Legislature(2021 - 2022)SENATE FINANCE 532

04/27/2021 09:00 AM Senate FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 10 FREE/REDUCED TUITION FOR ESSENTIAL WORKER TELECONFERENCED
Moved CSSB 10(FIN) Out of Committee
+= SB 95 SEARCH AND RESCUE SURPLUS STATE PROPERTY TELECONFERENCED
Moved CSSB 95(STA) Out of Committee
+= SB 101 ADVISORY COMMISSION ON FEDERAL MGT AREAS TELECONFERENCED
Moved CSSB 101(FIN) Out of Committee
*+ SB 75 APPROPRIATION LIMIT TELECONFERENCED
Heard & Held
-- Invited & Public Testimony --
-- <Time Limit May Be Set> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  SENATE FINANCE COMMITTEE                                                                                      
                       April 27, 2021                                                                                           
                          9:23 a.m.                                                                                             
                                                                                                                                
                                                                                                                                
9:23:20 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Bishop called the Senate Finance Committee meeting                                                                     
to order at 9:23 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Click Bishop, Co-Chair                                                                                                  
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Natasha von Imhof                                                                                                       
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Erin Shine, Staff, Senator Click Bishop; Jasmine Martin,                                                                        
Staff, Senator David Wilson; IntiMayo Harbison, Staff,                                                                          
Senator von Imhof.                                                                                                              
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Thor Bue, Chief Procurement Officer, Department of                                                                              
Administration;   Charlie    Franz,   Self,    Homer;   Bert                                                                    
Houghtaling, Self, Big Lake.                                                                                                    
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 10     FREE/REDUCED TUITION FOR ESSENTIAL WORKER                                                                             
                                                                                                                                
          CSSB 10(FIN) was REPORTED out  of committee with a                                                                    
          "do pass"  recommendation and with two  new fiscal                                                                    
          impact notes from the  Department of Education and                                                                    
          Early Development.                                                                                                    
                                                                                                                                
SB 95     SEARCH AND RESCUE SURPLUS STATE PROPERTY                                                                              
                                                                                                                                
          CSSB 95(STA) was REPORTED out of committee with a                                                                     
          "do pass" recommendation and with one previously                                                                      
          published zero fiscal note: FN 1(ADM).                                                                                
                                                                                                                                
SB 101    ADVISORY COMMISSION ON FEDERAL MGT AREAS                                                                              
                                                                                                                                
          CSSB 101(FIN)  was REPORTED out of  committee with                                                                    
          a  "do  pass"  recommendation  and  with  one  new                                                                    
          fiscal impact note from  the Department of Natural                                                                    
          Resources.                                                                                                            
                                                                                                                                
SB 75     APPROPRIATION LIMIT                                                                                                   
                                                                                                                                
          SB 75 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
SENATE BILL NO. 101                                                                                                           
                                                                                                                                
     "An Act extending the termination date of the                                                                              
     Citizens'  Advisory  Commission on  Federal  Management                                                                    
     Areas in Alaska; and providing for an effective date."                                                                     
                                                                                                                                
9:24:23 AM                                                                                                                    
                                                                                                                                
Co-Chair Bishop discussed housekeeping.                                                                                         
                                                                                                                                
Senator Olson MOVED to ADOPT proposed committee substitute                                                                      
for SB 101, Work Draft 32-LS0620\B (Fisher, 4/24/21).                                                                           
                                                                                                                                
Co-Chair Bishop OBJECTED for discussion.                                                                                        
                                                                                                                                
9:25:06 AM                                                                                                                    
                                                                                                                                
ERIN SHINE, STAFF, SENATOR CLICK BISHOP, offered an                                                                             
Explanation of Changes for SB 101(copy on file):                                                                                
                                                                                                                                
     Updated Title                                                                                                            
     Page 1, lines 1-2                                                                                                          
     Adds "relating to the membership of the Citizens'                                                                          
     Advisory Commission on Federal Management Areas in                                                                         
     Alaska"                                                                                                                    
                                                                                                                                
     New Section                                                                                                              
     Section 1                                                                                                                
     Amends  AS 41.37.180  to require  that  at least  three                                                                    
     appointments  to the  Citizens' Advisory  Commission on                                                                    
     Federal   Management   Areas   by  the   governor   are                                                                    
     representatives from  corporations organized  under the                                                                    
     Alaska Native Claims Settlement Act.                                                                                       
                                                                                                                                
     New Section                                                                                                              
     Section 3                                                                                                                
     Page 2, lines 3-13                                                                                                         
     Provides  transition   language  to  comply   with  the                                                                    
     requirement of Section 1.                                                                                                  
                                                                                                                                
Co-Chair Bishop discussed a new  fiscal note from Department                                                                    
of Natural Resources,  OMB Component 2733. He  read from the                                                                    
analysis:                                                                                                                       
                                                                                                                                
      The   Citizens'   Advisory   Commission   on   Federal                                                                    
     Management  Areas in  Alaska  (CACFA)  was active  from                                                                    
     1981 until 1999, at which  time funding was eliminated.                                                                    
     In 2007,  AS 41.37  reestablished CACFA and  was active                                                                    
     from   FY2008   through   FY2017,  when   funding   was                                                                    
     eliminated. This bill will  extend the termination date                                                                    
     of the CACFA through June 30, 2029.                                                                                        
                                                                                                                                
9:26:57 AM                                                                                                                    
                                                                                                                                
Co-Chair  Bishop  WITHDREW  his OBJECTION.  There  being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Senator  Olson   MOVED  to  report  CSSB   101(FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
CSSB  101(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass"  recommendation and  with one  new fiscal  impact note                                                                    
from the Department of Natural Resources.                                                                                       
                                                                                                                                
SENATE BILL NO. 10                                                                                                            
                                                                                                                                
     "An  Act establishing  a grant  program  to provide  to                                                                    
     essential  workers the  tuition  and fees  to attend  a                                                                    
     state-supported        postsecondary        educational                                                                    
     institution."                                                                                                              
                                                                                                                                
9:27:37 AM                                                                                                                    
                                                                                                                                
Co-Chair Bishop discussed housekeeping.                                                                                         
                                                                                                                                
Senator  Wielechowski  MOVED  to  ADOPT  proposed  committee                                                                    
substitute  for  SB  10, Work  Draft  32-LS0127\N  (4/26/21,                                                                    
Klein).                                                                                                                         
                                                                                                                                
Co-Chair Bishop OBJECTED for discussion.                                                                                        
                                                                                                                                
Ms.  Shine  addressed  an Explanation  of  Changes  document                                                                    
(copy on file):                                                                                                                 
                                                                                                                                
     Section 1                                                                                                                
     Page 3, line 3                                                                                                             
     Reduces the amount available for appropriation each                                                                        
     fiscal year from $10,000,000 to $2,500,000.                                                                                
                                                                                                                                
     Section 3                                                                                                                
     Page 4, line 10                                                                                                            
     Changes repeal date for the Essential Worker Grant                                                                         
     Program established in Section 1 from                                                                                      
     December 31, 2025 to June 30, 2025.                                                                                        
                                                                                                                                
     Section 4                                                                                                                
     Page 4, line 11                                                                                                            
     Changes repeal date for the Essential Worker Grant                                                                         
     Program Report established in Section 2                                                                                    
     from December 31, 2026 to June 30, 2026.                                                                                   
                                                                                                                                
9:29:28 AM                                                                                                                    
                                                                                                                                
Co-Chair  Bishop  WITHDREW  his objection.  There  being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Senator Wielechowski  discussed a  new fiscal note  from the                                                                    
Department   of  Education   and   Early  Development,   OMB                                                                    
Component 3096.                                                                                                                 
                                                                                                                                
Senator  Wielechowski discussed  a  second  new fiscal  note                                                                    
from the Department of Education  and Early Development, OMB                                                                    
Component 2738.                                                                                                                 
                                                                                                                                
9:31:55 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski MOVED  to report  CSSB 10(FIN)  out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes.                                                                                                      
CSSB 10(FIN) was REPORTED out  of committee with a "do pass"                                                                    
recommendation  and with  two new  fiscal impact  notes from                                                                    
the Department of Education and Early Development.                                                                              
                                                                                                                                
SENATE BILL NO. 95                                                                                                            
                                                                                                                                
     "An Act  relating to  the right of  first refusal  of a                                                                    
     volunteer  search  and  rescue group  with  respect  to                                                                    
     surplus state property."                                                                                                   
                                                                                                                                
9:32:31 AM                                                                                                                    
                                                                                                                                
Co-Chair Bishop discussed housekeeping.                                                                                         
                                                                                                                                
9:33:06 AM                                                                                                                    
                                                                                                                                
Senator Wilson provided a Sponsor Statement (copy on file):                                                                     
                                                                                                                                
     This legislation  allows a volunteer search  and rescue                                                                    
     organization to exercise the right  of first refusal on                                                                    
     items related to search and  rescue before the property                                                                    
     is  sold, leased,  licenses, or  disposed of.  Right of                                                                    
     first  refusal  means  the  organization  can  buy  the                                                                    
     equipment at a fair market  value set by the department                                                                    
     of  administration. This  bill enables  these volunteer                                                                    
     search  and rescue  groups to  more  easily obtain  the                                                                    
     equipment  they   need  to  fulfill   their  lifesaving                                                                    
     mission.                                                                                                                   
                                                                                                                                
9:33:52 AM                                                                                                                    
                                                                                                                                
Senator Wielechowski expressed  concern that an unregistered                                                                    
organization  could obtain  the title  to an  asset, disband                                                                    
shortly  after,   and  leave   the  title   ownership  under                                                                    
question.                                                                                                                       
                                                                                                                                
9:34:33 AM                                                                                                                    
                                                                                                                                
JASMINE MARTIN, STAFF, SENATOR  DAVID WILSON, explained that                                                                    
the properties in question would  be titled to organizations                                                                    
themselves,  not   to  individuals.   She  added   that  the                                                                    
department would  have authority  to set regulation  as what                                                                    
happened  if  a  group  disbanded  soon  after  obtaining  a                                                                    
property. She detailed that the  asset would need to be used                                                                    
for search  and rescue missions  for at least  twelve months                                                                    
after purchase from the state.                                                                                                  
9:35:28 AM                                                                                                                    
                                                                                                                                
Senator Olson did not understand  who would retain the asset                                                                    
should the organization disband.                                                                                                
                                                                                                                                
THOR   BUE,  CHIEF   PROCUREMENT   OFFICER,  DEPARTMENT   OF                                                                    
ADMINISTRATION (via  teleconference), explained that  if the                                                                    
organization disbanded prior to  the twelve-month period the                                                                    
state would  have the  authority to  take the  property back                                                                    
and   allow  the   property  to   be   awarded  to   another                                                                    
organization.                                                                                                                   
                                                                                                                                
Senator Olson understood that the  item would be repossessed                                                                    
by the state.                                                                                                                   
                                                                                                                                
Co-Chair Bishop thought that was the protocol.                                                                                  
                                                                                                                                
Co-Chair  Bishop  discussed  FN  1 from  the  Department  of                                                                    
Administration, OMB component 3291.                                                                                             
                                                                                                                                
Senator  Wilson   MOVED  to  report  CSSB   95(STA)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
CSSB 95(STA) was REPORTED out  of committee with a "do pass"                                                                    
recommendation  and  with   one  previously  published  zero                                                                    
fiscal note: FN 1(ADM).                                                                                                         
                                                                                                                                
9:37:51 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:39:22 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
SENATE BILL NO. 75                                                                                                            
                                                                                                                                
     "An  Act  relating to  the  duties  of the  legislative                                                                    
     finance division;  relating to an  appropriation limit;                                                                    
     relating   to  the   budget  responsibilities   of  the                                                                    
     governor; and providing for an effective date."                                                                            
                                                                                                                                
Co-Chair Bishop relayed  that this was the  first hearing of                                                                    
the legislation.                                                                                                                
                                                                                                                                
9:39:44 AM                                                                                                                    
                                                                                                                                
Senator  von   Imhof,  Sponsor,  discussed   a  presentation                                                                    
entitled  "SB 75"  (copy  on file).  She  believed that  the                                                                    
state  should have  a  spending cap.  She  thought that  the                                                                    
current  constitutional spending  cap did  not work  that it                                                                    
was imperative  that a steady and  predictable spending plan                                                                    
be established.  She asserted that  the cap would  allow the                                                                    
state  to spend  new  revenue on  annual operating  expenses                                                                    
based on what was allowable  inside of the cap, while saving                                                                    
excess  funds for  disasters, emergencies,  and low  revenue                                                                    
years.                                                                                                                          
                                                                                                                                
9:40:48 AM                                                                                                                    
                                                                                                                                
Senator von Imhof looked at slide 2, Why a spending cap?:                                                                       
                                                                                                                                
   1. Restrain the growth of the state budget over time.                                                                        
     2. Save during the good times so we have a savings                                                                         
     account to draw from in the tough times.                                                                                   
                                                                                                                                
    ?Spending Cap aka: TEL (Tax and Expenditure Limit)                                                                          
                                                                                                                                
She shared that  if the state had an  effectual spending cap                                                                    
in place more would have been  saved during the time of high                                                                    
revenues in  the mid-2000s, and  less would have  been spent                                                                    
out of the  CBR in low revenue years (mid  to late 2000s) to                                                                    
the tune of approximately $15 billion.                                                                                          
                                                                                                                                
9:41:48 AM                                                                                                                    
                                                                                                                                
Senator von Imhof spoke to slide  3, " What are other states                                                                    
doing?"  She related  that in  2020, 25  states had  imposed                                                                    
limits  on  their government  spending.  States  that had  a                                                                    
spending  limit  were  represented  in dark  orange  on  the                                                                    
slide; states  with revenue limit  were yellow;  states with                                                                    
both  were  blue.  She  said  that  some  states  had  their                                                                    
spending caps  in their constitutions  and some  in statute.                                                                    
She  said  that the  state  currently  had a  constitutional                                                                    
spending cap with  too high of a growth rate.  She felt that                                                                    
there was a  revenue limit in place with the  annual POMV on                                                                    
the Permanent Fund.                                                                                                             
                                                                                                                                
9:42:48 AM                                                                                                                    
                                                                                                                                
Senator  von  Imhof  referenced   slide  4,  "Four  Decision                                                                    
Points:                                                                                                                         
     1. Growth rate                                                                                                             
     2. Starting point                                                                                                          
     3. What is included under the cap                                                                                          
     4. What is excluded outside the cap                                                                                        
                                                                                                                                
Senator  von  Imhof   said  that  the  goal   today  was  to                                                                    
understand  the pro  and cons  for each  decision point,  as                                                                    
well as  the pros and  cons of  the spending cap  in statute                                                                    
versus the constitution.                                                                                                        
                                                                                                                                
9:43:21 AM                                                                                                                    
                                                                                                                                
Senator von Imhof turned to slide 5, "Growth Rate:":                                                                            
                                                                                                                                
     ?Usually a function of annual income and/or sales tax                                                                      
     collected                                                                                                                  
     ?And/Or change in annual population                                                                                        
     ?And/Or inflation growth                                                                                                   
                                                                                                                                
     SB 75: 75% of CPI (inflation) + 25% of population                                                                          
                                                                                                                                
Senator von Imhof  explained that most states  had some form                                                                    
of personal taxes a part of  the spending cap or the revenue                                                                    
cap  growth  rate,  an  income  tax, or  a  sales  tax.  She                                                                    
asserted that the personal taxes  were a true measurement of                                                                    
economic activity in the state.  She stated that an increase                                                                    
in  economic  activity  would  be  reflected  in  the  taxes                                                                    
collected, which  meant that  state budgets  would fluctuate                                                                    
to  meet the  demand. She  noted  that Alaska  did not  have                                                                    
personal taxes,  so it used  inflation, which  was reflected                                                                    
as  the CPI  for urban  Alaska and  population. She  related                                                                    
that the  state used  100 percent  growth of  population and                                                                    
inflation,  which  was too  high.  She  shared that  in  her                                                                    
modeling  she had  found that  75 percent  of the  change of                                                                    
annual inflation,  plus 25 change  of population,  seemed to                                                                    
be a comfortable equation.                                                                                                      
                                                                                                                                
9:45:07 AM                                                                                                                    
                                                                                                                                
Senator von Imhof  considered slide 6, which  showed a graph                                                                    
entitled  "Population vs  CPI."  The red  line showed  total                                                                    
growth of CPI  since 1980, which present day  denoted by the                                                                    
vertical  grey  dotted  line.   The  blue  bars  represented                                                                    
population.  She noted  that  both measures  had  been on  a                                                                    
steady  upward  trajectory,  until  recently  when  CPI  and                                                                    
population decreased.                                                                                                           
                                                                                                                                
9:45:45 AM                                                                                                                    
                                                                                                                                
Senator  von Imhof  displayed slide  7, "Historical  Revenue                                                                    
and Spending," which showed a  line graph entitled 'Expenses                                                                    
vs Revenue (Current Cap).' She  said that the slide began in                                                                    
1980,  roughly when  the current  spending cap  started, and                                                                    
oil became  a major  contributor to  state revenue.  The red                                                                    
line  was all  UGF  spending, including  the Permanent  Fund                                                                    
Dividend  (PFD),  the  green   line  was  all  UGF  revenue,                                                                    
including the money allocated to  pay the PFD. She said that                                                                    
the  black line  on  top represented  the  current cap.  She                                                                    
stated that  according to the  rate the UGF  spending should                                                                    
be approximately $10  billion in 2021. She  asserted the cap                                                                    
was  too steep  and the  rate too  high, combining  both 100                                                                    
percent of the CPI growth and population.                                                                                       
                                                                                                                                
Senator von  Imhof said that  between 1980 and  2005 revenue                                                                    
and spending  had not  fluctuated much.  She pointed  to the                                                                    
change in 2005 when  revenue and spending experience extreme                                                                    
highs and lows. She lamented  that during the fluctuating 13                                                                    
years the  state spend  $13 billion from  the CBR  to offset                                                                    
budget deficits.  She pointed to  2019 when the  POMV passed                                                                    
the legislature. She asserted that  more could have been put                                                                    
in the CBR during those volatile  years if there had been an                                                                    
effective spending cap.                                                                                                         
                                                                                                                                
9:48:07 AM                                                                                                                    
                                                                                                                                
Senator  von Imhof  highlighted  slide 8,  "What  If: SB  75                                                                    
Started @  $2.58 in FY83  - What If: Current  Spending, With                                                                    
SB  75  Model  Looking  back," which  showed  a  line  graph                                                                    
depicted  on the  previous  slide, with  the  addition of  a                                                                    
hypothetical model  showing a hypothetical growth  rate. The                                                                    
yellow  dotted  line  considered today's  spending  doing  a                                                                    
lookback of  the SB 75  growth rate calculation.  She stated                                                                    
that  at this  rate spending  grew at  $3 billion  per year,                                                                    
rather than  the $billion swings  experienced in  the recent                                                                    
decade.                                                                                                                         
                                                                                                                                
9:49:27 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  pondered the spike in  spending between FY                                                                    
05  and the  present. He  considered the  spike in  spending                                                                    
between  FY06  and FY10,  which  he  attributed to  deferred                                                                    
maintenance spending in the Capital  Budget. He reminded the                                                                    
committee that at that time there had been a significant                                                                        
deferred maintenance  backlog. He thought the  same deferred                                                                    
maintenance  backlog  problem  was applicable  currently  as                                                                    
there had been small Capital  Budgets the past few years. He                                                                    
thought    actual    expenditures   were    suppressed    by                                                                    
underspending   on  maintenance.   He   recalled  that   the                                                                    
increases  in  the  Operating Budget  were  recommended  and                                                                    
pushed through by the agencies  themselves and the governors                                                                    
at the time  had pulled agency budgets back.  He stated that                                                                    
the  legislative body  had struggled  to fill  holes in  the                                                                    
Operating  Budget  while   supporting  the  administrations                                                                     
desire to  hold back agency  growth. He thought it  would be                                                                    
helpful  to  take a  more  detailed  view of  agencies  when                                                                    
discussing the  bill. He asserted  that the growth  rates in                                                                    
agencies  came  for m  the  agencies  themselves, which  the                                                                    
legislature struggled with year after year.                                                                                     
                                                                                                                                
9:52:43 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  addressed  the  POMV draw,  which  had  a                                                                    
revenue  cap; the  state could  not  spend what  it did  not                                                                    
have.                                                                                                                           
                                                                                                                                
9:53:04 AM                                                                                                                    
                                                                                                                                
Co-Chair  Bishop  added  that   the  legislature  needed  to                                                                    
consider  the good  public policy  regarding  the 1  percent                                                                    
replacement rule  on deferred  maintenance to  eliminate the                                                                    
spike in spending.                                                                                                              
                                                                                                                                
9:53:47 AM                                                                                                                    
                                                                                                                                
Senator Wielechowski  referenced the red line  on the slide,                                                                    
and assumed it included the PFD.                                                                                                
                                                                                                                                
Senator von Imhof answered in the affirmative.                                                                                  
                                                                                                                                
Senator  Wielechowski asked  whether the  $1200 supplemental                                                                    
dividend of 2008 was represented in the line.                                                                                   
                                                                                                                                
Senator von Imhof answered in the affirmative.                                                                                  
                                                                                                                                
Senator  von  Imhof  commented  that  it  was  important  to                                                                    
remember that  Alaska was  unique in  that prior  to passing                                                                    
the POMV draw, the state's  primary income was from oil. She                                                                    
noted that oil was volatile.  She referenced a document from                                                                    
the  Palin Administration  that indicated  between 1993  and                                                                    
2005, the  legislature appropriated  over $4.8  billion from                                                                    
the  CBR. Cash  was borrowed  from  the CBR  in 1994,  1995,                                                                    
1996,  1998,  1999, 2000,  2002,  2003,  2004, and  2005  to                                                                    
balance  revenue and  expenditures.  She  asserted that  the                                                                    
state had a history of  funding annual budgets from the CBR.                                                                    
She  thought the  CBR  was currently  under  $1 billion  and                                                                    
would not be available to supplement future budgets.                                                                            
                                                                                                                                
9:55:49 AM                                                                                                                    
                                                                                                                                
Senator  Hoffman thought  that  the CBR  had been  protected                                                                    
because it required 40 out of  60 votes to access, which had                                                                    
once  been a  high  bar  to meet.  He  thought  there was  a                                                                    
potential to ignore  SB 26 when it came  to deficits because                                                                    
statutes were not  always followed. He noted  that there had                                                                    
been $17  billion in  the CBR,  and with  use of  the three-                                                                    
quarter vote it had been drained overtime.                                                                                      
                                                                                                                                
9:58:51 AM                                                                                                                    
                                                                                                                                
Senator  von Imhof  looked  at slide  9,  "Proposed SB  75,"                                                                    
which  showed a  line graph.  She explained  that the  black                                                                    
line showed the current spending  cap; the red line depicted                                                                    
the governor's proposed expenditures,  including all UGF and                                                                    
the  proposed  50/50 PFD  spending;  the  green line  showed                                                                    
anticipated  revenue,   including  the  POMV   transfer  and                                                                    
anticipated mineral  revenue; the  green dotted  line showed                                                                    
the governors  line item of  undefined revenue; the blue and                                                                    
yellow  lines was  the  SB  75 growth  rate  starting at  $6                                                                    
billion.  The  blue  was  the LFD  numbers  and  the  yellow                                                                    
Senator  von Imhofs   numbers    she  assured the  committee                                                                    
that  her office  had worked  to mirror  the LFD  numbers in                                                                    
their model.                                                                                                                    
                                                                                                                                
10:00:29 AM                                                                                                                   
                                                                                                                                
Senator  von Imhof  addressed slide  10,  "Comparison SB  75                                                                    
Start in FY83 @$2.5B to SB  75 Start," which removed the CBR                                                                    
from the model so the discrepancy could be identified.                                                                          
                                                                                                                                
10:00:47 AM                                                                                                                   
                                                                                                                                
INTIMAYO HARBISON,  STAFF, SENATOR  VON IMHOF,  relayed that                                                                    
the SB  75 limit,  starting at  $2.5 billion  in FY  83, had                                                                    
been added  back for comparison  between the proposed  SB 75                                                                    
model and current spending.                                                                                                     
                                                                                                                                
Senator  von Imhof  noted that  there was  currently a  $1.2                                                                    
billion shortage in undefined revenue.                                                                                          
10:01:38 AM                                                                                                                   
                                                                                                                                
Senator Hoffman  asked about the proposed  funding level for                                                                    
the PFD.                                                                                                                        
                                                                                                                                
Senator von  Imhof replied that the  governors  proposed PFD                                                                    
for  FY 22  was the  full statutory  dividend, and  then the                                                                    
50/50 POMV split from FY 23 and into the future.                                                                                
                                                                                                                                
10:02:12 AM                                                                                                                   
                                                                                                                                
Senator von Imhof  advanced to slide 11, "  Starting Point =                                                                    
$6.0 billion  (UGF)," which showed  a table of UGF  and POMV                                                                    
revenues. The  slide showed revenues, which  were well below                                                                    
the $6 billion mark.                                                                                                            
                                                                                                                                
10:03:21 AM                                                                                                                   
                                                                                                                                
Senator  von Imhof  looked at  slide 12,  "As a  comparison:                                                                    
Expenses," which showed  a data table of  spending from FY19                                                                    
through FY26. She  noted that the spending cap  bill did not                                                                    
include   debt      retirement  debt,   school  bond   debt,                                                                    
reimbursement,   or  general   obligation  bond   debt,  all                                                                    
indicated  in the  red numbers  on the  slide. The  bill did                                                                    
include the spending  for the PFD, with  the governors  POMV                                                                    
50/50  split starting  in FY23.  She noted  that the  bright                                                                    
orange line  reflected that the  numbers were below  the cap                                                                    
for this scenario.                                                                                                              
                                                                                                                                
10:04:14 AM                                                                                                                   
                                                                                                                                
Senator von Imhof showed slide  13, "What is included versus                                                                    
excluded":                                                                                                                      
                                                                                                                                
     Included                                                                                                                 
     Anything with UGF                                                                                                          
     ? Agency Spending                                                                                                          
     ? Retirement                                                                                                               
     ? Capital *                                                                                                                
     ? Permanent Fund Dividend                                                                                                  
                                                                                                                                
     Excluded                                                                                                                 
     ? Permanent Fund Principal (Corpus)                                                                                        
     ? Debt payments                                                                                                            
     ? Disaster Funding                                                                                                         
     ? Deposit into Savings                                                                                                     
     ? Federal Funds and Designated Funds                                                                                       
                                                                                                                                
     * There is a provision in section 4(c) that limits                                                                         
     additional capital to 5% of total cap in the event we                                                                      
     have excess revenue.                                                                                                       
                                                                                                                                
Senator von  Imhof relayed that  the provision in  Section 4                                                                    
allowed  the   legislature  to  appropriate   an  additional                                                                    
capital  amount in  excess of  the appropriation  limit, not                                                                    
exceeding  5 percent  of the  total appropriation  limit for                                                                    
the year. She explained that  this was to avoid flooding the                                                                    
industry  with too  much capital  dollars in  one year.  She                                                                    
said that  Alaskas  finite amount of  construction companies                                                                    
and construction  workers, coupled  with the  short building                                                                    
season, limited  the states  capacity  to absorb funds  in a                                                                    
given year.                                                                                                                     
                                                                                                                                
10:05:54 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman  considered the states   unfunded liability                                                                    
for  PERS  and  TRS.  He  thought  that,  under  the  SB  75                                                                    
scenario,   the  state   would   need   to  decrease   other                                                                    
operational  costs  in  order  to  meet  the  PERS  and  TRS                                                                    
payments. He assumed any disaster  funding would be broad in                                                                    
scope and would include federal dollars.                                                                                        
                                                                                                                                
Co-Chair Stedman  discussed the  concept of  overheating the                                                                    
economy  and too  many  capital dollars.  He  felt that  the                                                                    
large Capital  Budgets in the  past had helped to  build the                                                                    
state labor pool, which had  been drained as Capital Budgets                                                                    
were cut.                                                                                                                       
                                                                                                                                
Co-Chair Stedman  brought up debt payments,  and asked about                                                                    
the  reason for  excluding  debt service  from the  proposed                                                                    
spending cap.                                                                                                                   
                                                                                                                                
10:08:57 AM                                                                                                                   
                                                                                                                                
Senator  von  Imhof  affirmed  that  debt  service  was  not                                                                    
included  in the  current constitutional  spending cap,  and                                                                    
the bill was consistent with that.  She said she was open to                                                                    
including debt in the cap.                                                                                                      
                                                                                                                                
10:09:55 AM                                                                                                                   
                                                                                                                                
Senator Wilson  asked whether the  spending cap  would limit                                                                    
the   states   ability   to   take   advantage  of   federal                                                                    
infrastructure dollars.                                                                                                         
Senator von Imhof responded that  a future slide would speak                                                                    
to the question.                                                                                                                
                                                                                                                                
10:10:25 AM                                                                                                                   
                                                                                                                                
Senator  Hoffman   discussed  including   the  PFD   in  the                                                                    
calculation. He  said that currently  the PFD  was excluded,                                                                    
which  was constitutionally  established.  He reminded  that                                                                    
there was  a constitutional 120-day legislative  session and                                                                    
a statutory  90-day session.  He thought  the body  had only                                                                    
once achieved  the 90-day statutory legislative  session but                                                                    
had  always honored  the constitutional  120 days.  He asked                                                                    
whether the  inclusion of the PFD  appropriation limit would                                                                    
allow for future legislators to ignore statute.                                                                                 
                                                                                                                                
10:12:32 AM                                                                                                                   
                                                                                                                                
Senator von  Imhof went  back to slide  9 and  discussed the                                                                    
constitution  versus  statute.  She pointed  out  the  green                                                                    
line, which showed  UGF revenue including oil  taxes and the                                                                    
POMV draw.  She said that taxes  would need to be  raised to                                                                    
balance  the  budget.  She thought  there  were  factors  to                                                                    
Senator Hoffman's point; if the  state wanted to issue a PFD                                                                    
at  the   statutory  amount  then   new  revenue   would  be                                                                    
necessary.                                                                                                                      
                                                                                                                                
10:13:54 AM                                                                                                                   
                                                                                                                                
Senator von  Imhof referenced  slide 14,  "Additional Issues                                                                    
to consider:":                                                                                                                  
                                                                                                                                
     1. Constitution versus statute                                                                                             
     2. Can the legislature over-ride                                                                                           
     3. What happens if we have excess revenue                                                                                  
     4. Legislative Finance report requirements                                                                                 
     5. Governor budget provision                                                                                               
                                                                                                                                
Senator von  Imhof reiterated  that the  growth rate  of the                                                                    
current  constitutional  spending  cap  was  too  high,  and                                                                    
combined  inflation  and  population.  She  noted  imperfect                                                                    
factors   going  into   the   growth  rate   and  that   the                                                                    
constitutional  rate  did  not  work. She  asserted  that  a                                                                    
statutory  spending   cap  had   no  teeth    and  that  any                                                                    
legislature could  override a statute. She  contended that a                                                                    
spending  cap in  the constitution  would make  overspending                                                                    
more difficult. She  thought that her cap  should be written                                                                    
into statute as a test run  over the next several years. She                                                                    
said that LFD  would analyze the limit and  prepare a report                                                                    
every  three years  starting  in January  2024  so that  the                                                                    
legislature could  review the  effectiveness of  the statute                                                                    
on  a  periodic basis.  She  added  that when  the  governor                                                                    
submitted his budget  in December it would  include a report                                                                    
stating  that the  budget was  under the  statutory spending                                                                    
cap.                                                                                                                            
                                                                                                                                
10:17:01 AM                                                                                                                   
                                                                                                                                
Co-Chair Bishop commented on item  3 on the slide. He agreed                                                                    
with  the  concept  but highlighted  that  the  constitution                                                                    
stated that  the CBR must  be paid back  at the end  of each                                                                    
year using  excess revenue. He  asserted that it  would take                                                                    
120 years,  at $100 million per  year, to pay back  what had                                                                    
already been borrowed from the CBR.                                                                                             
                                                                                                                                
10:17:46 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman referenced  numerous discussions  over the                                                                    
years regarding a spending cap.  He thought many members had                                                                    
faced the same issue at  the municipal level. He thought the                                                                    
best way  to control  spending was  to constrain  cash flow,                                                                    
and not  spending what  was not  there    not to  borrow for                                                                    
operational costs. He noted that  POMV was the states  major                                                                    
source of  revenue and he  suggested a lower  spending rate.                                                                    
He  stressed that  to successfully  implement cost  controls                                                                    
across  the   state  cashflow   should  be   restricted.  He                                                                    
supported   putting  a   lower   spending   rate  into   the                                                                    
constitution.  He spoke  to  the  structural deficit  issue,                                                                    
which required revenue  enhancements or spending reductions.                                                                    
He believed  that legislatures  would likely  ignore statute                                                                    
when it suited them.                                                                                                            
                                                                                                                                
10:20:57 AM                                                                                                                   
                                                                                                                                
Senator  Olson referred  to  Slide 13.  He  asked about  the                                                                    
25/75 split.                                                                                                                    
                                                                                                                                
Senator von  Imhof clarified  that the  25/75 split  was the                                                                    
growth rate for the  proposed legislation reflected on slide                                                                    
5.  She  said  that  there  was nothing  in  the  bill  that                                                                    
addressed excess revenue.                                                                                                       
                                                                                                                                
10:22:11 AM                                                                                                                   
                                                                                                                                
Mr. Harbison addressed a Sectional Analsyis (copy on file):                                                                     
     Sec.  1:  Amends  AS 24.20.231  to  add  analyzing  and                                                                    
     preparing a report on  the appropriation limit, enacted                                                                    
     by this bill, to the  duties of the Legislative Finance                                                                    
     Division.                                                                                                                  
                                                                                                                                
     Sec.  2:  Enacts  AS   24.20.236,  which  requires  the                                                                    
     Legislative Finance Division to  deliver a report about                                                                    
     its  analysis of  the appropriation  limit, enacted  by                                                                    
     this bill,  and the allowed  growth rate to  the chairs                                                                    
     of the finance committees every three years.                                                                               
                                                                                                                                
     Sec. 3:  Amends AS 37.05.540  to remove a  reference to                                                                    
     the   current  statutory   spending  limit,   which  is                                                                    
     repealed in this bill.                                                                                                     
                                                                                                                                
     Sec.  4:   Enacts  AS  37.05.545,  which   is  the  new                                                                    
     Appropriation Limit.                                                                                                       
     (a) Establishes the parameters of the limit:                                                                               
     .notdef Includes all Unrestricted General   Fund  (UGF)                                                                    
     appropriations  for  agency  spending,  Permanent  Fund                                                                    
     dividends,   retirement    obligations,   and   capital                                                                    
     projects.                                                                                                                  
     Does  not  include   reappropriations,  federal  funds,                                                                    
     Designated General Fund                                                                                                    
     (DGF) spending,  program receipts, money  received from                                                                    
     non-state  sources   for  specific  purposes,   or  the                                                                    
     exclusions listed in (b).                                                                                                  
     .notdef Starting point is $6 billion for FY 2022, with a                                                                   
     growth rate  based on 75%  of the cumulative  change in                                                                    
     inflation  and 25%  of the  cumulative change  in state                                                                    
     population. Defines how the  growth rate is calculated.                                                                    
     (b) Lists the exclusions to the appropriation limit:                                                                       
     (1)  Appropriations  to  the Permanent  Fund  principal                                                                    
     (corpus);                                                                                                                  
     (2) Debt payments;                                                                                                         
     (3) Disaster funding; and                                                                                                  
     (4) Deposits  into savings accounts and  transfers into                                                                    
     accounts that require  additional legislative action to                                                                    
     spend.                                                                                                                     
     (c) Allows  an additional five percent  above the limit                                                                    
     to be spent on capital projects.                                                                                           
     (d)  Defines  the  terms  "debt  obligation,   "program                                                                    
     receipts",  and  "unrestricted  general fund"  for  the                                                                    
     purposes of this section.                                                                                                  
                                                                                                                                
     Sec.  5:  Enacts  AS 37.07.020(f)  which  requires  the                                                                    
     governor  to submit,  along with  the annual  budget, a                                                                    
     report  noting  whether  the  proposal  is  within  the                                                                    
     spending limit.  The report must be  updated to include                                                                    
     any supplemental appropriations and budget amendments.                                                                     
                                                                                                                                
     Sec.  6: Repeals  the  current statutory  appropriation                                                                    
     limit in  AS 37.05.540(b);  a section made  obsolete by                                                                    
     that repeal  in AS 37.05.540(c), and  outdated language                                                                    
     related  to   the  statutory   budget  reserve   in  AS                                                                    
     37.04.540(e).                                                                                                              
                                                                                                                                
     Secs 7  - 10: Applicability, transition,  and effective                                                                    
     date   language    that   specifies   when    the   new                                                                    
     appropriation  limit and  reporting requirements  would                                                                    
     take  effect.  The  limit would  apply  to  the  FY2022                                                                    
     budget,  the governor  would be  required  to file  the                                                                    
     necessary reports for the  proposed budgets starting in                                                                    
     December  2021, and  Legislative Finance  would prepare                                                                    
     the first analysis report in 2024.                                                                                         
                                                                                                                                
10:25:51 AM                                                                                                                   
                                                                                                                                
Co-Chair Bishop OPENED public testimony.                                                                                        
                                                                                                                                
10:25:59 AM                                                                                                                   
                                                                                                                                
CHARLIE FRANZ,  SELF, HOMER (via  teleconference), testified                                                                    
in opposition  to the bill.  He supported the intent  of the                                                                    
legislation but  thought that the  bill was  ineffectual. He                                                                    
believed  that  appropriation  limits  should  be  based  on                                                                    
projected revenue rather than past spending.                                                                                    
                                                                                                                                
10:27:18 AM                                                                                                                   
                                                                                                                                
BERT  HOUGHTALING,  SELF,  BIG  LAKE  (via  teleconference),                                                                    
spoke in  opposition to  the bill. He  thought the  bill was                                                                    
another way to  solidify the theft of the PFD  by putting it                                                                    
under the  spending cap. He expressed  concern for increased                                                                    
Capital Budgets and decreased PFDs.                                                                                             
                                                                                                                                
10:29:11 AM                                                                                                                   
                                                                                                                                
Co-Chair  Bishop  CLOSED   public  testimony.  He  discussed                                                                    
housekeeping.                                                                                                                   
                                                                                                                                
SB  75  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
10:29:37 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:29 a.m.                                                                                         
                                                                                                                                

Document Name Date/Time Subjects
SB 75 Sectional Analysis v.B 03.09.2021.pdf SFIN 4/27/2021 9:00:00 AM
SB 75
SB 75 Sponsor Statement v.B 03.09.2021.pdf SFIN 4/27/2021 9:00:00 AM
SB 75
SB 10 Explanation of Changes ver W to N 4.26.2021.pdf SFIN 4/27/2021 9:00:00 AM
SB 10
SB 10 Work Draft ver. N 4.26.2021.pdf SFIN 4/27/2021 9:00:00 AM
SB 10
SB 101 Explanation of Changes ver A to B 4.24.2021.pdf SFIN 4/27/2021 9:00:00 AM
SB 101
SB 101 Work Draft ver. B 4.24.2021.pdf SFIN 4/27/2021 9:00:00 AM
SB 101
SB 101RDC support for SB 101 SFIN.pdf HRES 5/14/2021 1:00:00 PM
SFIN 4/27/2021 9:00:00 AM
SB 101
SB75 SFIN Corrected Presentation.pdf SFIN 4/27/2021 9:00:00 AM
SB 75