Legislature(2019 - 2020)Anch LIO Lg Conf Rm
05/06/2020 10:00 AM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Rpl Legal Framework & Treasury Interpretation of the Cares Act | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
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.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Topics and Questions for House Judiciary Committee Meeting on May 6, 2020 5.5.2020.pdf |
HJUD 5/6/2020 10:00:00 AM |
|
| Senator Murkowski et al Letter to Secretary Mnuchin re Coronavirus Relief Fund 4.7.2020.pdf |
HJUD 5/6/2020 10:00:00 AM |
|
| Senators Portman & Brown Letter to Secretary Mnuchin re CARES Act State and Local Funding 4.21.2020.pdf |
HJUD 5/6/2020 10:00:00 AM |
|
| Senators Reed & Schumer et al Letter to Secretary Mnuchin re Coronavirus Relief Fund Guidance 4.26.2020.pdf |
HJUD 5/6/2020 10:00:00 AM |
|
| Legislative Legal Memo re CARES Act RPLs 4.30.2020.pdf |
HJUD 5/6/2020 10:00:00 AM |
|
| Legislative Legal Memo re RPL Process 45-Day Wait Period 4.30.2020.pdf |
HJUD 5/6/2020 10:00:00 AM |
|
| Coronavirus Relief Fund Frequently Asked Questions 5.4.2020.pdf |
HJUD 5/6/2020 10:00:00 AM |