Legislature(2025 - 2026)GRUENBERG 120
02/03/2025 01:15 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Federal Grant and Loan Pause Impacts | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
February 3, 2025
1:16 p.m.
MEMBERS PRESENT
Representative Andrew Gray, Chair
Representative Chuck Kopp, Vice Chair
Representative Ted Eischeid
Representative Genevieve Mina
Representative Mia Costello
Representative Jubilee Underwood
MEMBERS ABSENT
Representative Sarah Vance
COMMITTEE CALENDAR
PRESENTATION(S): FEDERAL GRANT AND LOAN PAUSE IMPACTS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
LAURIE WOLF, Chief Executive Officer
The Foraker Group
POSITION STATEMENT: Gave a presentation on the impact of
Alaska's nonprofit Sector.
JASMINE BOYLE, Chief Development Officer
RurAL CAP
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony during the Federal
Grant and Loan Pause Impacts presentation.
VIVIAN KORTHUIS, Chief Executive Officer
Association of Village Council Presidents
Bethel, Alaska
POSITION STATEMENT: Gave invited testimony during the Federal
Grant and Loan Pause Impacts presentation.
JOCELYN FENTON, Director of Programs
Denali Commission
Anchorage, Alaska
POSITION STATEMENT: Gave a presentation on the impact of the
federal grant and loan pause on the Denali Commission.
DAVID TRAVER, Chief Union Steward
American Federation of Government Employees
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony during the Federal
Grant and Loan Pause Impacts presentation.
ACTION NARRATIVE
1:16:00 PM
CHAIR ANDREW GRAY called the House Judiciary Standing Committee
meeting to order at 1:16 p.m. Representatives * were present at
the call to order. Representatives * arrived as the meeting was
in progress.
^PRESENTATION(S): Federal Grant and Loan Pause Impacts
PRESENTATION(S): Federal Grant and Loan Pause Impacts
1:16:38 PM
CHAIR GRAY announced that the only order of business would be
the Federal Grant and Loan Pause Impacts presentation. He read
the following prepared remarks [original punctuation provided]:
The purpose of today's hearing is to gain a clearer
understanding of how federal funds are distributed in
Alaska, their role in employment and economic
activity, and the potential implications if those
funds were ever paused or reduced.
To provide context, on Monday evening, January 27,
Acting U.S. Office of Management and Budget (OMB)
Director Matthew Vaeth issued a memo authorizing a
temporary freeze on hundreds of billions of dollars in
federal loans and grants. By the following day,
January 28, organizations expecting federal funds
found themselves without access to the money they had
planned for. Later that evening, a judge issued an
injunction temporarily halting the freeze, and by the
next morning, Wednesday, January 29, the memo itself
had been rescinded.
In a statement, White House Press Secretary Karoline
Leavitt clarified that the memo was withdrawn to
address uncertainty caused by the court's ruling. She
also reaffirmed that the executive orders regarding
federal funding remain in effect and will continue to
be implemented.
Although funding has been restored for now, last
week's events underscored Alaska's significant
reliance on federal dollarsno state receives more
federal funding per capita than Alaska. This moment
also serves as an opportunity to examine just how
federal grants and loans are integrated into our
state's economy.
Several state agencies were invited to provide insight
into how federal funding supports their budgets.
However, they have requested additional time to ensure
their testimony reflects the latest guidance from the
federal administration, allowing them to provide a
more precise assessment of any potential impacts.
As a result, today's testimony will come from
organizations outside of state government. They will
share how much of their funding comes from federal
sources, how those funds are used, and what effects a
funding pause or reduction would have on their
operations and on Alaska's economy as a whole.
1:19:33 PM
LAURIE WOLF, Chief Executive Officer, presented a PowerPoint,
titled "Discover the economic impact of Alaska's nonprofit
Sector" hard copy included in the committee packet]. She said
the federal administration's array of executive orders have
caused widespread confusion and are having a significant impact
on Alaskans regardless of their voting record. She expressed
great concern over President Trump's attempt to stop all federal
funding tied to these executive orders. She described the
importance of state nonprofits and Tribes and the services they
provide to Alaska communities and underscored the economic
impact of cutting nonprofit jobs from the economy. In 2023,
$38.6 billion in federal assistance came to Alaska, of which
nonprofits received $1.21 billion. Last week, The Juneau Empire
reported that 33 percent of the state budget is federal funds.
She gave a snapshot of federal investments in Alaska from 2022-
2024, which provided access to village safe water; affordable
energy sources; and better health care, infrastructure, and
communication. Many of these projects are in mid-funding cycle,
and delays would only hinder an already stretched and stressed
workforce. In addition to U.S. Agency for International
Development (USAID) funding, funds from the Infrastructure
Investment and Jobs Act (IIJA) and the Inflation Reduction Act
(IRA) are frozen, and all projects are currently under review
with no clear timeline for release. She shared her
understanding that the U.S. Department of Agriculture (USDA)
portal for Alaska and all Substance Abuse and Mental Health
Services (SAMHSA) funds are currently unavailable. Impacts on
organizations and Alaskans include [original punctuation
provided]:
• Increased unemployment
• Negative impact and reduced access to the Tribal
health system
• Increased rates of substance misuse/abuse, suicide,
and domestic violence
• Decreased physical and mental health and well-being
of Alaskans, including
premature death
• A push of Alaskans to higher levels of care
(emergency rooms, institutions, jails)
• Reduced access to safe drinking water, nutritious
and traditional foods, education
• The increased risk that Alaska Native culture,
language, and traditions become
extinct
1:37:26 PM
MS. WOLF, in response to a series of committee questions, cited
two lawsuits that were filed in response to the federal funding
freeze: one led by the National Council of Nonprofits (NCN),
and another filed by 22 state attorney generals. With regard to
duplicated services, she said any consolidation would be an
enormous hurdle to overcome and cautioned against a timely and
expensive solution. As for reinstating the funds, she explained
that some funds are "under review" for release; however, there
is still confusion about process and no promise that the funds
will be released.
1:44:05 PM
JASMINE BOYLE, Chief Development Officer, RurAL CAP, gave
invited testimony during the Federal Grant and Loan Pause
Impacts presentation. She gave background on RurAL CAP and
explained how the organization has been affected by the federal
funding freeze. The immediate reaction, she said, is a cash
flow challenge. RurAL Cap's budget is $40 million on average
with over 60 percent in federal funding. Following the federal
announcements, state partners reported employee resignations and
no shows. She expressed concern about the pause on
infrastructure funding, which would set building back years on
end. In addition, without secure funding or solid timelines,
contractors may move on to other opportunities. The guidance
received through the legal process is that each federal
department will communicate whether its funds will be frozen.
Despite the pause having been officially lifted, she said
communication has been inconsistent. She shared RurAL CAP's
experience with the funding pause, explaining that all funds
were frozen overnight, including existing obligations that have
been in place for 60 years.
1:57:25 PM
VIVIAN KORTHUIS, Chief Executive Officer, Association of Village
Council Presidents (AVCP), gave invited testimony during the
Federal Grant and Loan Pause Impacts presentation. She
explained that the one-day funding freeze impacted AVCP in the
following ways: Firstly, the [U.S. Office of Management and
Budget (OMB)] memorandum created chaos and confusion. Secondly,
Tribal membership raised several concerns, including lack of
information, concerns over Tribal resilience grants, questions
about funding for senior or elder programs, and financial
portals shutting down. Tribes expressed concerned about
disruption of services, such as Tribal ID cards, and the
shutdown of the Burau of Indian Affairs (BIA) office in
Anchorage. In addition, Ms. Korthius pointed out that the memo
questioned the special status of Indian Country and Alaska
Native Tribes. She questioned how compacting and contracting
would be protected in Alaska. Lastly, she assured the committee
that AVCP and member Tribes are committed to staying the course
and would continue to provide services.
2:06:37 PM
MS. KORTHUIS, in response to committee questions, said AVCP and
the Alaska Federation of Natives (AFN) have been in direct
communication with U.S. Senator Murkowski's office.
2:08:44 PM
JOCELYN FENTON, Director of Programs, Denali Commission,
presented a PowerPoint, titled "Federal Grant and Loan Pause
Impacts" [included in the committee packet]. She stated that on
January 31, 2025, a federal court issued a temporary restraining
order directing federal grant making agencies not to pause,
freeze, impede, block, cancel, or terminate awards and
obligations, effectually barring the pause of IIJA and IRA
funding disbursements. She shared the Denali Commission's
background and mission, and highlighted place-based projects
utilizing IIJA funding: $50,630,352 in active and pending
projects, $35,663,580 in obligations; and $33,049,823 that
remains unspent. She discussed the following key takeaways from
the funding freeze [original punctuation provided]:
1. 2025 construction season
2. Continued Deterioration of critical infrastructure
3. Low cash flow organizations and operations on
reimbursable basis
4. Alaska Workforce impacts
5. Match funding for other grants (FEMA BRIC, etc)
6. Critical/emergency project impacts
7. Mitigation: encouraging normal operations resume,
balance shortfalls with SOA and philanthropic funding,
bridge loans to assist continuity of operations
2:21:11 PM
MS. FENTON, in response to a series of committee questions,
stated that specific conversations about filling shortfalls
with state and philanthropic dollars has not been had,
however, the Denali Commission should be able to move
forward with funding as it was appropriated. The Denali
Commission's base funding comes from [the state's] annual
appropriation, plus an additional one-time appropriation of
$75 million from the IIJA and transfers from other
agencies. She detailed the application of workforce
development programs and clarified that the commission does
not write grants to for-profit entities aside from Alaska
Native Claims Settlement Act (ANCSA) regional corporations.
2:31:45 PM
DAVID TRAVER, Chief Union Steward, American Federation of
Government Employees (AFGE), gave invited testimony during
the Federal Grant and Loan Pause Impacts presentation. He
reported that an executive order seeks to terminate at
least 5 to 10 percent of the federal workforce, starting
with probationary employees. In Alaska, there are 11,078
federal employees, of which 1,198 have less than one year
and are most likely on probationary status. If these
probationary employees are let go, total lost wages to the
state would amount to $88,898,788. In addition, there is a
solicitation from the Trump administration for voluntary
resignations. He emphasized that the impact would be
chilling.
MR. TRAVER, in response to committee questions, shared his
understanding that all of the 11,078 federal employees in
Alaska received voluntary resignation offers. He added
that of the probationary employees, 335 are veterans. He
said the loss of funds would be deep reaching, especially
for veterans in rural Alaska.
2:43:12 PM
MS. BOYLE added that RurAL CAP has been told to expect the
bureaucracy and administration of complex programs to slow
down, and to financially plan for the heightened interest
around resignations and new gaps in federal partner
organizations. She explained that the majority of state
and federal funds are reimbursements, so the money has
already been spent in a good faith business agreement. If
it can't be recouped, it would cause institutional problems
for every nonprofit.
MR. TRAVER, in response to a question about pathways
forward for veterans, explained that the federal government
is funded through March, and if the funding is
discontinued, resignations could be terminated sooner than
September.
MS. BOYLE reported that U.S. Senator Murkowski had three
different work sessions and a conversation with Tribal
organizations, impacted nonprofits, and state and local
government officials. Feedback is being compiled and a
comprehensive data set would be forthcoming.
2:54:37 PM
ADJOURNMENT
There being no further business before the committee, the
House Judiciary Standing Committee meeting was adjourned at
2:54 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Economic Report 2024 2-3-25 House Judiciary -final.pdf |
HJUD 2/3/2025 1:15:00 PM |
Federal Federal Grant and Loan Pause Federal Grant and Loan Pause Impacts The Foraker Group |
| Denali Commission FY25 Update.pdf |
HJUD 2/3/2025 1:15:00 PM |
Federal Zreeze impacts |