Legislature(2019 - 2020)Anch LIO Lg Conf Rm
11/06/2020 01:00 PM Senate LEGISLATIVE BUDGET & AUDIT
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| Audio | Topic |
|---|---|
| Start | |
| Approval of Minutes | |
| Executive Session | |
| Special Request Audit | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
Anchorage, Alaska
November 6, 2020
1:01 p.m.
MEMBERS PRESENT
Representative Chris Tuck, Chair
Senator Click Bishop, Vice Chair (via teleconference)
Representative Neal Foster (via teleconference)
Representative Andy Josephson
Representative Ivy Spohnholz
Senator Bert Stedman (via teleconference)
Senator Natasha von Imhof
Senator Cathy Giessel
Senator Lyman Hoffman
Representative Jennifer Johnston (alternate)
Senator Bill Wielechowski (alternate) (via teleconference)
MEMBERS ABSENT
Representative Mark Neuman
OTHER LEGISLATORS PRESENT
Senator Lora Reinbold
Senator David Wilson (via teleconference)
Representative DeLena Johnson (via teleconference)
COMMITTEE CALENDAR
APPROVAL OF MINUTES
EXECUTIVE SESSION
SPECIAL REQUEST AUDIT
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
No witnesses to record
ACTION NARRATIVE
1:01:28 PM
CHAIR CHRIS TUCK called the Legislative Budget and Audit
Committee meeting to order at 1:01 p.m. Representatives Tuck,
Josephson, Spohnholz, Foster (via teleconference), and Johnston
(alternate) and Senators Bishop (via teleconference) and Stedman
(via teleconference) were present at the call to order.
Senators von Imhof, Giessel, Hoffman, and Wielechowski
(alternate) (via teleconference) arrived as the meeting was in
progress.
^APPROVAL OF MINUTES
APPROVAL OF MINUTES
1:02:20 PM
CHAIR TUCK announced the first order of business would be the
approval of minutes.
1:02:27 PM
SENATOR BISHOP moved that the Legislative Budget and Audit
Committee approve the minutes of the 5/1/20, 5/11/20, 8/27/20,
and 9/16/20 meetings, as presented. There being no objection,
the minutes were approved.
^EXECUTIVE SESSION
EXECUTIVE SESSION
1:02:52 PM
CHAIR TUCK announced the next order of business would be an
executive session to address the following audits:
a. Final Audit Release
i. Board of Governors of the Alaska Bar
Association (Sunset)
ii. Special Education Service Agency (Sunset)
iii. Citizens' Advisory Commission on Federal
Areas (Sunset)
iv. Board of Public Accountancy (Sunset)
v. Criminal Justice Commission (Sunset)
vi. Regulatory Commission of Alaska FY 19 Annual
Report
vii. Department of Revenue Mustang Operations
Center 1 LLC Loan
b. Preliminary Audit Release
i. Board of Direct-Entry Midwives (Sunset)
ii. Medicaid and Children's Health Insurance
Program Eligibility (Special)
iii. Medicaid and Children's Health Insurance
Program Transportation Costs (Special)
1:03:37 PM
SENATOR BISHOP moved that the Legislative Budget and Audit
Committee go into executive session under Uniform Rule 22(b)(3),
discussion of matters that may, by law, be required to be
confidential. He asked that the following persons remain in the
room or on the phone lines: the legislative auditor and
necessary staff for the auditor; any legislators not on the
committee; and staff for legislators who are members of the
committee.
CHAIR TUCK stated that there being no objection, the committee
would take an at-ease for the purpose of the executive session.
1:04:18 PM
The committee took an at-ease from 1:04 p.m. to 3:50 p.m.
3:50:22 PM
CHAIR TUCK called the Legislative Budget and Audit Committee
meeting back to order. Present at the call back to order were
Representatives Tuck, Josephson, Spohnholz, Foster (via
teleconference), and Johnston (alternate) and Senators Bishop
(via teleconference), Hoffman, Giessel, von Imhof, Stedman (via
teleconference), and Wielechowski (alternate) (via
teleconference). Also present were Senators Reinbold and Wilson
(via teleconference) and Representative Johnson (via
teleconference).
3:51:18 PM
SENATOR BISHOP moved that the Legislative Budget and Audit
Committee release the following audits as final public reports:
• Alaska Court System, Board of Governors of the Alaska
Bar Association;
• Department of Education and Early Development and
Department of Health and Social Services, Special
Education Service Agency;
• Department of Natural Resources, Citizens' Advisory
Commission on Federal Areas;
• Department of Commerce, Community, and Economic
Development, Board of Accountancy;
• Governor's Office, Criminal Justice Commission;
• Department of Commerce, Community, and Economic
Development, Regulatory Commission of Alaska FY 19
Annual Report; and
• Department of Revenue, Mustang Operations Center 1 LLC
Loan Special Audit
There being no objection, it was so ordered.
3:52:49 PM
SENATOR BISHOP moved that the Legislative Budget and Audit
Committee release the following preliminary audits to the
agencies for response:
• Department of Commerce, Community and Economic
Development, Board of Direct-Entry Midwives;
• Department of Health and Social Services, Medicaid and
Children's Health Insurance Program Eligibility; and
• Department of Health and Social Services, Medicaid and
Children's Health Insurance Program Transportation
Costs.
There being no objection, it was so ordered.
^SPECIAL REQUEST AUDIT
SPECIAL REQUEST AUDIT
3:53:32 PM
CHAIR TUCK announced the final order of business would be a
special request audit.
3:53:51 PM
REPRESENTATIVE JOSEPHSON reviewed that the legislature had
officially "wrapped up" on March 28, 2020, having passed HB 205,
which was the operating budget. That legislation created, for
the Department of Law (DOL), a new structure for the Civil
Division by splitting it into two structures. The first
structure was the main structure and was funded at approximately
$48 million to pay the division attorneys and "to do the things
the Civil Division does." He said the caption for the structure
was: Civil Division, except contracts relating to
interpretation of Janus v. AFSCME [American Federation of State,
County and Municipal Employees]. The second structure, he said,
was funded at $20,000 for the purpose of legal contracts
relating to interpretation of the Janus v. AFSCME decision. He
explained that through structure - not intent language - the
legislature specified that the $20,000 could only be spent on
Janus-related contracts, while the $48 million could be spent on
everything else the division does.
3:56:00 PM
REPRESENTATIVE JOSEPHSON said he received a call on October 12
and was told that in a Ninth Circuit Court case [Belgau v.
Inslee], the administration had sought and received a contract
from Consovoy McCarthy PLLC to file a 19-page amicus brief, in
which Janus is mentioned over 40 times. He said that violates
the budget structure; therefore, it violates Title 37 and,
arguably, parts of the Constitution of the State of Alaska.
Representative Josephson said he wrote to Attorney General
Designee Ed Sniffen to inquire whether he was spending money
outside the $20,000 on Janus-related litigation. He explained
that he knew DOL was not spending from the $20,000, because
Governor Mike Dunleavy vetoed that item. He said the governor
offered no other objection related to the DOL appropriation;
there was no veto of the structure set up by the legislature
prohibiting spending on Janus-related contracts. Representative
Josephson said he did not hear from the attorney general, so he
followed up with a phone call, and on October 29, he was
informed that DOL "took a different view."
REPRESENTATIVE JOSEPHSON, regarding the viewpoint of DOL, said
under the constitution, the attorney general is an important arm
of the governor, who can "direct a pathway for any litigation he
or she wants." He indicated that the Office of the Attorney
General cited a case from 1975, which supports that, with
limitations. Another case cited was Alaska Legislative Council
v. Knowles. He opined that the Knowles decision largely harms
the department's position. He emphasized that the Knowles
decision concerns a veto of intent language. He said this is a
key point because Governor Dunleavy did not veto intent
language; he vetoed the $20,000. Representative Josephson said,
"You're really supposed to veto an item." He said an item is
typically a dollar figure, but Governor Dunleavy vetoed the
structure created by the legislature. Representative Josephson
said the House, in subcommittee, full Finance Committee, and on
the floor made the argument that [Janus litigation] was too
expensive at $600 an hour. He said, "The structure we created
does not prohibit him from advancing any Janus-related
litigation he wants to, but he ... must use our own assistant
attorneys general to do it." He opined that Governor Dunleavy
did not offer a timely objection to the core structure laid out
by the legislature; therefore, he should implement what the
legislature passed. He said the Knowles position had much more
prescriptive intent language. He reiterated the caption for the
structure the legislature created was: Civil Division, except
contracts relating to interpretation of Janus v. AFSCME.
4:03:21 PM
REPRESENTATIVE JOSEPHSON said the issue is that DOL concedes
that it is spending beyond the authority of the structure, but
is thus far spending only $6,000. He said at the time he wrote
the letter, he thought DOL was filing only in the Ninth Circuit
Court, but that was wrong. The department is advancing Janus-
related litigation with expensive contracts in Alaska Superior
Court and Alaska District Court. He said he was not told this
information, and said he had not asked. He continued:
I'm asking in this audit - I have a small amendment
that I'd like to request - that we authorize Ms.
Curtis and her team and find out: How much are they
spending on Janus-related contracts? Is it ... on
these expensive contracts? Where are they doing it?
Are they violating any other laws?
REPRESENTATIVE JOSEPHSON offered his view as to why the Knowles
decision does not help DOL. He said the legislature at the time
wanted money spent on private halfway houses, not on municipal
ones. The governor vetoed that as being beyond the confinement
clause. He read a portion of the court decision and explained
it allowed the legislature to be descriptive; it just cannot be
fully prescriptive.
4:07:22 PM
SENATOR VON IMHOF asked how many cases the State of Alaska is
involved in at any given time and "how many have we line-itemed
like this in the past?"
REPRESENTATIVE JOSEPHSON answered he could tell Senator von
Imhof the number of criminal cases. To the second part of the
question, he said, "This is not typical." He said the
administration wanted to cut the budget, and there was "a lot of
kerfuffle and consternation about these expensive contracts in
the media and amongst the public." He said he does not know how
many civil cases there are.
SENATOR VON IMHOF speculated there are probably "multiples of
tens" of civil cases. She said she does not know of any
instance where the legislature has pulled out one specific case
and created a budget for it. She questioned why Representative
Josephson had chosen this particular case.
REPRESENTATIVE JOSEPHSON answered that it was in the budget
currently. He continued that [the state] was given a discount
from $900 to $600 an hour to pay the Consovoy firm to advance a
theory of the Janus decision, which no other attorney general in
the country was advancing. He said the Janus decision is
closed, but he opined that the administration wanted to "throw a
stick of dynamite under it," even though it was written by a
conservative, Justice Samuel Alito, and was viewed as an anti-
union case. He said the legislature addressed the expense,
which is between $600,000 and $700,000. It reigned in the
budget structure, and the governor is ignoring that.
4:11:25 PM
CHAIR TUCK, in response to Representative von Imhof, asked that
questions be directed at the issue of legislative authority
rather than the Janus argument.
SENATOR VON IMHOF noted that Representative Josephson had
highlighted the $600,000 that the case was estimated to
ultimately cost, and she asked whether there was a framework for
comparison of other cases that have cost the state considerable
funds, especially cases that have been lengthy.
REPRESENTATIVE JOSEPHSON said there is some intent language that
infers that [the legislature] does not want [the state] to spend
money on contracts unless there is going to be a real return to
the treasury. He said the state sometimes spends a lot of money
to litigate oil and gas cases; however, $5 million spent in
attorney fees in such cases can yield a return of $200 million.
He said there could be no confusion about what the legislature
wanted in this capital budget, with the aforementioned
structure, which is in the law. He reiterated that a structure
cannot be vetoed, only a number can. He said what he is asking
is: "Do you mind that they're ignoring the structure we passed
and that they didn't veto?"
4:13:16 PM
SENATOR GIESSEL said in listening to Representative Josephson
make his point, she was reminded of "The Chevron case," in which
the [Alaska] Supreme Court decided that if the legislature
abdicates specificity, then it has abdicated it and given it to
the department. She said, "In this case, we didn't, it sounds
like - I didn't scrutinize the budget - but it sounds like you
didn't, and so, it seems to me that specificity is required to
be honored." She asked, "So, you get this information. What
are you going to with it? What's the end game?"
REPRESENTATIVE JOSEPHSON offered his understanding that
Representative Giessel was asking whether the legislature can do
what it did and whether it should "defend that principle." He
stated, "Our facts are much better than Knowles', and in Knowles
the legislature won a lot of the battles, because we're just not
that prescriptive. And in fact, we're telling the attorney
general, 'Use your own hundreds of lawyers to litigate whatever
you want, however you want to.' And I think that's an important
fact." Representative Josephson told Senator Giessel that
results would vary depending on the makeup of the Legislative
Council Committee and whoever is its current chair. He
continued:
I think this case - it's not a case yet - but I think
this set of facts is very important to the future of
the legislature - very. Now, is there a way to -
short of an injunction - to stop them from doing this?
No, no, there's not. ... They're going to do it. But
just as Knowles offers this guidance now, a future
case could offer future legislators guidance.
... I'm bothered because they failed to comply, in my
view. In some way - even though they couldn't quite
veto this - they failed ... to tell the world about
this. ... It was on the OMB site, ... and that's
something, but we're four months into the fiscal year,
and I learned about the fact that they're going to
ignore this? It seems inappropriate.
4:16:43 PM
CHAIR TUCK expressed support for the special audit request. He
said it comes down to whether the legislature has the authority
and what the legislature can do to enforce the laws it creates
"if the administration decides to do whatever it wants." He
said the administration has taken a lot of liberties over the
last few months. He opined that if the legislature sets up a
program with not only intent but legislative will, then it
should be carried out. He pointed out that Legislative Council
has the authority, through resolution, to pursue lawsuits on
behalf of the full legislature during session. The Legislative
Budget and Audit Committee has the authority to act on behalf of
the full legislature to move lawsuits, especially when not in
session.
4:18:24 PM
SENATOR BISHOP asked, "At the end of the day, you're just
requesting how much money has been spent, to date, on contracts
related to the issue of Janus, correct? That's all your
asking?"
REPRESENTATIVE JOSEPHSON answered that's correct. He added,
"We're also asking Ms. Curtis to find out whether she thinks
this is a violation of law." If so, she would contact Ms.
Wallace.
4:19:17 PM
SENATOR BISHOP moved that the Legislative Budget and Audit
Committee approve Representative Josephson's request for an
audit, as amended, of the Department of Law's spending on
contracts related to Janus. [The amendment was subsequently
treated separately.]
4:19:32 PM
CHAIR TUCK objected for the purpose of discussion.
4:19:58 PM
REPRESENTATIVE JOSEPHSON moved to amend the Special Audit
Request, as follows:
On page 2 of the memorandum, at the second bullet
point:
Following "Belgau v Inslee"
Insert ", or other filing in Alaska Superior
Court, Alaska Federal District Court or any other
court."
CHAIR TUCK objected to Amendment 1 for the purpose of
discussion.
4:20:32 PM
SENATOR VON IMHOF said she does not have the legal background
that Representative Josephson has and does not know what the
proposed amendment would do; therefore, she does not feel
comfortable voting. She said she has read Representative
Josephson's Special Audit Request and has heard his [explanation
of] it. She indicated that the acting attorney general, Mr.
Sniffen, had refuted Representative Josephson's stance. She
objected to the motion to adopt Amendment 1 to the Special Audit
Request.
4:22:02 PM
CHAIR TUCK clarified that the Special Audit Request is not to
dispute authority but rather to find out how much is being spent
and how much of that is being spent on Outside contracts.
4:22:47 PM
SENATOR VON IMHOF said the information in the committee packet
shows that the department anticipates expenses of less than
$6,000.
CHAIR TUCK replied, "Well, we don't know if that's true right
now."
4:23:00 PM
REPRESENTATIVE JOSEPHSON recounted his previous remark about
having asked only about the Ninth Circuit Court case, to which
Mr. Sniffen had responded accordingly, but that subsequently
Representative Josephson had discovered more was being spent in
the Alaska Supreme Court and the Alaska Federal District Court.
He said this Special Audit Request would ask Ms. Curtis to find
out what is being spent.
CHAIR TUCK removed his objection to, and expressed his support
of, the motion to adopt Amendment 1 to the Special Audit
Request.
SENATOR VON IMHOF [maintained her objection].
4:24:11 PM
The committee took a brief at-ease at 4:24 p.m.
4:24:34 PM
A roll call vote was taken. Representatives Josephson, Foster,
Spohnholz, and Tuck and Senators Giessel and Bishop voted in
favor of Amendment 1 to the Special Audit Request. Senator von
Imhof voted against it. Therefore, Amendment 1 was adopted by a
vote of 6-1.
4:25:58 PM
CHAIR TUCK removed his objection to the motion to approve the
Special Audit Request [as amended]. He asked if there was
further objection.
4:26:13 PM
SENATOR VON IMHOF objected.
4:26:20 PM
A roll call vote was taken. Representatives Josephson, Foster,
Spohnholz, and Tuck and Senators Giessel and Bishop voted in
favor of the motion to approve the Special Audit Request, as
amended. Senator von Imhof voted against it. Therefore, the
Special Audit Request, as amended, was approved by a vote of 6-
1.
4:27:44 PM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
[4:28] p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 20-11-06 LBA Agenda Amended.pdf |
JBUD 11/6/2020 1:00:00 PM |
|
| josephson special audit request janus.pdf |
JBUD 11/6/2020 1:00:00 PM |
|
| appendices for janus special audit request.pdf |
JBUD 11/6/2020 1:00:00 PM |