded that he was not fully informed on
the reasoning behind the idea to move AMHS back to DOA. The
goal behind implementing a new and robust time and
attendance system was to build consistency across the
payroll system. He explained that the intent was not
necessarily to relocate work but to make the system
adaptable across all agencies, even agencies that currently
handled payroll functions internally. He hoped that by
building statewide consistency, the state could achieve
both uniformity and cost savings.
Representative Johnson asked if the new system would have
any impact on issues related to retirement payments from
municipalities to the state, particularly regarding the
Public Employees' Retirement System (PERS) and Teachers'
Retirement System (TRS). She noted that there were concerns
about a possible cyber-attack affecting retirement payments
and asked whether the new time and attendance system would
require upgrades or additional funding to address the
problem.
Mr. DeMoulin responded that the time and attendance system
and the retirement payment system were not currently
interconnected. When developing the scope of work and a
detailed RFP for the payroll system, the department would
ensure that stakeholders were considered, including those
involved with retirement systems like the Division of
Retirement and Benefits (DRB). He noted that DRB's new
system, "BEARS" [Benefits and Retirement System], was
currently being developed, and it would be important to
coordinate to ensure that the systems worked well together
and did not create any issues.
1:43:55 PM
Ms. Sanders continued to the Department of Commerce,
Community, and Economic Development (DCCED) on slide 10.
She highlighted several capital projects, beginning with a
$6.3 million deposit into the Renewable Energy Grant Fund
(REGF). The funding would support approximately 17
renewable energy projects, with six additional projects
from the prioritized list of the Alaska Energy Authority
(AEA). She noted that the previous year's budget had
included the top five projects, totaling $10.5 million, and
the FY 26 deposit would continue funding for the remaining
projects on the list. Next, she highlighted the $4.4
million allocation in Ocean Ranger receipts for AEA's
Whittier-Cruise Ship Terminal Port Electrification Project.
The funding would complete the project to upgrade the
cruise ship dock in Whittier, allowing cruise ships to plug
into shore power and turn off the engines while docked,
reducing emissions.
Ms. Sanders continued to discuss the funding for the Alaska
Gas Line Development Corporation (AGDC), which would
support legal expertise for overseeing agreements and
contracts related to Alaska Liquefied Natural Gas's (LNG)
gasline project. Additionally, the funding would support
data management systems, geographic information systems,
and federal permitting efforts. The next item was a $6.5
million request for AEA to continue work on the Dixon
Diversion Project. The funding would cover additional
engineering, design, permitting, and geological studies
necessary to obtain the required Federal Energy Regulation
Commission (FERC) license and advance the project toward
construction.
Ms. Sanders continued by highlighting a $2.5 million
request to the Alaska Industrial Development Export
Authority (AIDEA) for the West Susitna Road Access Project.
The funds would allow AIDEA to complete necessary fieldwork
and submit a Clean Water Act Section 404 permit application
to the U.S. Army Corps of Engineers, which would ensure the
project could progress with all federal permitting in
place.
1:46:45 PM
Co-Chair Josephson noted that there were some questions
regarding the second bullet item, the Ocean Ranger
receipts, which would fund the Whittier project. He
mentioned that the program had originated in around 2006
and that the receipts were initially collected by DEC.
Ms. Sanders responded that the Ocean Ranger receipts were
collected by DOR and then deposited into the Environmental
Compliance Fund (ECF), which had been managed by DEC.
Within ECF, there had been two sources of revenue that had
been tracked separately but were both deposited into the
same account: the environmental compliance fees and the
Ocean Ranger receipts. She explained that DOA had worked
closely with the Division of Finance and DEC to ensure
accurate accounting of the receipts. She relayed that DOA
had worked through the process in 2024 to document the two
funds properly.
Co-Chair Josephson explained that while he had understood
the benefits of electrifying the Whittier terminal in terms
of reducing air pollution, he questioned whether the
project was truly what voters had envisioned when the
initiative passed. He was concerned that the initiative was
originally meant to fund the regulation of cruise ship
pollution, but it had not been clear whether enough
resources had been directed toward pollution regulation. He
asked whether adequate resources had still been applied to
cruise ship regulation in the absence of the receipts.
Ms. Sanders deferred the question to DEC. She acknowledged
that there had been discussions about balancing the Ocean
Ranger fund and the growing amount of funds being
collected. She relayed that DEC was still involved, but not
to the extent that was originally intended. She explained
that because the funds had been collected through a "head
tax" on cruise ships, the funds were required to be used to
serve the cruise ship industry, and the Whittier project
had fit within the scope.
1:50:30 PM
Representative Hannan asked for the total dollar amount
already allocated to the Whittier project, including both
the Ocean Ranger receipts and other funding sources. She
asked if the dock was private or owned by the city of
Whittier, and what contributions had come from other
sources.
Ms. Sanders deferred the question to DCCED.
HANNAH LAGER, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF COMMERCE, COMMUNITY, AND ECONOMIC DEVELOPMENT, responded
that she could provide a copy of a spreadsheet tracking the
history of Ocean Ranger fund collections and expenditures.
She noted that there had been a previous appropriation of
$5 million from the Commercial Passenger Vessel
Environmental Compliance Fund (CPVECF) to the dock project.
She relayed that Holland America had contributed $6 million
towards the project, and $1 million had been contributed by
the community of Whittier itself. She would follow up with
information about the dock's ownership.
Ms. Sanders clarified that in 2024, $5.4 million should
have come out of the Ocean Ranger fund, not CPVECF. The
issue had since been corrected.
Representative Hannan asked Ms. Lager to provide the
spreadsheet for further review and asked for the terms of
the agreement for the project. She understood that the bulk
of the funding was state-authorized, but the dock was
privately owned. She was concerned that the state funding
could potentially benefit only one cruise line and asked
for clarification on whether the dock was owned by Holland
America or the city of Whittier. She emphasized the need to
ensure that the Ocean Ranger funds did not create
favoritism toward one cruise line as the funds were
collected from all cruise ship lines.
Representative Bynum asked why additional UGF was being
added for AIDEA as it did not seem to need it.
Ms. Sanders replied that there were several projects
underway at AIDEA, and UGF had been identified as the
funding source for the dock projects. She clarified that
UGF was simply the funding source identified for the
project.
1:54:50 PM
Representative Johnson asked what the $6.5 million for the
Dixon Diversion Project would pay for.
Ms. Sanders responded that the funding would cover the
remaining costs to get the project to construction, which
included federal permits and geological studies. The funds
were necessary to submit the FERC license and proceed to
construction.
Ms. Lager added that the project was intended to be bonded
for the utilities.
Representative Galvin understood that the project would
allow ships to be shut down while docked in Whittier. She
recalled that the project would cost over $15 million, with
$6 million coming from Holland America. She asked whether
the state would be responsible for maintaining the
facility, including upkeep and deferred maintenance, or if
Holland America would be involved. She asked if the project
would place additional responsibilities on the state.
Ms. Sanders responded that the dock in Whittier was not
state-owned, and the state would not be responsible for
deferred maintenance. She acknowledged that community
requests for state funds could arise in the future, even
though the responsibility for maintenance would rest either
with the community or with Holland America. She offered
reassurance that the department would follow up with more
information on the dock's ownership.
Co-Chair Josephson asked for more information about the
West Susitna funding. He understood that prior
appropriations were for activities such as permitting and
construction on the east side of the Susitna River, but not
for the west side, which was the more controversial side.
He asked whether the Army Corps of Engineers' CWA
permitting and other federal permitting efforts were for
the east side or the west side of the river.
Ms. Sanders replied that she would follow up with the
requested information.
1:58:42 PM
Ms. Sanders continued on slide 11 and explained that there
were two budget requests for the Department of Corrections
(DOC). The first was to finalize the development of the
Point Mackenzie Correctional Farm and its produce
processing plant. The department had previously received
$1.5 million to start the project and the current request
for $3.1 million would provide the remaining funding needed
to purchase and install equipment for a fully functional
plant. The farm would be able to grow and store produce
year-round for distribution. The second request was for $4
million for the construction of a booking and intake area
at the Hiland Mountain Booking and Intake Area, which
currently did not have such a facility.
Representative Galvin remarked that she had visited the
Point Mackenzie processing plant and observed the need for
new equipment. She was surprised by the high price tag of
the new request and asked whether it was also meant to
cover meat processing needs, as the previous request seemed
to be more focused on produce and storage.
Ms. Sanders replied that DOC would explain the high cost of
the equipment.
APRIL WILKERSON, DEPUTY COMMISSIONER, DEPARTMENT OF
CORRECTIONS, responded that the funding would complete the
produce processing part of the project and was not related
to meat processing. The request would cover the cost of
missing equipment, including distribution freezers, a
chiller blancher, a steam boiler, a water chiller, heat
exchangers, a blast shock freezer, and conveyor tables. She
explained that when DOC submitted the RFP, it was
discovered that some of the necessary equipment had not
been identified in the original request, as well as some
missing infrastructure. As a result, the initial $1.5
million was not sufficient to cover all the required
equipment and was used instead for other infrastructure,
water, and electrical needs. There had been a substantial
increase in the costs associated with the equipment since
COVID-19.
2:02:24 PM
Ms. Sanders continued to the budget requests on slide 12,
beginning with DEC. She explained that there was a request
for $450,000 in designated general funds (DGF) from the Oil
and Hazardous Response Fund (OHRF). The funding would pay
for the Home Heating Oil Tank Oversight program. She also
pointed out a typo, clarifying that the funding would come
from DGF although the slide indicated that it would come
from UGF. She explained when there was a release from a
home heating oil tank, the responsible parties were
required to clean up the release, conduct inspections, and
dispose of materials. However, the cleanup often became the
responsibility of private residents, who might not have the
technical or financial means to address the issue
themselves. She relayed that DEC had a program in place to
assist residents in the event of a hazardous release, which
could involve conducting site characterizations or helping
with risk evaluations to ensure the contaminated soil was
cleaned up properly.
Representative Hannan asked for clarification on how the
money was allocated into OHRF.
Ms. Sanders explained that there were several funding
sources, including a surcharge on fuel and settlement funds
related to specific incidents. She remarked that it was
complex, but the funds were generally used for a variety of
purposes related to oil and hazardous substance releases.
Representative Hannan asked if the Spill Prevention and
Response (SPAR) division of DEC contributed to the fund.
Ms. Sanders confirmed that SPAR was one of the contributors
to the fund.
Representative Hannan asked for more specific information
on how much money was generated annually by the fund and
what impact the $450,000 allocation would have on the
overall balance.
Ms. Sanders responded that she did not have the fund
balance summary with her but would ask DEC to follow up
with the information. She noted that DEC also needed to
maintain reserves in the fund, particularly in case of a
large spill.
2:06:08 PM
Ms. Sanders continued to the three budget requests from the
Department of Fish and Game (DFG). First, there was a $5.6
million request for the Gulf of Alaska Chinook Salmon
Program, which was a five-year effort by the department to
sample, assess, analyze, and report the stock composition
of Chinook Salmon harvested across the Gulf of Alaska. The
program was necessary to ensure the accuracy and
reliability of the data, which was essential for the
sustainable management of Chinook in the region. There was
also an $800,000 request to continue the Alaska Marine
Salmon Program, which would further support salmon
management and conservation efforts. The program was an
ongoing survey aimed at pinpointing survival bottlenecks in
salmon populations, assessing health metrics that might
serve as early indicators of poor marine survival, and
collecting abundance data to forecast run sizes for up to
three years in the future. The next item was a $6.8 million
request in federal receipts for the Pacific Coastal Salmon
Recovery Fund (PCSRF). The funding was a continuation of
federal grants from PCSRF and projects under the program
were selected through a competitive process, with the funds
supporting stock assessments, harvest monitoring,
eradication of invasive species, and habitat projects.
Co-Chair Josephson asked whether it was typical for these
types of programs to be in the capital budget.
Ms. Sanders responded that the situation varied from year-
to-year, but it was generally appropriate for such programs
to be included in the capital budget, especially if the
project was not intended to continue indefinitely. She
added that including the projects in the capital budget
brought more stability to the DFG budget, as it avoided
large fluctuations in funding. Additionally, it allowed DFG
to begin projects earlier in the year. Without the
flexibility of a multi-year appropriation, the department
would miss out on a significant portion of the season as it
would be required to wait until July 1 of each year to
begin projects under the operating budget.
Ms. Sanders moved on to discuss the Department of Health
(DOH). She highlighted a request for $14 million to replace
the provider services module for the Alaska Medicaid
program. The request included $12.6 million in federal
receipts and a $1.4 million match. The provider enrollment
process was a critical part of the state's Medicaid
program, but the current system that was embedded in the
existing Medicaid Management Information System (MMIS) was
outdated and required extensive manual data entry. The new
provider services module would greatly improve processing
and approval times in line with the efforts of the Centers
for Medicare and Medicaid Services (CMS) to modernize
legacy MMIS systems and would ideally reduce the wait to
one week or less.
Ms. Sanders continued to the request from the Department of
Law (DOL) for $8 million to replace its case management
system. She explained that there were currently two
separate and outdated systems used by the Civil Division
and Criminal Division. The Civil Division's system was not
compatible with cloud technology or a virtual private
network (VPN), and the Criminal Division's system could not
keep up with the volume and types of evidence and could not
maintain consistent connectivity with the court system
across the state. The $8 million request aimed to replace
both systems with one new system that would meet the needs
of both divisions.
2:11:22 PM
Co-Chair Schrage asked whether DOL had solicited proposals
and if so, he asked how many proposals it had received.
Ms. Sanders replied that the department had solicited
information, specifically working with other states to see
what systems other states were using. She deferred to DOL
for more information.
AMBER LEBLANC, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF LAW, (via teleconference), explained that DOL had not
issued an official RFP, but had gathered information from
other states that had recently updated their legal systems.
The department asked other states about the options
available and the associated prices for the systems. She
noted that there were only a few options available and the
department did not anticipate many more becoming available.
She explained that the Civil Division's current system was
outdated, and the vendor providing service had indicated it
would no longer support or upgrade the software in the
future. She clarified that the $8 million allocation would
not fully fund the replacement for both divisions. The
department would need to request additional funding in the
future to complete both systems.
Ms. Sanders continued to discuss the Department of Military
and Veteran's Affairs (DMVA). She explained that the
statewide Armory Barracks conversion projects were spread
throughout the state aimed at converting space for disaster
response or other events. Additionally, the Camp Carroll
modernization project and Alcantra modernization projects
involved restoring and upgrading facilities. For example,
the dining facility at Alcanta was not up to current health
code requirements and updates were needed to ensure it
could properly serve soldiers. All of the projects were
federally funded with a matching requirement, and detailed
backup information was available for further review.
Representative Hannan asked how many Army Barracks
conversion projects there were. She asked for more details
about Alcantra as she was unfamiliar with it. She asked
whether Alcantra and Camp Carrol were both barracks
conversions.
Ms. Sanders responded that she did not have the detailed
spreadsheets in front of her but confirmed that there were
multiple barracks conversion projects. The budget documents
included project allocations that broke down the costs for
each location. She deferred the question to DMVA for more
details.
2:16:44 PM
BOB ERNISSE, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF MILITARY AND VETERANS' AFFAIRS, (via teleconference),
explained that the statewide barracks conversion projects
had specific allocations for Nome, Kodiak, Bethel, and
Fairbanks. He clarified that Alcantra was located in the
Wasilla area.
Representative Hannan noted that the federal-to-state match
for the statewide barracks appeared to be a dollar-to-
dollar match, while the other projects did not have the
same ratio. She asked why there was a dollar-to-dollar
match for the barracks conversion and not for the Camp
Carroll or Alcantra modernization projects.
Mr. Ernisse responded that the match requirements varied by
armory location and were dependent on the ownership of the
land. He explained that most of the barracks conversion
projects would follow a 50-50 split, but Camp Carroll had a
75 percent federal and 25 percent state split. He relayed
that Alcantra would also follow a 50-50 split, but it had
received a waiver from the National Guard Bureau for part
of the project, allowing the federal government to
contribute more than was typical.
Ms. Sanders continued to slide 13 and the requests for the
Department of Natural Resources (DNR). The first item was a
$2.5 million request for the acquisition of a firefighting
aircraft to replace the turbo commander aircraft, which was
at the end of its operational life. The aircraft was
critical for mission specific to wildfire firefighting and
for coordinating aerial and ground resources during fires,
which would enhance safety for Alaskans by protecting
private citizens and communities from wildfires.
Ms. Sanders continued to the Department of Public Safety
(DPS), which had a $6.5 million request for the purchase of
a single-engine turbine-powered all-weather Pilatus PC-12NG
aircraft, which would be used for emergency response
capabilities across 96 percent of Alaska's maintained
airports.
Representative Allard asked to revisit slide 12 and the
Alcantra and Camp Carroll modernization projects. She
emphasized the importance of military bases for strategic
military needs and highlighted that upgrades had been
requested for five or six years. She thought that Alcantra
could have served as an essential meeting place for the
National Guard if it had already been modernized during
recent earthquakes. She added that the modernizations were
crucial for ensuring military readiness.
Co-Chair Josephson noted that Commissioner James Cockrell
had made valid arguments about the importance of the
Pilatus aircraft. Other states had Pilatus aircrafts and
the aircrafts were relied upon during statewide emergency
responses. He was not certain if Alaska currently had a
Pilatus.
2:20:59 PM
Ms. Sanders responded that the state did not presently have
a Pilatus.
Ms. Sanders continued speaking to DPS's requests. The next
request was for $1.4 million for annual aircraft
maintenance and repairs for DPS aircrafts and would cover
the replacement cost of worn-out equipment such as
propellers, radios, and landing gear, as well as upgrades
and deferred maintenance. The department also made a
request for $2.8 million for the maintenance and repair of
Alaska Wildlife Troopers' (AWT) marine vessels. The
troopers had 41 marine vessels that required ongoing
maintenance. She explained that DPS had a plan and process
for addressing deferred maintenance related to marine
vessels on an annual basis. For example, there were several
vessels that needed to go into a shipyard, which was a
common process. She noted that the AMHS vessels also had to
go into dry dock for maintenance. She added that there was
a $750,000 request for rifle-related armor and a less
lethal 40mm program. The funding would ensure that troopers
had adequate protective gear, including body armor,
helmets, and ballistic shields, to perform their duties
safely and effectively.
Representative Galvin asked if the estimate of $1.4 million
in UGF for annual aircraft maintenance was based on best
practices for deferred maintenance. She asked if the figure
was derived using a common approach, such as spending 2
percent to 4 percent of the equipment's total value for
deferred maintenance.
Ms. Sanders replied that there were likely more deferred
maintenance needs than could be addressed. The focus was on
life, health, and safety for troopers operating in Alaska
under diverse conditions. She deferred the question to DPS.
2:24:13 PM
DIANNA THORNTON, ADMINISTRATIVE SERVICES DIRECTOR,
DEPARTMENT OF PUBLIC SAFETY, responded that the maintenance
schedule was based on the current fleet of aircraft and the
maintenance requirements set by the Federal Aviation
Administration (FAA). The FAA required certain tasks to be
performed by specific dates, which determined the fleet's
maintenance schedule. She reiterated that the schedule was
not reliant upon on a specific percentage of the
equipment's value.
Representative Galvin asked for confirmation that the
maintenance schedule was based on FAA regulations and not
on the equipment's value.
Ms. Thornton responded in the affirmative.
Representative Johnson asked if the $2.5 million request
for the turbo commander aircraft was for a new aircraft.
Ms. Sanders replied that she could not remember if it
represented the total cost for a new aircraft or a used
aircraft. She would follow up with the information.
Representative Johnson noted that the aircraft had been
requested in the past. She was wondering if the request was
a net cost or the total cost. She asked if there was any
value in selling the old aircraft and suggested that it
could potentially offset the cost for a new aircraft.
Ms. Sanders responded that there could be some
reimbursement from the state if there was an aircraft to
sell. However, DPS was seeking an additional aircraft and
was not planning to sell its old aircraft. She explained
that similar to the way DFG handled budgets, there was
often language in the budget that allowed DPS to reuse
earnings from the sale of a vessel to fund new maintenance
or equipment costs.
Representative Hannan asked if there was an operating
budget corollary to cover the staffing, maintenance, and
housing of the new Pilatus aircraft. She asked if there
were any operating budget considerations related to
staffing the aircraft and maintaining it.
Ms. Thornton responded that there were no corollary
operating budget items at the moment. She explained that
DPS currently had pilots who were rated to fly the Pilatus
aircraft. The request for funding was only for the purchase
of the aircraft, and the department planned to purchase a
used plane. Any additional operating costs would not be
known until the aircraft was actually acquired.
Representative Hannan asked how many aircrafts the
department currently had and how many pilots were certified
to operate the planes. She asked if, for instance, there
were pilots without an assigned aircraft or a discrepancy
between the number of aircrafts and available pilots.
Ms. Thornton responded that the pilots currently on staff
were certified to operate the aircraft the department
already had and would also be qualified to fly the new one.
She added that the department currently had one long-range
aircraft. She did not know the exact the number of pilots
but she would follow up with the information.
Representative Hannan emphasized the importance of
understanding the total number of aircrafts and pilots in
DPS and not just the number of pilots rated for the
specific new aircraft. She asked for more clarity on the
department's overall aircraft operations.
Co-Chair Josephson acknowledged that many AWTs were often
pilots as well.
Ms. Thornton responded in the affirmative. She apologized
for the lack of specifics but assured that she would follow
up with more detailed information.
2:29:59 PM
Co-Chair Schrage asked for more information about the
ongoing operational maintenance of the aircraft and other
items like vessels and rifle-rated armor. He asked if there
would be additional capital budget requests in the future
for things like aircraft maintenance, and whether the costs
were expected to be covered in future operating budgets.
Ms. Sanders replied that maintenance costs for capital
assets such as aircrafts, vessels, and armor could vary
depending on the agency. She acknowledged that different
agencies managed maintenance costs differently. Some had
maintenance budgets built into the annual operating
budgets, while others had requested the costs year after
year through the capital budget. She added that maintenance
costs were not a one-time cost and many of the
expenditures, like aircraft purchases, were part of ongoing
long-term expenses for maintenance and repairs. Plans could
also change due to unexpected conditions. She emphasized
the importance of flexibility in managing the costs. For
instance, if a project was estimated to cost $1 million but
ended up costing $1.2 million, agencies needed the ability
to adjust and redirect funds as needed. She explained that
flexibility allowed agencies to manage maintenance needs
over time, particularly when budgets were tight and costs
were escalating. She also noted that the capital budget
approach was becoming more common in some agencies, like
DNR, DPS, and DFG, where maintaining specialized equipment
such as aircrafts, vessels, and snow machines was critical
for employee safety.
Co-Chair Schrage remarked that while he understood the
reasoning behind the flexibility, as an appropriator, he
wanted oversight over unexpected costs and cost overruns.
He emphasized that legislators should be made aware of the
issues, especially given the difficult fiscal environment.
He was concerned about the trend of shifting maintenance
costs into the capital budget. For example, he felt that
rifle-rated armor should be part of the annual budget,
rather than treated as a one-time expense, which would make
it harder to anticipate future costs and plan for them. He
also raised concerns about hidden costs across departments,
such as the replacement of ATVs or firearms, and how the
costs would affect the budget long-term.
2:34:39 PM
Co-Chair Foster asked if the current aircraft that was
serving in the role of the Pilatus was similar to a King
Air or Cessna 208. He asked if the department was replacing
the aircraft because it was reaching the end of its life or
if it was simply looking to expand capability.
Ms. Thornton responded that the department currently had a
King Air based in Anchorage, but the intent was to have a
second long-range aircraft based in Fairbanks to help with
travel in the western region of the state without crossing
the Alaska Range. While the department also used other
aircrafts or chartered planes, the other planes did not
have the range or capacity to handle the distances needed
in one trip. The new aircraft would allow for faster
responses and would help eliminate delays in providing
services to Alaskans.
Representative Jimmie asked if the current fleet of planes
had the ability to handle the weather and airport
conditions that a Pilatus could handle.
Ms. Thornton confirmed that the current fleet did not have
the same flexibility as the long-range Pilatus aircraft,
which could travel longer distances without the need for
multiple stops. The department had other aircrafts, but
none with the same range or carrying capacity.
Co-Chair Schrage asked if there was a record of callouts
over the past one or two years and an analysis of how a new
aircraft might improve service or performance.
Ms. Thornton responded that she would follow up with the
information.
2:37:34 PM
Ms. Sanders continued to DOR's requests on slide 13. She
relayed that the Dividend Application Information System
(DAIS) replacement project had an additional request of
$4.5 million to complete phase 2. She noted that in 2024,
the legislature approved $7.5 million for the first phase.
The total cost of the system replacement project was $12
million, and the $4.5 million request was necessary to
complete it.
Ms. Sanders reviewed the request for over $65 million in
ongoing funding for Alaska Housing Finance Corporation
(AHFC) programs, such as the senior citizens housing
program, rural professional housing, and homeless
assistance programs.
Representative Johnson asked for assurance that there would
be no additional phases or further funding requests for
DAIS.
Ms. Sanders replied that the $4.5 million request was the
final request to complete the system replacement, and there
should be no additional funding needed for it.
Co-Chair Schrage asked why UGF was being used instead of
Permanent Fund receipts, which typically covered Permanent
Fund operations.
Ms. Sanders responded that using Permanent Fund receipts
would reduce the amount of the dividend paid to eligible
recipients. The decision was made to use UGF instead after
discussions between the administration and the legislature.
2:40:56 PM
Ms. Sanders continued on slide 14 and the request for DOT.
The first item was a request for the Silvertip Camp
Bunkhouse (STCB). The $325,000 request was to construct a
bunkhouse for maintenance workers at the Silvertip
Maintenance Station near milepost 56 on the Sterling
Highway. Due to the remote location, workers currently
commuted daily, and the new bunkhouse would allow workers
to stay overnight during winter storms and ensure quicker
response times for maintenance. Additionally, there was a
$2.5 million request for heavy maintenance on the Dalton
Highway between mileposts 76 and 89, which would require
extensive work to maintain the highway.
Ms. Sanders added that there was also a $4.5 million
request for aggregate stockpiles along the Dalton Highway
to construct stockpiles at strategic locations for short-
term maintenance. The purpose was to help address the poor
surface conditions of the highway, which required an
increased quantity of aggregate materials for repairs. She
also noted that the funding source had been initially
listed incorrectly and would be corrected through a
technical amendment because capital improvement project
(CIP) receipts were typically handled in the operating
budget, not the capital budget.
Co-Chair Josephson asked for clarification that the
Silvertip project was a Kenai Peninsula project, followed
by the two Dalton Highway projects.
Ms. Sanders responded in the affirmative.
Co-Chair Josephson asked whether the Dalton Highway
requests had been driven by the need to safely deliver
supplies to the North Slope, and if the roughly $7 million
total cost had been industry driven.
Ms. Sanders responded that the requests had come directly
from DOT. She acknowledged the fiscal challenges the state
had faced and explained that while there had been extensive
needs along the Dalton Highway, the department had
prioritized what had been most urgent and feasible given
the current financial limitations.
Co-Chair Josephson suggested that Director Dom Pannone
offer additional insights.
DOM PANNONE, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES (via
teleconference), responded that the funding would be
allocated to a high priority section of the Dalton Highway.
He confirmed that the funding was considered a single
request. He explained that DOT had collaborated with the
Alaska Truckers Association (ATA) and commercial operators
to identify priority areas for road maintenance. The state
funding request had allowed for quick and efficient action,
with substantial federal funds from the Statewide
Transportation Improvement Program (STIP), which was also
allocated annually for capital projects and preventive
maintenance on the Dalton Highway.
2:45:27 PM
Co-Chair Josephson asked if the $7 million request was the
cure for road erosion and other safety concerns. He asked
if the highway would need more updates over the next five
or ten years.
Mr. Pannone replied that there were maintenance funds in
the operating budget and preventative maintenance funds in
the capital budget. He clarified that the maintenance of
the Dalton Highway was ongoing, especially given the harsh
environment, and he explained that the gravel road had
required regular grading and handling of heavy truck loads.
The requested funding would not be a permanent fix but part
of an ongoing effort to maintain and improve the highway
for safe transportation. He also pointed out that no single
project would have completely solved the challenges of road
erosion and other safety concerns over a long period and
continual work was needed.
Representative Hannan asked whether the Dalton Highway
"slump" area, which had been sliding for several years, was
located between mileposts 76 and 89.
Ms. Sanders responded that she would need to follow up with
the information.
Representative Hannan understood that there was a capital
budget item a few years ago that would have addressed the
slump. She noted that the slump area had been notorious for
melting and sliding, causing significant disruptions in
traffic flow. She relayed that the slump disrupted traffic
flow every year.
Ms. Sanders replied that she had the opportunity to travel
to the area and observe the slump and subsequent traffic
disruption. She emphasized that there was significant
deferred maintenance along the entire highway and not only
in the area that was considered the slump. She agreed that
there would need to be continued capital projects along the
highway to address maintenance.
Representative Bynum asked if the committee would be
discussing not just the upcoming fiscal year's deferred
maintenance but also the broader, long-term maintenance
needs in the state.
Ms. Sanders responded that she could arrange a specific
committee meeting to discuss deferred maintenance in
greater detail if the committee desired. She suggested that
such a presentation would be helpful to offer a
comprehensive view of the scope of deferred maintenance
needs.
2:49:29 PM
Ms. Sanders continued with the additional requests on slide
14. There was a $4.25 million request for the Wood River
Canyon Bridges and Trails project aimed to realign and
build new trail bridges along the Copper River Highway Wood
Canyon Trail, from O'Brien Creek to Haley Creek. The goal
of the project was to improve access along the route while
avoiding significant cultural sites. The project would
focus on enhancing the road, bridges, waysides, and
protecting the area from erosion, as well as conducting
preservation activities for historic and cultural sites.
She noted that collaboration with the Chitina Task Force
would be key in the efforts. Additionally, there was a $2.7
million request for the second phase of the Williamsport
Intermodal Connector project. The second phase would
continue the design work that began in 2024, focusing on
the Williamsport side of the road corridor to complete the
multi-modal connection between Pile Bay on Iliamna Lake and
Williamsport on Iliamna Inlet, which was part of Cook
Inlet.
Ms. Sanders relayed that the next request was a $6.25
million initiative to deploy system-wide Wi-Fi on the AMHS
fleet, of which $5 million was federal receipts and $1.25
million was matching funds. The initiative aimed to enhance
the passenger experience and improve operational efficiency
by providing reliable wireless connectivity during transit.
Finally, there was a request for $10 million for a project
at Ted Stevens Anchorage International Airport to install a
10-megawatt solar array, allowing the airport to generate
renewable solar energy and reduce operational costs.
Representative Galvin asked if some of the appropriation
requests for DOT were due to displaced federal funds that
were expected but not received. She noted that there were
concerns about the state missing out on tens of millions of
dollars in federal funding.
Ms. Sanders responded that the projects included in the
presentation were simply items of note and part of the
governor's priorities. She understood that the conversation
to which Representative Galvin was referring regarding lost
federal funds was related to the STIP. She clarified that
none of the items she had discussed in the presentation
were due to a deferment because of issues with the STIP.
She deferred to Mr. Pannone to provide additional context
on the matter.
Co-Chair Josephson clarified that the question was if the
appropriation requests were in lieu of dollars that the
state arguably should have received through STIP.
2:53:39 PM
Mr. Pannone responded that the state did not miss out on
any federal dollars in 2024. He suggested that
Representative Galvin's concern might be related to the
August redistribution, which provided an opportunity to
spend more funds than initially authorized. He emphasized
that the federal funds were not lost, but carried forward.
He offered reassurance that none of the current requests
were related to August redistribution or STIP funding
issues.
Representative Galvin asked if Mr. Pannone could comment on
STIP funds in general and whether the state was losing any
expected project funds.
Mr. Pannone responded that the STIP was currently working
on Amendment 1 and would begin work on Amendment 2 in the
near future. He explained that DOT was strategizing to
maximize the available funds during the August
redistribution.
Co-Chair Josephson asked Mr. Pannone to clarify the
location of the Williamsport Intermodal Connector project.
He asked if it was in the Lake Clark area.
Mr. Pannone responded that the project aimed to connect a
barge landing for the community to an area with deeper
water barge landings, but he admitted that his knowledge of
the exact details was limited. He would follow up with
additional information.
Co-Chair Josephson asked if the project was for Iliamna.
Mr. Pannone responded that he would need to follow up with
the information.
Ms. Sanders continued to the requests for the University of
Alaska (UA) on slide 14. One of the highlighted projects
was the continuation of the drone program, which was part
of the University of Alaska Fairbanks' (UAF) Alaska Center
for Unmanned Aerial Systems Integration (ACUASI). The
project focused on developing a drone economy in Alaska by
creating educational pathways and working with the FAA to
establish the safe integration of drones into traditional
aviation systems in the state. Another significant project
for UA was the Research 1 (R1) status initiative at UAF,
with a $5 million investment to continue progressing toward
achieving national research prominence. The project had
started in 2024 and aimed to elevate the university's
research capacity.
Ms. Sanders detailed the next UA request, which was $3
million to invest in research at UAF on agriculture and
food Systems to improve Alaska's economic sustainability.
The project was designed to strengthen Alaska's
agricultural research in response to increasing food
security demands and the need for industrial growth.
Additionally, the University of Alaska Southeast (UAS)
sought $2 million to support its growing mariculture
program. The funding was intended to purchase a floating
mariculture laboratory and construct necessary moorage
facilities. The program aimed to address the rising demand
for skilled technicians in Alaska's expanding mariculture
industry.
Ms. Sanders noted that while the projects were included in
the Board of Regents' capital budget, there were other
requests from the university that were not included due to
the state's fiscal constraints, such as a $60 million
request for deferred maintenance. She emphasized that the
governor's budget was designed to prioritize the most
pressing needs given the state's financial limitations.
2:58:56 PM
Co-Chair Josephson noted that in 2024, Representative Stapp
had proposed a bill to capitalize and sustainably draw down
a deferred maintenance program for the university. He asked
if the administration took a position on such a remedy.
Ms. Sanders responded that while having a sustainable plan
for deferred maintenance would have been beneficial, the
main challenge was identifying a consistent funding source.
She pointed to the example of the Alaska Higher Education
Investment Fund (HEIF), which required a $400 million
capitalization to provide enough funding for programs like
the Alaska Performance Scholarship (APS). She acknowledged
that while a deferred maintenance fund would be beneficial,
finding a stable revenue stream for such an initiative
remained difficult.
Representative Galvin commented that she frequently heard
that a deferred maintenance plan could not be put in place
because the state could not find revenue to dedicate to it.
She noted that other states had approached the issue
differently. She cited Utah as an example, where the state
committed to spending 2 percent of the total value of state
properties on deferred maintenance before allocating funds
to new capital projects. The state of Utah made choices
about how to prioritize revenue, and deferred maintenance
could be a part of that discussion.
3:03:19 PM
Ms. Sanders continued on slide 15 and praised state
agencies for their hard work over the past year. She
pointed out that there had been many conversations about
the number of budgeted positions in state agencies and the
growing vacancies. She highlighted that state agencies had
responded to the concerns by focusing on filling vacant
positions before requesting new ones, except in a few
critical areas like DPS.
Co-Chair Josephson asked how DFG and DNR had more filled
positions than budgeted positions. He asked if it was
because the positions were temporary summer jobs.
Ms. Sanders responded in the affirmative. She explained
that some positions could be double filled, and that the
data, based on December 2024, included part-time and
seasonal positions. The positions were more common in
agencies like DFG and DNR as the departments' needs were
more seasonal.
Co-Chair Schrage asked for more information on the concept
of double filling positions.
Ms. Sanders explained that double filling could occur when
an employee went on long-term medical leave, for example,
and another person was hired temporarily to ensure that the
position's duties were still carried out.
Ms. Sanders continued to slide 16 and discussed the state's
vacancy rate. The slide included data from July 2017 to
July 2024. She noted that vacancy rates had been high,
especially after the COVID-19 pandemic, but there had been
positive progress. The state had a roughly 16 percent
vacancy rate as of July 2024. She mentioned that the data
was constantly changing, as agencies were working hard to
recruit and fill positions. She explained that what might
have been 10 vacant positions one day could be reduced to
five the next day, based on the success of recruitment
efforts. The numbers represented a point in time and the
situation was improving.
Representative Allard asked how many vacant positions were
for remote workers.
Ms. Sanders responded that she did not have the data but
would follow up with DOA about whether it was tracking
information about full-time teleworkers. There were
instances in which employees had a telework agreement in
place but were not full-time remote workers. She reiterated
that she would provide the committee with more specific
data about remote work and its potential savings for the
department.
Representative Allard asked how much money telework was
saving. She asked if there were remote workers who never
physically came into the office. She wondered if positions
that were held open due to telework had been initiated
during COVID-19 and whether employees working remotely from
outside of the state would be returning to the office. She
also requested a breakdown of how long budgeted positions
had been vacant. She specifically wanted to know how many
had been vacant for 12 months, 24 months, 36 months, 48
months, or even five years.
Ms. Sanders responded that that the department tracked the
length of vacancies closely and that she would follow up
with the requested data.
3:09:03 PM
Representative Galvin thought it would be important to
understand why positions that were still listed as open
remained unfilled, particularly if the department could not
deliver services effectively due to vacancies. She
suggested that it could be worth exploring how leadership
viewed the unfilled positions and how they planned to
address the challenge of filling the vacancies. She added
that there were concerns about the lack of a wage study,
though she chose not to delve into the issue further at the
moment.
Co-Chair Schrage asked why 849 budgeted positions were
listed for DFG on slide 15 but 1,132 positions were listed
as filled. He asked whether the discrepancy was due to
double filled positions or seasonal work.
Ms. Sanders responded in the affirmative and indicated that
the budgeted positions represented full-time employees
only, whereas the filled positions included both full-time
and part-time workers, making it a less-than-ideal
comparison. She would provide a corrected chart to the
committee to ensure a more accurate "apples-to-apples"
comparison.
Ms. Sanders continued to slide 17, which focused on the 10-
year fiscal outlook. She explained that the governor was
required by statute to publish the outlook on December 15
of each year, balancing sources of revenue with state
expenditures and ensuring that essential state services
were maintained while safeguarding the state's economic
stability. The slide presented a condensed version of the
plan. She explained that the governor had proposed
different versions of the fiscal outlook over the years.
Ms. Sanders continued by emphasizing that the 10-year
fiscal outlook was a status quo projection and the outlook
was clearly unsustainable. She explained that by FY 28, the
state's savings would be depleted. The governor
acknowledged that a combination of revenue measures and
spending reductions would need to be implemented before the
state's savings were exhausted. She highlighted that
policymakers would need to have ongoing discussions to
address the state's structural deficits.
3:12:47 PM
Co-Chair Josephson remarked that from his perspective, the
governor was the most important policymaker. He was
surprised that the governor would not want to engage in
solving the state's budget issues with only two years left
in office so that the next governor could focus on other
challenges. He relayed that the House Majority would invite
and encourage the governor's participation in addressing
the issues.
Representative Galvin expressed that she was excited to
hear the hopeful words about the willingness to address the
budget issue, and she was looking forward to the
discussion. She also asked about the expected changes
related to federal funding, particularly due to executive
orders pausing funding allocated to infrastructure projects
under the Infrastructure Investment and Jobs Act (IIJA) and
the Inflation Reduction Act (IRA). She emphasized that
Alaska's revenue was heavily reliant on federal funding.
She questioned whether the $282 million requested in the
capital budget would change if there was no federal funding
due to the federal executive orders. She asked Ms. Sanders
to comment on the thought process behind the fiscal
projections in light of the federal input.
Ms. Sanders responded by acknowledging that DOA was working
with state agencies to identify the impacts on the funding
that had been allocated through IRA and IIJA. She clarified
that there was not a full understanding yet of what would
be implemented at the federal level. She noted that the
federal government was still working through the situation
and the impact on future years was still unknown. There
would be conversations about the projects and whether the
projects would continue if federal funds were unavailable.
She offered reassurance that the administration would share
more information with the committees and the legislature as
it became available. She remarked that it was difficult to
predict the future, which meant that the 10-year fiscal
outlook could only be based on assumptions that the current
programs in the FY 26 budget would continue forward.
Representative Galvin asked for clarification regarding the
percentage of federal funds in the capital budget for FY
25, FY 26, and FY 27. She asked what portion of the
contribution was expected to be federal.
Ms. Sanders responded that the numbers provided in the
projections were for UGF and did not reflect any federal
funds. She explained that the current federal match in the
budget was around 55 percent, which amounted to $155
million. However, there were other projects like the Grid
Resilience and Innovation Partnership (GRIP) which had
various funding sources contributing to its match.
3:17:41 PM
Co-Chair Josephson thanked the presenters and asked if
there were any closing comments.
Ms. Sanders thanked the committee and reiterated that the
presentation was just a starting point. She expressed her
willingness to assist and collaborate with the committee,
emphasizing that DOA was looking forward to working
together through the process to achieve a positive outcome
for the state.
Co-Chair Josephson reviewed the agenda for the following
day's meeting.
ADJOURNMENT
3:18:52 PM
The meeting was adjourned at 3:18 p.m.