Legislature(2019 - 2020)Anch LIO Lg Conf Rm

05/06/2020 10:00 AM JUDICIARY

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10:00:36 AM Start
10:01:38 AM Presentation(s): Rpl Legal Framework & Treasury Interpretation of the Cares Act
11:44:36 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Testimony <Invitation Only> --
+ Presentation: RPL Legal Framework & Treasury TELECONFERENCED
Interpretation of the CARES Act
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE JUDICIARY STANDING COMMITTEE                                                                             
                       Anchorage, Alaska                                                                                        
                          May 6, 2020                                                                                           
                           10:00 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Matt Claman, Chair                                                                                               
Representative Chuck Kopp                                                                                                       
Representative Harriet Drummond (via teleconference)                                                                            
Representative Louise Stutes (via teleconference)                                                                               
Representative Gabrielle LeDoux (via teleconference)                                                                            
Representative Laddie Shaw                                                                                                      
Representative Sarah Vance (via teleconference)                                                                                 
                                                                                                                                
OTHER MEMBERS PRESENT                                                                                                         
                                                                                                                                
Senator Cathy Giessel (via teleconference)                                                                                      
Representative Bart LeBon (via teleconference)                                                                                  
Representative Dan Ortiz (via teleconference)                                                                                   
Representative Andy Josephson (via teleconference)                                                                              
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION(S):  RPL LEGAL FRAMEWORK & TREASURY INTERPRETATION                                                                 
OF THE CARES ACT                                                                                                                
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KATE VOGEL, Municipal Attorney                                                                                                  
Municipality of Anchorage                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Offered testimony pertaining to CARES Act                                                                
funds.                                                                                                                          
                                                                                                                                
JASON BOCKENSTADT                                                                                                               
Chief of Staff                                                                                                                  
Mayor's Office                                                                                                                  
Municipality of Anchorage                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Answered questions pertaining  to CARES Act                                                             
funds.                                                                                                                          
                                                                                                                                
MEGAN WALLACE, Director                                                                                                         
Division of Legal and Research Services                                                                                         
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Answered questions  pertaining to  the RPL                                                             
structure.                                                                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:00:36 AM                                                                                                                   
                                                                                                                                
CHAIR MATT  CLAMAN called the House  Judiciary Standing Committee                                                             
meeting  to order  at  10:00 a.m.    Representatives Kopp,  Shaw,                                                               
LeDoux  (via teleconference),  Stutes  (via teleconference),  and                                                               
Claman were present  at the call to order.   Representative Vance                                                               
(via  teleconference) and  Drummond (via  teleconference) arrived                                                               
as the meeting was in progress.                                                                                                 
                                                                                                                                
^PRESENTATION(S):  RPL Legal  Framework & Treasury Interpretation                                                               
of the CARES Act                                                                                                                
PRESENTATION(S):  RPL Legal Framework & Treasury Interpretation                                                             
                        of the CARES Act                                                                                    
                                                                                                                              
10:01:38 AM                                                                                                                   
                                                                                                                                
CHAIR CLAMAN announced  that the only order of  business would be                                                               
a  presentation on  RPL  legal framework  and  the Department  of                                                               
Treasury's interpretation of the CARES Act.                                                                                     
                                                                                                                                
10:03:56 AM                                                                                                                   
                                                                                                                                
KATE  VOGEL,  Municipal   Attorney,  Municipality  of  Anchorage,                                                               
determined  that Anchorage  can spend  CARES Act  funds that  are                                                               
awarded  to  the  municipality.     She  addressed  the  list  of                                                               
frequently  asked questions  (FAQs)  [included  in the  committee                                                               
packet] that  were issued from  the U.S. Department  of Treasury,                                                               
which supplement  the Treasury's initial Coronavirus  Relief Fund                                                               
Guidance that outlines the use of  CARES Act funds.  She said the                                                               
FAQ's  clarify  that  the  fund is  designed  to  provide  "ready                                                               
funding to  address unforeseen financial  needs."   She continued                                                               
to read the following from the FAQs:                                                                                            
                                                                                                                                
     For  this reason,  and as  a  matter of  administrative                                                                    
     convenience in  light of the  emergency nature  of this                                                                    
     program,  a   State,  territorial,  local,   or  Tribal                                                                    
     government may  presume that  payroll costs  for public                                                                    
     health  and public  safety employees  are payments  for                                                                    
     services  substantially  dedicated   to  mitigating  or                                                                    
     responding to the COVID-19 public health emergency ...                                                                     
                                                                                                                                
MS.  VOGEL said  the  previous statement  clearly indicates  that                                                               
CARES Act  money can  fund the  municipality's payroll  costs for                                                               
first  responders  and health  officials.    She reiterated  that                                                               
Anchorage will  be able to  fully utilize  CARES Act funds.   She                                                               
noted that she  is not at liberty to answer  all of the questions                                                               
submitted by the  committee because she does  not share attorney-                                                               
client   privilege   with    the   House   Judiciary   Committee;                                                               
furthermore,  this meeting  is  not an  executive  session.   She                                                               
added  that some  of the  questions hinge  on future  litigation,                                                               
which she declined to speculate on.                                                                                             
                                                                                                                                
10:06:23 AM                                                                                                                   
                                                                                                                                
MS.  VOGEL turned  attention  to the  memorandum  from the  House                                                               
Judiciary  Committee [included  in the  committee packet],  which                                                               
provided  a list  of questions  regarding  the use  of CARES  Act                                                               
funds.   She  addressed the  first question,  which asked  if the                                                               
language  of   the  CARES  Act  is   consistent  with  Treasury's                                                               
Interpretation.   She stated that  the language of the  CARES Act                                                               
is not as  restrictive as Treasury's interpretation.   She opined                                                               
that the  municipality of Anchorage  could fit  within Treasury's                                                               
guidelines with  the latest FAQ  update.  She explained  that the                                                               
CARES Act has  three requirements pertaining to the  use of funds                                                               
for local governments: Firstly; funds  can be used to cover costs                                                               
that  are  necessary  expenditures  incurred due  to  the  public                                                               
health  emergency; secondly;  for costs  that were  not accounted                                                               
for in  the budget most recently  approved as of the  date of the                                                               
CARES Act passage;  thirdly; for costs that  were incurred during                                                               
the period that begins March 1,  2020 and ends December 30, 2020.                                                               
She  pointed   out  that   the  [CARES   Act]  language   is  not                                                               
particularly   expansive;  consequently,   Treasury's  guidelines                                                               
provide clarification  that was not  included in the  law itself.                                                               
Additionally, the  guidelines define  "an expenditure due  to the                                                               
current public  health emergency" and  "not accounted for  in the                                                               
budget."   She  noted  that the  guidelines' restrictiveness  has                                                               
prompted outcry from U.S. senators  requesting more expansive and                                                               
permissive guidance to effectuate congressional intent.                                                                         
                                                                                                                                
10:09:41 AM                                                                                                                   
                                                                                                                                
MS.  VOGEL  directed  attention  to a  letter  [included  in  the                                                               
committee  packet]  from  U.S.   Senators  Reed  and  Schumer  to                                                               
Secretary of the Treasury, Steven Mnuchin, which stated:                                                                        
                                                                                                                                
     ...  a plain  text  reading  of the  law  leads to  the                                                                    
     logical conclusion that lost  or delayed revenues are a                                                                    
     direct cost created by the  coronavirus that were never                                                                    
     accounted for in any budget.                                                                                               
                                                                                                                                
MS.  VOGEL noted  that Senator  Murkowski and  16 other  senators                                                               
also wrote to  Secretary Mnuchin to advocate  for the eligibility                                                               
of emergency  payments from states  to units of  local government                                                               
based on  the intent of  congress when  it passed the  CARES Act.                                                               
She   reiterated   that    despite   the   restrictiveness,   the                                                               
Municipality of Anchorage  will be able to fully  spend its CARES                                                               
Act funds consistent with Treasury's interpretations.                                                                           
                                                                                                                                
MS. VOGEL in reference to  whether the legislative history of the                                                               
CARES  Act is  consistent with  Treasury's interpretation,  noted                                                               
that she has  not reviewed the entire legislative  history of the                                                               
CARES  Act.    Nonetheless,  she said  the  congressional  record                                                               
indicates that most speakers do  not delve into detail on revenue                                                               
replacement; however,  they do discuss  that it is  providing the                                                               
needed  relief for  state and  local governments.   She  quoted a                                                               
direct  passage from  Congresswoman Rosa  Delauro's congressional                                                               
testimony record, which read:                                                                                                   
                                                                                                                                
     with  state  revenues  collapsing  at  the  same  time,                                                                    
     demand  for  services is  skyrocketing.    We have  had                                                                    
     broad  agreement that  something  needs to  be done  to                                                                    
     help the  states.  Although  some might  have preferred                                                                    
     to  increase the  federal matching  rate for  Medicaid,                                                                    
     this legislation  goes a different route  with a fiscal                                                                    
     relief fund  for state and  local governments.   In any                                                                    
     case,  the key  is  to help  states  plug the  enormous                                                                    
     fiscal gaps  they are currently  facing.  I  am pleased                                                                    
     that  the  final   legislative  language,  unlike  some                                                                    
     earlier proposals that we  rejected, gives states broad                                                                    
     flexibility  in  how they  spend  the  money they  will                                                                    
     receive.   At this point,  it has become  impossible to                                                                    
     separate  the  effects  on   state  budgets,  a  rising                                                                    
     demands  for  services,  and  shortfalls  in  revenues.                                                                    
     States  cannot   spend  the   money  on   new  projects                                                                    
     unrelated  to  the  public  health  emergency  and  its                                                                    
     economic fallout.   I doubt  any state would  have done                                                                    
     that anyway,  but the legislation clearly  says that it                                                                    
     cannot.    Beyond  that, we  trust  states'  discretion                                                                    
     about what  expenditures are necessary in  light of the                                                                    
     current crisis.  We also  know that states planned many                                                                    
     expenditures assuming revenues that  they are no longer                                                                    
     receiving.  An activity  without the revenue to support                                                                    
     it  is not  accounted for  in  a state's  budget.   The                                                                    
     state should understand that they  can apply this money                                                                    
     to  prevent   the  cuts  that  would   devastate  their                                                                    
     necessary functions that they  can no longer cover from                                                                    
     their general  funds because of  the loss of  sales and                                                                    
     income tax revenue.   We are assured  that the Treasury                                                                    
     department appreciates  the importance of  getting this                                                                    
     money out to states quickly,  flexibly, and with a bare                                                                    
     minimum of paperwork.                                                                                                      
                                                                                                                                
10:12:59 AM                                                                                                                   
                                                                                                                                
MS. VOGEL  pointed out that Congresswoman  DeLauro's testimony is                                                               
the kind of statement that the  municipality would want to see in                                                               
the legislative  history; however, that expansive  explanation is                                                               
not fully embedded within Treasury's guidelines.                                                                                
                                                                                                                                
MS. VOGEL turned  attention to the next question,  which asked if                                                               
the  federal  courts apply  a  different  standard for  statutory                                                               
interpretation  than the  Alaska  courts.   She  said the  Alaska                                                               
Supreme  Court  takes a  sliding  scale  approach to  legislative                                                               
history.   She stated  that "the plainer  the language,  the more                                                               
convincing legislative history  would need to be  to the contrary                                                               
in order  to be a  factor in interpreting  a law."   By contrast,                                                               
she said, federal  courts adopt the principal that  "if the plain                                                               
meaning  of the  statute  is  unambiguous on  its  face then  the                                                               
legislative  history should  not be  [considered] at  all."   She                                                               
noted  that  to  some  extent,  this  is  a  matter  of  judicial                                                               
philosophy;  therefore, it's  not  a prediction  of  how a  court                                                               
might rule.  She continued to  explain that any legal battle over                                                               
interpreting CARES  Act provisions would occur  in federal court,                                                               
so arguably,  the plain language  of the  CARES Act should  be of                                                               
more importance than the legislative history.                                                                                   
                                                                                                                                
MS. VOGEL  continued to the  next question, which asked  how much                                                               
deference  the courts  give to  Treasury's interpretation  of the                                                               
CARES  Act.   She indicated  that the  amount of  deference would                                                               
depend on the  situation.  She noted that there  are two types of                                                               
deference  that  are  relevant: Chevron  deference  and  Skidmore                                                               
deference.  Chevron  deference stipulates that when  a statute is                                                               
silent  or  ambiguous  on  a   specific  issue  there  should  be                                                               
deference  to the  agency's  interpretation, as  long  as it's  a                                                               
permissible or  reasonable construction.   In  Contrast, Skidmore                                                               
deference requires  a lesser  degree of  deference and  relies on                                                               
persuasive authority  as opposed to reasonability.   She surmised                                                               
that Skidmore  deference would likely apply  to interpretation of                                                               
the CARES Act.                                                                                                                  
                                                                                                                                
10:17:36 AM                                                                                                                   
                                                                                                                                
MS. VOGEL  directed attention to  the next question,  which asked                                                               
if there is a problem  with statutory language or the legislative                                                               
history,  what  options  Congress  has to  fix  the  problem  and                                                               
clarify whether  states and local  governments may use  the funds                                                               
to  replace  lost  revenue.    She  stated  that  the  CARES  Act                                                               
expressly  delegated  to  Treasury  the  authority  to  determine                                                               
whether payments  are used for  eligible purposes;  however, that                                                               
determination must  be consistent  with statutory language.   She                                                               
pointed out  that so far,  the response from members  of Congress                                                               
has been to  write to Treasury in an attempt  to shape or clarify                                                               
the guidelines in an effort to  interpret CARES Act language in a                                                               
way that  benefits states or  local governments.  She  added that                                                               
beyond  writing new  laws,  she  is not  aware  of other  federal                                                               
options that might be available.                                                                                                
                                                                                                                                
MS. VOGEL addressed the following  question, which asked how much                                                               
weight  the  courts  would  likely   give  to  state  legislative                                                               
findings about the appropriate scope  for CARES Act funding.  She                                                               
said she  couldn't think of a  scenario in which a  federal court                                                               
would   give  weight   to   state   legislative  findings   while                                                               
interpreting  Congress's  intentions  for  the CARES  Act.    She                                                               
continued  to the  next question,  which asked  how the  State of                                                               
Alaska  and  the  federal  government  would  resolve  a  dispute                                                               
concerning  state   or  local   government  expenditures.     She                                                               
explained  that   the  CARES  Act  delegates   the  authority  to                                                               
determine whether payments are used  for eligible purposes to the                                                               
Treasury;  nonetheless,  she  said  she is  unfamiliar  with  the                                                               
process that would be used to  resolve a dispute.  She noted that                                                               
there is a  provision in the law stating that  if a State, local,                                                               
or   tribal  government   has  failed   to  comply   with  proper                                                               
expenditures, "an  amount equal  to the amount  of funds  used in                                                               
violation of  such subsection shall be  booked as a debt  owed to                                                               
the federal government."  She  noted that the same answer applies                                                               
to the final  question about who is responsible  for repayment to                                                               
the  federal government  for improper  expenditures of  CARES Act                                                               
funding.  She  added that no local governments in  Alaska met the                                                               
threshold to  receive payments  from Treasury.   She  offered her                                                               
understanding   that  Treasury's   interaction  with   the  state                                                               
regarding government CARES  Act funds would be  directly with the                                                               
state.                                                                                                                          
                                                                                                                                
10:22:20 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KOPP asked  if the  municipality has  experienced                                                               
any  expenses related  to  COVID-19, such  as  the homeless  camp                                                               
cleanups, that have been difficult to recover.                                                                                  
                                                                                                                                
MS. VOGEL  said she is  not concerned that  Treasury's guidelines                                                               
would prevent the municipality from  spending any CARES Act funds                                                               
it receives.                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KOPP   questioned   whether   state   or   local                                                               
governments can save CARES Act  funds beyond December 30, 2020 to                                                               
use for the long-term impacts of the coronavirus pandemic.                                                                      
                                                                                                                                
MS. VOGEL  said she does not  know.  She reiterated  that the law                                                               
states  the funds  can be  used to  cover costs  incurred between                                                               
March  1, 2020  and  December  30, 2020.    She deferred  further                                                               
explanation to Jason Bockenstadt.                                                                                               
                                                                                                                                
10:26:27 AM                                                                                                                   
                                                                                                                                
JASON BOCKENSTADT,  Chief of Staff, Mayor's  Office, Municipality                                                               
of Anchorage, said the FAQs clarify  that if a government has not                                                               
used  the funds  cover costs  incurred  by December  30, 2020  as                                                               
required, those funds must be  returned to the U.S. Department of                                                               
Treasury.                                                                                                                       
                                                                                                                                
REPRESENTATIVE KOPP  asked if  a local  government could  have an                                                               
expenditure plan  for encumbered  funds related to  COVID-19 that                                                               
extends into 2021.                                                                                                              
                                                                                                                                
MR. BOCKENSTADT offered his understanding  that the federal funds                                                               
could not  be used for expenses  incurred on or after  January 1,                                                               
2021.                                                                                                                           
                                                                                                                                
10:29:42 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KOPP  opined   that  allowing  local  governments                                                               
flexibility in  spending CARES Act  funds past December  30, 2021                                                               
would  prevent  municipalities from  having  a  dramatic drop  in                                                               
stimulus  and  revenue.   He  suggested  advocating  to  Alaska's                                                               
congressional  delegation for  the  ability to  manage the  funds                                                               
into 2021 for coronavirus related costs and expenses.                                                                           
                                                                                                                                
10:31:09 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  LEDOUX  asked  if   a  COVID-19  related  expense                                                               
incurred after December 30, 2020 could be prepaid.                                                                              
                                                                                                                                
MR. BOCKENSTADT  said he does not  think so.  He  reiterated that                                                               
according  to  the law,  expenditures  must  be incurred  between                                                               
March 1, 2020 and December 30, 2020.  He deferred to Ms. Vogel.                                                                 
                                                                                                                                
MS. VOGEL agreed with Mr. Bockenstadt.                                                                                          
                                                                                                                                
10:33:18 AM                                                                                                                   
                                                                                                                                
CHAIR CLAMAN  directed attention  to the  second question  on the                                                               
list of  FAQs.  He asked  if the Municipality of  Anchorage could                                                               
use CARES Act  funds to pay the entire payroll  for public health                                                               
and public safety employees during the period in question.                                                                      
                                                                                                                                
MS. VOGEL answered yes.                                                                                                         
                                                                                                                                
10:35:35 AM                                                                                                                   
                                                                                                                                
MEGAN  WALLACE,   Director,  Division   of  Legal   and  Research                                                               
Services, Legislative Affairs Agency,  noted that she focused her                                                               
attention  on the  RPL  structure.   She  opined  that Ms.  Vogel                                                               
answered  the questions  regarding  the use  of  CARES Act  funds                                                               
sufficiently.                                                                                                                   
                                                                                                                                
10:36:54 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE KOPP asked Ms. Wallace  if the State is liable for                                                               
misappropriation.                                                                                                               
                                                                                                                                
MS. WALLACE answered yes.   She explained that Alaska's CARES Act                                                               
funds have been  deposited into the state's  treasury account and                                                               
from there,  will be disbursed  to local governments.   She added                                                               
that Treasury's  guidelines allow states to  disburse the federal                                                               
funds  to  local governments  for  spending;  however, the  local                                                               
governments are still bound by provisions  in the CARES Act.  She                                                               
opined that the  state would be liable for  repayment because the                                                               
federal government sent  the funds to the state.   She speculated                                                               
that the  state may have  some opportunity to collect  funds back                                                               
from  a local  government depending  on the  circumstance of  how                                                               
they were distributed.                                                                                                          
                                                                                                                                
10:40:12 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE LEDOUX asked to what  degree the state is required                                                               
to manage the municipalities' use of CARES Act funds.                                                                           
                                                                                                                                
MS.  WALLACE   said  it's   circumstantial.     Nonetheless,  she                                                               
recommended  that the  state put  local  governments on  specific                                                               
notice that the  funds must be spent in  accordance with Treasury                                                               
guidelines  and according  to the  CARES  Act.   She offered  her                                                               
belief that  in time, there will  be further guidance on  use and                                                               
oversight of CARES Act funds.                                                                                                   
                                                                                                                                
10:43:31 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  LEDOUX  asked  whether the  state  could  require                                                               
municipalities  to sign  a hold  harmless agreement  (HHA) before                                                               
disbursing the funds.                                                                                                           
                                                                                                                                
MS. WALLACE  said if the state  would like to ensure  an HHA, she                                                               
would recommend  that the legislature consider  a substantive law                                                               
provision  outlining the  criteria and  expectations.   She noted                                                               
that it  could be  uncodified temporary law,  similar to  SB 241,                                                               
rather than a "gentlemen's agreement."                                                                                          
                                                                                                                                
REPRESENTATIVE LEDOUX  said, "I  wasn't talking actually  about a                                                               
gentlemen's  agreement ...  I  was talking  about  a signed  hold                                                               
harmless agreement."                                                                                                            
                                                                                                                                
MS. WALLACE  opined that the  executive branch does not  have the                                                               
authority  to demand  or  require an  HHA  before disbursing  the                                                               
federal funds.  She offered to research the matter further.                                                                     
                                                                                                                                
10:46:18 AM                                                                                                                   
                                                                                                                                
MS.  WALLACE  informed the  committee  that  her office  provides                                                               
policy neutral  nonpartisan legal  advice.   She stated  that her                                                               
comments  on the  RPL process  and the  CARES Act  should not  be                                                               
viewed as  advocating for or  against any particular  process for                                                               
appropriating  or  spending  the  federal funds.    She  directed                                                               
attention  back  to  the  memorandum  from  the  House  Judiciary                                                               
Committee  [included in  the committee  packet] and  proceeded to                                                               
address the  questions pertaining  to the  RPL structure  and the                                                               
legislature's appropriation authority.   The first question asked                                                               
for   the   constitutional    provisions   that   establish   the                                                               
legislature's  appropriation  authority.   She  said  Article  9,                                                               
Section 13 of the Alaska  Constitution states, "no money shall be                                                               
withdrawn   from  the   treasury   except   in  accordance   with                                                               
appropriations made by  law."  She added that  the legislature is                                                               
the body  of government that  makes those appropriations  by law.                                                               
She also  referenced a  confinement clause,  found in  Article 2,                                                               
Section  13,  which states,  "bills  for  appropriation shall  be                                                               
confined to  appropriation."  She explained  that substantive law                                                               
and  appropriations cannot  comingle in  a single  bill; however,                                                               
appropriations are  not bound by the  single subject restrictions                                                               
that substantive measures are.                                                                                                  
                                                                                                                                
10:48:39 AM                                                                                                                   
                                                                                                                                
MS. WALLACE  turned attention to  the next question,  which asked                                                               
what  appropriation   authority  the   governor  has   under  the                                                               
constitution.  She stated that  the governor has no appropriation                                                               
power under  the Alaska Constitution; however,  the governor does                                                               
have  budget requirements.    Under Article  9,  Section 12,  the                                                               
governor is  required to submit  a budget to the  legislature for                                                               
the  next fiscal  year.   She  said  that is  the  extent of  the                                                               
governor's constitutional requirements  pertaining to the budget.                                                               
She added that  Title 37 includes an Executive  Budget Act, which                                                               
outlines  additional  budget   requirements  that  the  executive                                                               
branch  must  follow  with  respect  to  submission  of  proposed                                                               
budgets, revenue measures, and the like.                                                                                        
                                                                                                                                
10:49:51 AM                                                                                                                   
                                                                                                                                
MS. WALLACE continued to the  next question, which asked if there                                                               
is  a  different analysis  on  the  appropriation authority  when                                                               
federal funds  are involved.  She  indicated that there is  not a                                                               
different analysis.  Federal funds,  she said, are deposited into                                                               
the state  treasury and  under Article 9,  Section 13,  cannot be                                                               
withdrawn   from  the   treasury   except   in  accordance   with                                                               
appropriation.    She  explained  that all  the  state's  federal                                                               
receipts  are appropriated  through  the budget  process with  or                                                               
without a state matching fund requirement.                                                                                      
                                                                                                                                
MS. WALLACE directed attention to  the next question, which asked                                                               
for examples  of "other  program receipts"  that may  involve the                                                               
RPL  process.   She noted  the  RPL process  is set  forth in  AS                                                               
37.07.080(h), which states:                                                                                                     
                                                                                                                                
     The  increase   of  an  appropriation  item   based  on                                                                    
     additional  federal  or   other  program  receipts  not                                                                    
     specifically appropriated  by the full  legislature may                                                                    
     be   expended   in   accordance  with   the   following                                                                    
     procedures:                                                                                                                
                                                                                                                                
MS.  WALLACE  noted  that AS  37.05.146  [Definition  of  Program                                                               
Receipts  and Non-General  Fund  Program  Receipts] provides  the                                                               
following explanation under subsection (a):                                                                                     
                                                                                                                                
     In AS 37.05.142 -  37.05.146 and AS 37.07.080, "program                                                                    
     receipts"  means   fees,  charges,  income   earned  on                                                                    
     assets,  and  other state  money  received  by a  state                                                                    
     agency  in  connection  with  the  performance  of  its                                                                    
     functions.                                                                                                                 
                                                                                                                                
MS. WALLACE added  that AS 37.05.146 provides  79 different types                                                               
of program receipts  with specific examples.   She explained that                                                               
if a  state agency collected  more fees or revenue  than expected                                                               
during a  regular budget process,  the RPL process could  be used                                                               
to  increase  that agency's  budget  to  allow  it to  spend  the                                                               
additional program receipts received during the fiscal year.                                                                    
                                                                                                                                
10:53:51 AM                                                                                                                   
                                                                                                                                
CHAIR CLAMAN established a scenario  in which the budget expected                                                               
$100,000 in fishing license receipts  but ended up with $120,000.                                                               
He  asked if  that is  an  example of  "other program  receipts,"                                                               
which could be adjusted through the RPL process.                                                                                
                                                                                                                                
10:54:10 AM                                                                                                                   
                                                                                                                                
MS. WALLACE confirmed that.   She continued to the next question,                                                               
which asked for the history of  the RPL process.  She stated that                                                               
AS  37.07.080(h) was  originally  enacted in  1977 and  initially                                                               
required both the  governor and the Legislative  Budget and Audit                                                               
Committee  (LB&A)  to  explicitly  approve  the  RPL  before  the                                                               
expenditure could  be made.   In  1977, the  provision's original                                                               
language read as follows:                                                                                                       
                                                                                                                                
     Appropriations  may  be  revised  on  approval  by  the                                                                    
     governor   and  the   Legislative   Budget  and   Audit                                                                    
     Committee to allow for an  increase of an appropriation                                                                    
     item  based  on  additional federal  or  other  program                                                                    
     receipts,  establishment of  a  new permanent  position                                                                    
     not  authorized in  the appropriated  operating budget,                                                                    
     or reallocation between appropriation items.                                                                               
                                                                                                                                
MS. WALLACE  explained that following  the original  enactment of                                                               
that  subsection,   a  lawsuit  was  filed   [Kelly  v.  Hammond]                                                               
challenging the  provision.  Judge  Thomas Stewart of  the Juneau                                                               
Superior  Court found  that  all three  types  of revisions  were                                                               
unconstitutional.   Specifically, he found  that the  statute was                                                               
an improper  delegation of the  legislative power  to appropriate                                                               
to  a  committee;  additionally,  it   was  a  violation  of  the                                                               
separation of  powers doctrine to  the extent that  the provision                                                               
authorized  the legislative  committee to  exercise jointly  with                                                               
the  governor's  expenditure authority.    After  a decision  was                                                               
reached in  the Superior  Court, the appeal  was dismissed.   She                                                               
noted that there  is little precedential value to the  case.  She                                                               
stated that after  Kelly v. Hammond was  decided, the legislature                                                               
proposed  a   constitutional  amendment  to  the   voters,  which                                                               
proposed  that  budget  revisions   and  expenditure  of  program                                                               
receipts upon approval of the  governor and an interim committee,                                                               
be permissible;  however, the voters rejected  the constitutional                                                               
amendment.   In the subsequent  session, the  legislature enacted                                                               
AS  37.07.080(h) in  substantially the  same form  that currently                                                               
exists.  She noted that there  have been no further challenges to                                                               
the statute.                                                                                                                    
                                                                                                                                
10:58:07 AM                                                                                                                   
                                                                                                                                
MS.  WALLACE noted  that in  recent litigation  history, Governor                                                               
Walker  proposed Medicaid  expansion through  utilization of  the                                                               
RPL  process; however,  the issue  was primarily  related to  the                                                               
interpretation  of  who  was covered  under  the  state  Medicaid                                                               
statute and not the RPL process itself.                                                                                         
                                                                                                                                
10:58:59 AM                                                                                                                   
                                                                                                                                
CHAIR CLAMAN sought  to clarify how the  current statute compares                                                               
to   the  original   1977  statute   that  Judge   Stewart  found                                                               
unconstitutional.  He asked how the statute was modified.                                                                       
                                                                                                                                
10:59:29 AM                                                                                                                   
                                                                                                                                
MS.  WALLACE  explained  that  the   primary  difference  in  the                                                               
existing statute  is that  LB&A approval  is no  longer required.                                                               
Instead, a  45-day wait period  now exists  and if LB&A  does not                                                               
recommend  that  the  governor move  forward  with  the  proposed                                                               
expenditure,  the  governor must  review  the  program again  and                                                               
provide a  written statement  explaining his  or her  decision to                                                               
approve  the expenditure.    Therefore, LB&A  does  not have  the                                                               
power  to reject  the expenditures  like  it did  under the  1977                                                               
provision.   She noted that a  second key difference is  that the                                                               
current statute states that an  increase of an appropriation item                                                               
can  be  made for  additional  federal  or program  receipts  not                                                               
specifically  appropriated by  the  full legislature  - a  clause                                                               
that did not exist in the 1977 statute.                                                                                         
                                                                                                                                
11:02:35 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE LEDOUX asked if Judge  Stewart based his ruling on                                                               
the delegation  of powers to the  LB&A committee, as well  as the                                                               
separation of powers between the legislature and the governor.                                                                  
                                                                                                                                
MS. WALLACE confirmed that.   She said Judge Stewarts opined that                                                               
there was  a violation  of the separation  of powers  doctrine to                                                               
the  extent  that  the provision  was  allowing  the  legislative                                                               
committee  to  exercise its  power  jointly  with the  governor's                                                               
expenditure authority.                                                                                                          
                                                                                                                                
REPRESENTATIVE  LEDOUX pointed  out that  under current  statute,                                                               
the LB&A committee  must concede its power to  the governor after                                                               
45 days.  She asked if that is correct.                                                                                         
                                                                                                                                
MS. WALLACE  noted that  the "catch-all"  appropriation is  a key                                                               
portion  of  the  RPL process  and  appropriates  the  additional                                                               
federal and  program receipts conditioned on  compliance with the                                                               
RPL process under  AS 37.07.080(h).  She opined  that because the                                                               
legislature   has  appropriated   the  receipts   conditioned  on                                                               
compliance with  the RPL process,  the governor's  expenditure of                                                               
those funds after the 45-day  wait period is contemplated as part                                                               
of the appropriation bills that the legislature passes.                                                                         
                                                                                                                                
11:05:29 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  if  that's true  even  if the  LB&A                                                               
committee recommends  the governor not  to move forward  with the                                                               
additional expenditures.                                                                                                        
                                                                                                                                
MS.  WALLACE answered  yes.   She said  as long  as the  governor                                                               
complies  by   providing  a  written  statement   explaining  the                                                               
decision to  move forward, the  process is satisfied.   She noted                                                               
that historically,  there have been  disagreements on  whether an                                                               
RPL  submitted by  the governor  complies  with AS  37.07.080(h),                                                               
which  presents an  argument that  it's not  appropriate to  move                                                               
forward with those  expenditures.  She said that could  lead to a                                                               
legal  dispute   on  whether  the   initial  RPL   complied  with                                                               
37.07.080(h).                                                                                                                   
                                                                                                                                
REPRESENTATIVE  LEDOUX expressed  her  concern  with the  current                                                               
statute,  which   allows  the  governor  to   move  forward  with                                                               
additional   expenditures  after   45   days  despite   potential                                                               
opposition by LB&A.  She  questioned the constitutionality of the                                                               
current statute.                                                                                                                
                                                                                                                                
11:08:57 AM                                                                                                                   
                                                                                                                                
CHAIR CLAMAN asked Ms. Wallace to  forward a copy of the Kelly v.                                                               
Hammond decision to the legislature.                                                                                            
                                                                                                                                
11:10:09 AM                                                                                                                   
                                                                                                                                
MS.  WALLACE  turned  attention   to  the  next  question,  which                                                               
questioned  whether  AS  37.07.080(h)   is  the  only  applicable                                                               
statute to  this issue.   She confirmed  that AS  37.07.080(h) is                                                               
the primary  statute applicable  to the RPL  process.   She noted                                                               
that  depending on  the RPL  under review,  there could  be other                                                               
statutory  provisions  that  are  analyzed.    She  continued  to                                                               
explain  that  the  Division  of   Legal  and  Research  Services                                                               
(Legislative  Legal Services)  is  of the  opinion  that the  RPL                                                               
process  can  not  be  utilized   to  amend  the  purpose  of  an                                                               
appropriation  made  by  the full  legislature.    She  suggested                                                               
reviewing  the   underlying  purpose  of  the   appropriation  in                                                               
question and  whether the agency  has the statutory  authority to                                                               
assume the proposed expenditure.                                                                                                
                                                                                                                                
11:13:56 AM                                                                                                                   
                                                                                                                                
MS.  WALLACE  explained that  the  RPL  process is  traditionally                                                               
utilized during  the interim;  however, she  anecdotally reported                                                               
that  the  RPL  process  has   previously  been  used  while  the                                                               
legislature is in  session.  She added that  AS 37.07.080(h) does                                                               
not specifically  provide a  timeframe in  which the  RPL process                                                               
must be utilized.   She said LB&A has the  statutory authority to                                                               
meet during session  and in the interim.  She  opined that in the                                                               
current   situation  where   the   legislature   is  in   recess,                                                               
utilization of the  RPL process by LB&A would  not be invalidated                                                               
by the courts.                                                                                                                  
                                                                                                                                
11:17:36 AM                                                                                                                   
                                                                                                                                
MS. WALLACE continued  to the next question, which  asked how the                                                               
"catch-all"  appropriation  language   in  the  operating  budget                                                               
impacts the  RPL analysis.   She reiterated that  the "catch-all"                                                               
provision  appropriates the  additional  receipts conditioned  on                                                               
compliance  with  AS  37.07.080(h).   She  said  the  "catch-all"                                                               
language  has never  been the  subject of  litigation; thus,  the                                                               
constitutionality has  never been reviewed by  the Alaska Supreme                                                               
Court.  She  noted that there are two  elements of appropriation:                                                               
firstly,   the   amount   appropriated    must   be   stated   or                                                               
ascertainable;  secondly,  the  appropriation's purpose  must  be                                                               
stated or ascertainable.  She  indicated that someone could argue                                                               
the "catch-all" language  is too broad if it does  not provide an                                                               
ascertainable appropriation; however, as  long as the RPL process                                                               
is  complied  with,  the  additional   amount  is  considered  an                                                               
ascertainable  increase to  the  appropriation.   She noted  that                                                               
sometimes  the  legislature  adds   restrictive  language  in  an                                                               
attempt to  prohibit certain appropriations from  being increased                                                               
through the  RPL process.   She read the "catch-all"  language as                                                               
follows:                                                                                                                        
                                                                                                                                
     Federal  or  other  program receipts  that  exceed  the                                                                    
     amounts  appropriated  in  this  act  are  appropriated                                                                    
     conditioned  upon compliance  with  the program  review                                                                    
     provisions of AS 37.07.080(h).                                                                                             
                                                                                                                                
11:21:50 AM                                                                                                                   
                                                                                                                                
MS.  WALLACE  directed attention  to  the  final question,  which                                                               
asked if a single RPL can  be used to increase the expenditure in                                                               
more than one fiscal year.   She noted that the question pertains                                                               
to the  specific language in  AS 37.07.080(h), which  states that                                                               
an  increase  of  "an"  appropriation  item may  be  made.    She                                                               
recounted that  the issue of using  a single RPL to  increase the                                                               
expenditure  in more  than one  fiscal year  was raised  with the                                                               
current  RPL  put  forward  by   the  governor  with  respect  to                                                               
expenditure of  the CARES  Act.   She said  many of  the proposed                                                               
RPLs  sought  multi-year  expenditure  authority.    Ms.  Wallace                                                               
explained  that she  raised issue  with those  RPLs because  it's                                                               
improper to  categorically request  to spend money  over multiple                                                               
fiscal  years unless  the  appropriation  amount is  specifically                                                               
identified for  each year.   She said  that issue was  cured with                                                               
the  administration's submission  of  a new  batch  of RPLs  that                                                               
provided how  much money was  to be expended  in FY 20  versus FY                                                               
21.                                                                                                                             
                                                                                                                                
11:25:35 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE KOPP  referenced a  legal memorandum  submitted by                                                               
Ms. Wallace  on April  30, 2020 to  the LB&A  committee regarding                                                               
the RPL  process and 45-day  period.   He asked if  Ms. Wallace's                                                               
opinion  has changed  with respect  to the  RPLs that  pertain to                                                               
community assistance  payments and small business  relief for the                                                               
economic stimulus of Alaskan fisheries.                                                                                         
                                                                                                                                
11:27:06 AM                                                                                                                   
                                                                                                                                
CHAIR  CLAMAN  clarified that  there  are  two memorandums  dated                                                               
April 30, 2020  that Ms. Wallace provided to  the LB&A committee.                                                               
One pertains to the 45-day period  and the other is an eight-page                                                               
memorandum that addresses several RPLs.                                                                                         
                                                                                                                                
11:27:32 AM                                                                                                                   
                                                                                                                                
MS.  WALLACE  explained  that   the  administration  revised  the                                                               
community assistance  RPLs in  the May  1, 2020  RPL submissions,                                                               
which  reduced  the amount  to  $200,000.    She said  the  cited                                                               
statutory authority was revised  to grant Department of Commerce,                                                               
Community &  Economic Development  (DCCED) the  general authority                                                               
to administer  grants and federal community  assistance programs.                                                               
She   stated   that   the  general   conclusion   regarding   the                                                               
appropriateness  of utilizing  the RPL  process has  not changed.                                                               
The formula that  was utilized to determine the  amount that each                                                               
local  government  would  receive  was changed  to  provide  more                                                               
assistance to  several communities;  however, the  formula itself                                                               
did  not change.    She  opined that  there  continues  to be  no                                                               
statutory  authority  that provides  the  governor  the power  to                                                               
develop  or create  a new  community assistance  payment formula.                                                               
She further  noted that  the small business  relief RPL  was also                                                               
modified  by  removing the  proposal  to  utilize Alaska  Housing                                                               
Finance Corporation (AHFC)  as part of the  small business loans.                                                               
The  revised  RPL  exclusively   utilizes  DCCED's  authority  in                                                               
cooperation  with   Alaska  Industrial  Development   and  Export                                                               
Authority (AIDEA).   She reiterated  that her  general conclusion                                                               
has not changed.                                                                                                                
                                                                                                                                
11:31:22 AM                                                                                                                   
                                                                                                                                
CHAIR CLAMAN remarked:                                                                                                          
                                                                                                                                
     It's  your general  analysis that  because there  is no                                                                    
     appropriation   for   COVID-19   in   2019   that   the                                                                    
     legislature  would  need  to  make  the  appropriation,                                                                    
     there would be no  appropriation to increase for COVID-                                                                    
     19  in  the  2020   budget  through  the  RPL  process.                                                                    
     Whereas  if  there  [are] appropriations  in  the  2021                                                                    
     budget process  for COVID-19 the  RPL process  would be                                                                    
     appropriate to make those adjustments.                                                                                     
                                                                                                                                
11:32:35 AM                                                                                                                   
                                                                                                                                
MS. WALLACE  answered that is  correct.   She pointed out  one of                                                               
the  strictest readings  of 37.07.080(h)  indicates  that if  the                                                               
legislature  didn't appropriate  any CARES  Act funds  then there                                                               
are no appropriations eligible to  be increased.  She stated that                                                               
a less  restrictive approach could  find it permissible  to allow                                                               
an appropriation  that has some  federal receipt authority  to be                                                               
utilized through  the RPL process to  increase that appropriation                                                               
to allow for expenditures of the  CARES Act funds, so long as the                                                               
purpose of the  appropriation is consistent with  the purpose for                                                               
utilization of the CARES Act funds.                                                                                             
                                                                                                                                
11:35:52 AM                                                                                                                   
                                                                                                                                
CHAIR  CLAMAN provided  an example  referencing federal  receipts                                                               
for  school lunches.   He  established  a scenario  in which  the                                                               
CARES Act  provided more money  for schools and asked  whether it                                                               
would be  appropriate to increase that  appropriation because the                                                               
purpose is consistent with the federal receipts.                                                                                
                                                                                                                                
MS. WALLACE confirmed that.                                                                                                     
                                                                                                                                
11:36:24 AM                                                                                                                   
                                                                                                                                
CHAIR CLAMAN  said in contrast,  there's not a  federal component                                                               
to  community revenue  sharing; additionally,  there's no  budget                                                               
for community  revenue sharing.   He surmised that even  if there                                                               
were  money to  be  used  for revenue  sharing  from the  federal                                                               
funds, there's no appropriation for  that in the budget, which is                                                               
why Ms. Wallace's  opinion has not changed  regarding the revenue                                                               
sharing.                                                                                                                        
                                                                                                                                
11:36:55 AM                                                                                                                   
                                                                                                                                
MS. WALLACE said  that's generally correct.  She  stated that the                                                               
appropriation identified for the  community revenue sharing is an                                                               
appropriation to  the Division of Community  and Regional Affairs                                                               
for  the  purpose of  funding  the  division's operations.    She                                                               
opined that  the purpose  of that appropriation  is not  to carry                                                               
out  a  community assistance  function.    She pointed  out  that                                                               
there's  not  a  federal  component for  any  existing  community                                                               
assistance program  or a formula  for distributing funds  in this                                                               
manner for  community assistance  programs.   The RPL,  she said,                                                               
doesn't  rely exclusively  on  the  community assistance  formula                                                               
provided  under  AS 29.68.50  -  29.68.879,  it also  includes  a                                                               
component of  other tax revenue  based on information  that DCCED                                                               
collects  for  municipalities.     All  that  information  helped                                                               
establish  a new  formula for  distribution  to communities,  she                                                               
said.                                                                                                                           
                                                                                                                                
11:38:34 AM                                                                                                                   
                                                                                                                                
CHAIR CLAMAN  returned attention to the  45-day requirement under                                                               
AS 37.07.080(h).   He  observed that  whether the  LB&A committee                                                               
does not  take action in  the 45-day  period or they  take action                                                               
and recommend that authority is  not granted to the governor, the                                                               
45-day period  allows the  legislature to  return from  recess or                                                               
call  themselves back  in to  specifically prohibit  the governor                                                               
from accessing the  funds.  He theorized that  if the "catch-all"                                                               
gives  the governor  access to  $100 million  the governor  could                                                               
spend  those funds  unless  the legislature  calls  a session  to                                                               
prevent  that.     In   contrast,  if   the  LB&A   approves  the                                                               
expenditure,  then the  governor could  spend the  funds earlier;                                                               
however, without LB&A concurrence  the governor must wait 45-days                                                               
during  which the  legislature could  prohibit the  governor from                                                               
spending the money from the "catch-all."                                                                                        
                                                                                                                                
MS.  WALLACE acknowledged  that the  45-day wait  period provides                                                               
the legislature  with an opportunity  to reconvene,  during which                                                               
time there are many policy decisions  that could be made, such as                                                               
explicitly  approving  the  recommendations  for  expenditure  as                                                               
proposed or formulating a new way to appropriate the funds.                                                                     
                                                                                                                                
11:40:51 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE KOPP  suggested looking  at the  original language                                                               
in the 1977 statute.  He asked  if that would be relevant to this                                                               
discussion.                                                                                                                     
                                                                                                                                
MS. WALLACE  said if  there were  a challenge  to the  process it                                                               
might  be relevant  for  understanding  the legislative  history.                                                               
She offered to follow-up with the requested information.                                                                        
                                                                                                                                
11:42:23 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KOPP  offered  his  belief  that  the  discussion                                                               
revolves  around the  fundamental issue  of getting  the urgently                                                               
needed funding out to the  impacted communities and industries in                                                               
the most  lawful manner possible.   He said his questions  are in                                                               
the  spirit of  helping  the legislature  and the  administration                                                               
come to  a consensus on the  best way forward in  the interest of                                                               
all Alaskans.                                                                                                                   
                                                                                                                                
11:44:36 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Judiciary Standing Committee meeting was adjourned at [11:44]                                                                   
a.m.