Legislature(2021 - 2022)SENATE FINANCE 532

05/05/2021 09:00 AM Senate FINANCE

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Audio Topic
09:03:16 AM Start
09:03:47 AM HB27
09:18:07 AM HB169
09:27:09 AM Presentation: Omb May 3, 2021 Amendments Op/cap/sup
01:05:21 PM SB49 || SB51
01:55:27 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Presentation: OMB May 3, 2021 Amendments:
Scheduled but Not Heard
<Pending Referral>
Scheduled but Not Heard
<Pending Referral>
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Moved HB 27 Out of Committee
-- Invited & Public Testimony --
-- <Time Limit May Be Set> --
Heard & Held
Heard & Held
                 SENATE FINANCE COMMITTEE                                                                                       
                        May 5, 2021                                                                                             
                         9:03 a.m.                                                                                              
9:03:16 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Bishop called the Senate Finance Committee meeting                                                                     
to order at 9:03 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Click Bishop, Co-Chair                                                                                                  
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Natasha von Imhof (via teleconference)                                                                                  
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Representative  Louise Stutes,  Sponsor; Representative  Dan                                                                    
Ortiz,  Sponsor;   Neil  Steininger,  Director,   Office  of                                                                    
Management  and   Budget,  Office  of  the   Governor;  Pete                                                                    
Ecklund,  Staff,  Senator   Bert  Stedman;  Alexei  Painter,                                                                    
Director, Legislative Finance Division.                                                                                         
PRESENT VIA TELECONFERENCE                                                                                                    
Katrina Hoffman, Self, Cordova; Kim Aspelund, Self,                                                                             
Anchorage; Mike Webber, Self, Cordova.                                                                                          
SB 49     APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
          SB 49 was HEARD and HELD in committee for further                                                                     
SB 51     APPROP: MENTAL HEALTH BUDGET                                                                                          
          SB 51 was HEARD and HELD in committee for further                                                                     
HB 27     NAMING IRENE WEBBER BRIDGE                                                                                            
          HB 27 was REPORTED out of committee with a "do                                                                        
          pass" recommendation and with one previously                                                                          
          published fiscal impact note: FN 1(DOT).                                                                              
HB 69     APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
          HB 69 was SCHEDULED but not HEARD.                                                                                    
HB 71     APPROP: MENTAL HEALTH BUDGET                                                                                          
          HB 71 was SCHEDULED but not HEARD.                                                                                    
HB 169am APPROP: EDUCATION; PUPIL TRANSPORTATION                                                                                
          HB 169am was HEARD and HELD in committee for                                                                          
          further consideration.                                                                                                
PRESENTATION: OMB MAY 3, 2021 AMENDMENTS OP/CAP/SUP                                                                             
HOUSE BILL NO. 27                                                                                                             
     "An Act naming the irene Webber Bridge."                                                                                   
9:03:47 AM                                                                                                                    
Co-Chair Bishop noted that it was the second hearing for HB
9:04:03 AM                                                                                                                    
REPRESENTATIVE LOUISE STUTES, SPONSOR, discussed HB 27. She                                                                     
explained that irene Webber had an incredible impact on the                                                                     
community of Cordova, and the proposed naming of the                                                                            
bridge was  exciting for the whole  community. She discussed                                                                    
Ms. Webber's history of recovery  and involvement in running                                                                    
and marathons. She emphasized the  importance of the bill to                                                                    
the community.                                                                                                                  
9:05:57 AM                                                                                                                    
KATRINA HOFFMAN,  SELF, CORDOVA (via  teleconference), spoke                                                                    
in favor  of the bill.  She was irene  Webber's daughter-in-                                                                    
law.  She  discussed  the  legacy  of  Ms.  Webber  and  the                                                                    
community events  she had  created such  as the  Cancer Walk                                                                    
and   Wild   Salmon   Run.  She   discussed   Ms.   Webber's                                                                    
contribution  to the  community  of  Cordova. She  described                                                                    
that the  bridge was adjacent to  community recreation areas                                                                    
that  residents frequented  for  skiing, four-wheeling,  and                                                                    
barbecuing.  She  described  the area.  She  encouraged  the                                                                    
committee to pass the bill.                                                                                                     
9:08:07 AM                                                                                                                    
KIM   ASPELUND,   SELF,  ANCHORAGE   (via   teleconference),                                                                    
testified in  support of the  bill. She was the  daughter of                                                                    
irene  Webber. She  discussed Ms.  Webber's volunteer  work.                                                                    
She  relayed  that  Ms.  Webber had  helped  others  in  the                                                                    
community  overcome alcohol  abuse.  She  described how  Ms.                                                                    
Webber  was  inspirational  to  others.  She  discussed  Ms.                                                                    
Webber's  dedication  to  herself  and  the  community.  She                                                                    
thanked the committee  and asked for members  to support the                                                                    
9:11:19 AM                                                                                                                    
MIKE WEBBER,  SELF, CORDOVA  (via teleconference),  spoke in                                                                    
support  of the  bill. He  discussed his  mother's qualities                                                                    
and  history  in  commercial fishing.  He  spoke  about  his                                                                    
mother  running  on  the  beach  and  inspiring  others.  He                                                                    
thought  the  proposed  naming  of the  bridge  would  be  a                                                                    
powerful statement. He relayed that  his mother was a leader                                                                    
in the  community and discussed  her kindness to  others. He                                                                    
discussed  the  community of  Cordova,  and  the Salmon  Run                                                                    
event which his mother had started.                                                                                             
9:15:21 AM                                                                                                                    
Co-Chair Bishop OPENED and CLOSED public testimony.                                                                             
Co-Chair  Bishop  addressed  a previously  published  fiscal                                                                    
impact  note  from  the  Department  of  Transportation  and                                                                    
Public  Facilities,  OMB  Component  2068  with  $10,200  in                                                                    
unrestricted general funds.                                                                                                     
Co-Chair  Stedman MOVED  to report  HB 27  out of  Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
HB  27  was REPORTED  out  of  committee  with a  "do  pass"                                                                    
recommendation  and  with  one previously  published  fiscal                                                                    
impact note: FN 1(DOT).                                                                                                         
9:16:18 AM                                                                                                                    
AT EASE                                                                                                                         
9:18:03 AM                                                                                                                    
Co-Chair Bishop handed the gavel to Co-Chair Stedman.                                                                           
HOUSE BILL NO. 169 am                                                                                                         
  "An Act making appropriations for public education and                                                                        
     transportation of students; and providing for an                                                                           
     effective date."                                                                                                           
9:18:07 AM                                                                                                                    
Co-Chair   Stedman  asked   the  sponsor   to  address   the                                                                    
9:18:34 AM                                                                                                                    
REPRESENTATIVE  DAN ORTIZ,  SPONSOR, explained  that HB  169                                                                    
was  an appropriation  bill for  the foundation  formula and                                                                    
pupil  transportation for  2022  and 2023.  The  bill was  a                                                                    
separate  appropriation  bill  from  the  regular  operating                                                                    
budget, in order to pass  funding for education early in the                                                                    
session for FY 22 and  provide forward-funding for FY 23. He                                                                    
referenced the long legislative  history of the members, and                                                                    
thought  they  were familiar  with  the  ongoing problem  of                                                                    
delayed  funding  for  school districts.  He  described  the                                                                    
challenge of  school districts  that often  had to  send out                                                                    
layoff  notices  to  teachers because  of  uncertainty  with                                                                    
funding levels  and the  need to  comply with  contracts. He                                                                    
recalled receiving such  a notice early in  his own teaching                                                                    
Representative  Ortiz  continued  his  opening  remarks.  He                                                                    
asserted that HB 169 reflected  an attempt to help alleviate                                                                    
the problem  as described. He identified  that education and                                                                    
student success was a high  priority for the legislature and                                                                    
the   state.  He   asserted  that   HB  169   reflected  the                                                                    
legislature's   commitment  to   education,  students,   and                                                                    
teachers and would  help alleviate one issue  related to the                                                                    
growing problem of not being able to retain teachers.                                                                           
Senator Wielechowski  thanked the  sponsor for  bringing the                                                                    
bill forward,  which he thought  was a huge step  forward in                                                                    
the  way education  was  funded. He  hoped  the state  would                                                                    
engage in  the method  more often. He  asked if  the sponsor                                                                    
knew  when  layoff notices  were  sent  to teachers  in  the                                                                    
Representative  Ortiz thought  that the  layoff date  varied                                                                    
around the  state. He thought  some districts  began layoffs                                                                    
in  the  middle  of  April,  and  others  at  a  later  time                                                                    
depending  upon  the  budget   cycle  of  the  district.  He                                                                    
understood that  the Juneau School  District had  an earlier                                                                    
layoff date.                                                                                                                    
9:23:12 AM                                                                                                                    
Co-Chair Stedman  asked if the  sponsor could recall  if the                                                                    
legislature  had ever  lowered the  Base Student  Allocation                                                                    
(BSA) amount  and asked if  the bill contained  the targeted                                                                    
BSA amount.                                                                                                                     
Representative  Ortiz  could   not  recall  the  legislature                                                                    
having   ever   lowered   the    BSA.   He   mentioned   the                                                                    
constitutional obligation  to provide an  adequate education                                                                    
for  all  students  in  the  state,  including  a  financial                                                                    
commitment  for the  state to  bear  the responsibility.  He                                                                    
considered that  since there was  no question of  having the                                                                    
obligation,  the  legislature  might  as  well  provide  the                                                                    
funding earlier.                                                                                                                
Co-Chair Stedman asked for more  detail regarding the timing                                                                    
of  the proposed  appropriation  and where  the funds  would                                                                    
come from.  He asked if  there had been litigation  over the                                                                    
Representative  Ortiz was  not aware  of any  litigation. He                                                                    
thought no  one could  argue that the  bill proposed  to tie                                                                    
the  hands of  a  future legislature,  as  the current  body                                                                    
would be the  legislature for FY 23. He did  not think there                                                                    
would be a threat of a lawsuit going forward.                                                                                   
Co-Chair Stedman set the bill  aside. He assured the viewing                                                                    
public that  there would be further  information coming from                                                                    
the  committee  regarding  maintenance  of  effort  and  the                                                                    
federal   assistance   funding   coming  for   schools.   He                                                                    
referenced  data  sheets  that   were  being  assembled.  He                                                                    
thought there would  be dialogue over the  following year as                                                                    
to how to track the funds.                                                                                                      
HB  169  was  HEARD  and   HELD  in  committee  for  further                                                                    
^PRESENTATION: OMB MAY 3, 2021 AMENDMENTS OP/CAP/SUP                                                                          
9:27:09 AM                                                                                                                    
NEIL STEININGER, DIRECTOR, OFFICE  OF MANAGEMENT AND BUDGET,                                                                    
OFFICE OF  THE GOVERNOR,  addressed four  amendment packages                                                                    
differentiated    by   operating,    capital,   supplemental                                                                    
operating,  and  supplemental  capital (copy  on  file).  He                                                                    
addressed the FY 22 operating  governor amend package, which                                                                    
had  a memo  followed by  a summary  spreadsheet with  three                                                                    
Mr. Steininger addressed Line 1,  which was an adjustment to                                                                    
the  cost-of-living  adjustment  (COLA)  for  court  service                                                                    
officers and  deputy fire marshals. Upon  further review, it                                                                    
was noted  that the  two percent  adjustment for  the second                                                                    
year  of  the contract  was  applied  to an  incorrect  base                                                                    
salary.  The  total  was $317,000,  $300,200  of  which  was                                                                    
Unrestricted General  Funds (UGF).  The item  accommodated a                                                                    
four percent salary  adjustment made in the  first year, and                                                                    
a two percent adjustment was made to the base salary.                                                                           
Mr.  Steininger  addressed  Line  2,  concerning  an  upward                                                                    
adjustment to the investment management  fees for the Alaska                                                                    
Permanent  Fund Corporation  (APFC), due  to higher  returns                                                                    
and  a larger  than  expected account  balance. He  detailed                                                                    
that  management fees  were scaled  as a  percent of  assets                                                                    
under management. The $60 million  item was an estimate, and                                                                    
if the fees  came in lower than $60 million  the money would                                                                    
be put back into the fund.                                                                                                      
9:29:47 AM                                                                                                                    
Mr.  Steininger  spoke  to  Line  3,  which  was  for  three                                                                    
temporary  positions for  the  Department of  Transportation                                                                    
and  Public Facilities  (DOT). As  the  department had  been                                                                    
working through  the complexities of the  guidance and rules                                                                    
surrounding  the federal  relief from  the Federal  Aviation                                                                    
Administration (FAA),  Federal Transit Authority  (FTA), and                                                                    
the Federal  Highway Administration (FHWA) in  all 3 primary                                                                    
COVID-19 funding acts, there was  about 9 pots of money with                                                                    
differing  rules  that  necessitated  additional  accounting                                                                    
Co-Chair Stedman  observed that the item  description listed                                                                    
three  long-term non-permanent  (LTNP)  positions. He  asked                                                                    
for greater detail.                                                                                                             
Mr. Steininger  explained that in the  classification system                                                                    
for   state   employees   there  was   permanent   full-time                                                                    
employees,  and  non-permanent  employees  were  split  into                                                                    
short-term  and  long-term  positions. The  short-term  non-                                                                    
permanent  positions   were  limited  to  90   or  120  days                                                                    
depending upon the bargaining contract. The long-term non-                                                                      
permanent  positions were  those requiring  more than  90 or                                                                    
120 days.                                                                                                                       
Co-Chair  Bishop asked  if the  department had  the position                                                                    
control  numbers (PCNs)  available, or  if a  classification                                                                    
study would  be needed. He  asked if the positions  would go                                                                    
away after the funds were expended.                                                                                             
Mr.  Steininger stated  that  the  proposed amendment  would                                                                    
create three  new PCNs  and were  labeled as  long-term non-                                                                    
permanent position  to ensure that the  employees understood                                                                    
the  positions  would go  away  once  the need  and  federal                                                                    
funding expired.                                                                                                                
Senator  Wielechowski   asked  if   there  were   any  other                                                                    
collective bargaining  agreements that were  currently being                                                                    
negotiated that might necessitate a supplemental request.                                                                       
Mr.  Steininger  answered   affirmatively.  There  were  two                                                                    
tentative agreements that he had  received that morning, and                                                                    
there would be further  amendments related to the bargaining                                                                    
units. He  thought there was a  third agreement outstanding.                                                                    
He affirmed  that OMB would  come back before  the committee                                                                    
with more information when it was available.                                                                                    
Co-Chair Stedman  asked if the  further amendments  would be                                                                    
within the next seven days.                                                                                                     
Mr. Steininger stated that OMB  was working on formal backup                                                                    
in order to  transmit the information to  the legislature in                                                                    
the next 24 to 48 hours.                                                                                                        
Senator  Wielechowski  about  Item   2  pertaining  to  APFC                                                                    
management fees. He asked about the fee rate.                                                                                   
Mr. Steininger had  to the defer the question  back to APFC.                                                                    
He  believed the  fees varied  according  to the  management                                                                    
Co-Chair  Stedman thought  the  fees would  be  tied to  the                                                                    
asset  base.  He  suggested  that   as  the  Permanent  Fund                                                                    
advanced in value the fees would go up.                                                                                         
9:33:47 AM                                                                                                                    
Senator Wilson  asked about  the two  forthcoming amendments                                                                    
and the bargaining unit that Mr. Steininger referenced.                                                                         
Mr.  Steininger   thought  the  supervisory  unit   and  the                                                                    
Correctional  Officers Association  would  be  ready in  the                                                                    
next 24  to 48  hours, his office  was putting  together the                                                                    
technical records  so that the Legislative  Finance Division                                                                    
(LFD) could put the adjustments  in the right components. He                                                                    
recalled that the remaining contract  was labor, trades, and                                                                    
Co-Chair Stedman clarified that  the committee had expressed                                                                    
interest  in having  the OMB  formalize  amendments so  that                                                                    
paperwork was in  order and the committee  would take action                                                                    
on the amendments were presented.                                                                                               
Mr.  Steininger  addressed  a   memo  and  spreadsheet  with                                                                    
capital budget amendments (copy  on file). He discussed Item                                                                    
1 on  the spreadsheet,  relating to  FTA. He  explained that                                                                    
the  item was  not related  to federal  COVID-relief funding                                                                    
but  was  an  adjustment   to  the  normal  federal  transit                                                                    
administration  grant.  The  increase  was due  to  the  FTA                                                                    
apportionment   rising   over   the   previous   years   and                                                                    
communities being  able to submit applications  through DOT.                                                                    
The  increase was  for $25.26  million  from a  base of  $10                                                                    
million  and would  be a  pass-through to  community transit                                                                    
Mr. Steininger  discussed Item 2, related  to federal COVID-                                                                    
relief  funds. A  portion of  the  Coronavirus Response  and                                                                    
Relief  Supplemental  Appropriations  Act  (CRRSAA)  funding                                                                    
through  DOT  would  be  passed  through  to  the  Anchorage                                                                    
Metropolitan  Area Transit  Solutions Organization.  The act                                                                    
required  that the  monies be  passed through  to Anchorage,                                                                    
and  the   pass-through  had   been  omitted   from  earlier                                                                    
appropriation  vehicles. The  funding was  in the  amount of                                                                    
$11.3 million.                                                                                                                  
Senator Olson considered the proposed  DOT funding listed in                                                                    
item 1 and item 2. He asked if  any of the funding had to do                                                                    
with  the  Knik  Arm  Bridge  and  Toll  Authority  (KABATA)                                                                    
Mr. Steininger  did not  believe either  of the  items would                                                                    
deal  with  the KABATA  issue  but  would confirm  with  the                                                                    
department and get back to the committee.                                                                                       
9:37:13 AM                                                                                                                    
Mr.  Steininger addressed  a  spreadsheet with  supplemental                                                                    
operating amendments  (copy on  file). He addressed  Item 1,                                                                    
which would be an increase  to federal authority for the Mt.                                                                    
Edgecumbe  Boarding School  to accommodate  COVID-19 relief.                                                                    
The item  was related to  the relief funding managed  by the                                                                    
Department  of  Education  and Early  Development  that  got                                                                    
spread to  different school districts. For  Mt. Edgecumbe to                                                                    
collect  the funds  it needed  federal authority  within its                                                                    
budget in the amount of $5.3 million.                                                                                           
Mr.  Steininger  addressed Item  2,  which  was $410,000  of                                                                    
judgement settlements  and claims. He directed  attention to                                                                    
the  list of  judgement settlements  and claims  against the                                                                    
Mr. Steininger spoke to Item  3, which was a reappropriation                                                                    
to  the Marine  Highway  System Fund.  He  noted that  there                                                                    
would  be  a  corresponding  decrease  in  the  supplemental                                                                    
capital  budget.  The  item was  a  reappropriation  of  the                                                                    
aviation  match  for FY  21.  The  aviation match  had  been                                                                    
waived  in FY  21  as  part of  one  of  the federal  relief                                                                    
packages, and the  Marine Highway System Fund  was posting a                                                                    
$5.5  million deficit  at the  close of  the current  fiscal                                                                    
year. The  item utilized the  reduced need for match  in the                                                                    
aviation program to backfill the  need in the Marine Highway                                                                    
System Fund.                                                                                                                    
Mr.  Steininger  addressed   FY  2021  Supplemental  Capital                                                                    
Budget Amendments. Item 1 corresponded  with the transfer to                                                                    
the Marine  Highway System Fund and  reflected the reduction                                                                    
in  the capital  budget  for aviation  state  match of  $5.5                                                                    
million. Item  2 was $11  million from the  Coronavirus Aid,                                                                    
Relief, and Economic Security (CARES)  Act funding for rural                                                                    
airport  deferred  maintenance.  The item  covered  deferred                                                                    
maintenance  at airports  owned  by the  state.  Item 3  was                                                                    
authority  for the  Alaska International  Airport System  to                                                                    
use some  of its COVID-19  relief to pay down  debt service.                                                                    
He explained that  the relief funds received  by the airport                                                                    
system  could be  deposited into  its International  Airport                                                                    
System Fund as  general revenue, however in order  to use it                                                                    
outside day  to day  operations an  additional appropriation                                                                    
was needed.                                                                                                                     
Mr. Steininger addressed Item  4, another reappropriation of                                                                    
the  aviation   state  match.  The   $1  million   would  be                                                                    
reappropriated  to   an  emergency  weather   event  capital                                                                    
project  for  the  department  to  be  able  to  respond  to                                                                    
emergency  weather events  that required  funding above  and                                                                    
beyond the amount available  in normal maintenance operating                                                                    
budgets. He  used the example  of extreme freeze  events and                                                                    
avalanches,  after which  the funds  could  be used  without                                                                    
having to  come forward  with individual  supplemental items                                                                    
for every weather event.                                                                                                        
9:41:16 AM                                                                                                                    
Senator Wilson  asked how much estimated  debt service would                                                                    
be paid with the federal COVID-19 relief funds.                                                                                 
Mr. Steininger specified  that the item proposed  to use $30                                                                    
million  in  debt  service   for  the  Alaska  International                                                                    
Airport System. He believed the  system had been able to use                                                                    
other  federal  receipt  authority   at  the  close  of  the                                                                    
previous  year  to  pay  down debt  service.  He  agreed  to                                                                    
provide more detail at a later time.                                                                                            
Senator Wilson  asked if there  were other  departments that                                                                    
would be  using federal CARES  Act funding to pay  down debt                                                                    
Co-Chair Stedman  asked if Mr. Steininger  could provide the                                                                    
information at a later time.                                                                                                    
Mr.  Steininger  was  not aware  of  any  other  departments                                                                    
paying down debt service with  federal CARES Act funding. He                                                                    
knew there was  a proposal in the other body  to use some of                                                                    
the American Rescue Plan Act  (ARPA) funding to pay down the                                                                    
state's  annual debt  service as  a replacement  for general                                                                    
funds. He  agreed to  look to  see if  there were  any other                                                                    
areas  with  debt  service  not  in the  main  area  of  the                                                                    
operating budget.                                                                                                               
Co-Chair Bishop asked  about Item 2 pertaining  to CARES Act                                                                    
funding  and rural  airport deferred  maintenance. He  asked                                                                    
about the inclusion of capital expenses for equipment.                                                                          
Mr.  Steininger  explained  that  most of  the  funding  had                                                                    
limitations  on purchasing  equipment,  but the  maintenance                                                                    
work was generally eligible. He  thought was nuance involved                                                                    
since there was multiple pots  of money and multiple sets of                                                                    
rules. He  would work  with the department  to see  if there                                                                    
was allowability in  one or more pots of  money for purchase                                                                    
of equipment.                                                                                                                   
9:44:34 AM                                                                                                                    
Senator    Olson    considered    aviation    funds    being                                                                    
reappropriated to  the Alaska  Marine Highway  System (AMHS)                                                                    
and extreme weather  events. He asked where  the funding was                                                                    
originally allocated.                                                                                                           
Mr.  Steininger  explained  that   in  the  previous  year's                                                                    
capital  budget   there  had   been  $8.8  million   in  one                                                                    
appropriation intended for  matching the airport improvement                                                                    
program. Part of  it was proposed to  be reappropriated, and                                                                    
the remaining amount was being  reserved for potential costs                                                                    
that were  not federally reimbursable. Originally  the funds                                                                    
were UGF intended to match  the airport improvement program,                                                                    
but the change  in FAA rules allowed for the  state (in that                                                                    
one  year) to  not require  match for  the program,  and the                                                                    
need went away.                                                                                                                 
Senator Olson asked if there  was any other fund source that                                                                    
could be used.                                                                                                                  
Mr. Steininger asked if Senator  Olson referenced the Marine                                                                    
Highway System Fund or weather events.                                                                                          
Senator Olson answered "yes."                                                                                                   
Mr.  Steininger   informed  that  the  state   could  use  a                                                                    
straightforward    UGF   appropriation    rather   than    a                                                                    
reappropriation,  or  other  Designated General  Fund  (DGF)                                                                    
sources  that  had  available balances,  however  using  the                                                                    
reappropriation as proposed was a  place where there was not                                                                    
necessarily a competing need.                                                                                                   
Senator Wielechowski asked  if the proposed reappropriations                                                                    
of  aviation  funds   would  be  a  loss   for  the  Airport                                                                    
Improvement Program.                                                                                                            
Mr.  Steininger stated  that the  match was  waived for  the                                                                    
Airport  Improvement  Program  and   the  FAA  had  provided                                                                    
significant  additional  amounts  of relief  that  could  be                                                                    
applied to airport  maintenance improvement needs throughout                                                                    
the  state. Through  the federal  relief funding,  the total                                                                    
amount available for airport  needs had grown significantly,                                                                    
but there  was no longer a  need for general fund  match. He                                                                    
summarized that the airports were  not necessarily harmed by                                                                    
the use of  the matching funds as there was  other FAA money                                                                    
coming in that could backfill the amount.                                                                                       
9:47:52 AM                                                                                                                    
Senator Olson  asked if the  funding switch would  slow down                                                                    
any projects.                                                                                                                   
Mr. Steininger relayed that the  projects funded through the                                                                    
projects  funded  through  the  FY  21  Airport  Improvement                                                                    
Project would  use federal funds  that were  still available                                                                    
for use. He  understood that the change would  not slow down                                                                    
any of the projects.                                                                                                            
Senator  Olson considered  the $410,000  UGF in  judgements,                                                                    
settlements,  and  claims  referenced   in  Item  2  of  the                                                                    
supplemental  operating amendments.  He  wondered about  any                                                                    
other judgements,  settlements, and  claims were  present in                                                                    
the regular operating budget.                                                                                                   
Mr.  Steininger  offered  to  provide a  full  list  of  the                                                                    
judgements, settlements  and claims inclusive of  new items.                                                                    
He explained that there were not  any in the FY 22 operating                                                                    
budget, and  generally the way the  state managed judgements                                                                    
and settlements was in a  supplemental budget after the item                                                                    
occurred, so  the items  were primarily  always supplemental                                                                    
needs.  he  offered to  provide  a  full  list by  case  and                                                                    
Senator Olson asked how much  the state paid in total, which                                                                    
he thought was more than $410,000.                                                                                              
Mr. Steininger did  not know the exact  number but estimated                                                                    
that the amount was in the several million dollar range.                                                                        
Co-Chair  Stedman asked  for Mr.  Steininger to  provide the                                                                    
information to the committee at a later time.                                                                                   
Senator  Wielechowski requested  a list  of management  fees                                                                    
listed  in Item  2 in  the operating  budget amendments.  He                                                                    
thought  the amount  seemed huge  on top  of other  fees the                                                                    
state was already paying.                                                                                                       
Mr. Steininger  stated he  would work with  APFC to  get the                                                                    
information. He  cited that the increase  in management fees                                                                    
was a result  of market returns increasing the  value of the                                                                    
fund. He agreed to provide the information.                                                                                     
Co-Chair Stedman relayed that  the committee would reconvene                                                                    
at  one  o'clock  in  the  afternoon  to  consider  proposed                                                                    
committee substitutes  for SB 49  and SB  51, and to  hear a                                                                    
presentation   about   recurring   revenue   and   recurring                                                                    
expenditures.  The committee  would  be  engaging in  budget                                                                    
discussions over  the following  two weeks, and  would build                                                                    
upon  the afternoon  presentation  as  different monies  and                                                                    
transactions  were  layered  in.   The  committee  was  also                                                                    
waiting  for  the  other  body  to  transmit  the  companion                                                                    
operating budget bill, which he  suspected would not be done                                                                    
for several days. He asserted  that the Senate would try and                                                                    
advance  the process  and  minimize the  number  of days  it                                                                    
would  take   to  put  the  final   budgets  together  after                                                                    
receiving  the version  from the  House.  He referenced  the                                                                    
constitutional deadline  on the 19th  of May and  was unsure                                                                    
if the deadline would be met.                                                                                                   
9:53:24 AM                                                                                                                    
1:04:50 PM                                                                                                                    
SENATE BILL NO. 49                                                                                                            
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain   programs;    capitalizing   funds;   amending                                                                    
     appropriations;    making   reappropriations;    making                                                                    
     supplemental   appropriations;  making   appropriations                                                                    
     under art.  IX, sec.  17(c), Constitution of  the State                                                                    
     of  Alaska,  from  the  constitutional  budget  reserve                                                                    
     fund; and providing for an effective date."                                                                                
SENATE BILL NO. 51                                                                                                            
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive    mental    health    program;    making                                                                    
     supplemental  appropriations;  and   providing  for  an                                                                    
     effective date."                                                                                                           
1:05:21 PM                                                                                                                    
Co-Chair  Stedman discussed  the  afternoon  portion of  the                                                                    
agenda.  The   committee  would   consider  adoption   of  a                                                                    
committee  substitute (CS)  for SB  49 and  SB 51  and would                                                                    
hear  a  fiscal  update  from LFD.  He  explained  that  the                                                                    
committee  had  been working  on  a  base budget  with  fund                                                                    
source exchanges, COVID-19 relief  funds, and transfers from                                                                    
other fiscal  years excluded.  The committee  would consider                                                                    
the  base  budget  with  recurring  revenues  and  recurring                                                                    
expenditures. The  CS would  include all  subcommittee work,                                                                    
and  he  would look  to  members  for amendments  and  other                                                                    
concerns to be submitted to his office by Friday.                                                                               
Senator   Hoffman   MOVED   to  ADOPT   proposed   committee                                                                    
substitute  for   SB  49,  Work  Draft   32-GS1509\N  (Marx,                                                                    
Co-Chair Stedman OBJECTED for discussion.                                                                                       
1:07:27 PM                                                                                                                    
PETE  ECKLUND, STAFF,  SENATOR BERT  STEDMAN,  spoke to  the                                                                    
proposed CS. He  discussed the structure of  the bill, which                                                                    
had been  divided into sections  and groupings  for purposes                                                                    
clarity. There  was multiple  numbers sections.  He detailed                                                                    
that Section 1 through Section  3 were the regular operating                                                                    
budget,  which contained  the recommendations  from all  the                                                                    
Senate Finance  budget subcommittees. Section 2  and Section                                                                    
3  were  all   the  funding  source  roll-ups   of  all  the                                                                    
appropriations made in Section  1. He continued that Section                                                                    
4 through Section  6 were the number  sections operating and                                                                    
supplemental items,  and Section  5 and  Section 6  were the                                                                    
funding source  roll-ups for all the  supplemental operating                                                                    
items listed in Section 4.                                                                                                      
Mr. Ecklund added  that Section 7 through Section  9 was the                                                                    
numbers section  for capital supplemental items.  Sections 8                                                                    
and  9 were  the funding  source 'roll  ups' of  all of  the                                                                    
supplemental capital items listed in section 7.                                                                                 
Mr. Ecklund read from a prepared statement:                                                                                     
     The Language Section                                                                                                       
     The  bulk  of  supplemental language  items  have  been                                                                    
     grouped  together  at  the beginning  of  the  language                                                                    
     section.    These    varying   supplemental    language                                                                    
     appropriations  could   be  for  either   operating  or                                                                    
     capital items, as well as  direct or 'inflexible' ARPA,                                                                    
     CRRSAA, CARES  or from other federal  acts that require                                                                    
     appropriation to be accepted.                                                                                              
     Sections 10    27 of the language section  are the bulk                                                                    
     of those  varying language supplemental items  for FY21                                                                    
     I just referred to                                                                                                         
     The   remaining  sections   (28-59)  are   mainly  more                                                                    
     'normal' or 'usual' FY22 language appropriations                                                                           
1:09:45 PM                                                                                                                    
Mr. Ecklund continued his remarks  about the proposed CS for                                                                    
SB  49. He  addressed the  substance of  the bill.  He noted                                                                    
that  there were  many reports  that  described the  funding                                                                    
laid out  in the CS in  varying degrees of detail.  He noted                                                                    
that there  would be  even more  detailed reports  posted on                                                                    
LFD's website after the hearing.                                                                                                
Mr. Ecklund highlighted that one  change incorporated in the                                                                    
CS  was the  many transactions  approved to  accommodate the                                                                    
Governor's  request  to   consolidate  human  resources  and                                                                    
procurement  into  the   Department  of  Administration.  He                                                                    
highlighted  that  it  was the  reason  that  members  might                                                                    
notice   small   differences  between   their   subcommittee                                                                    
recommendation and what was contained in the draft CS.                                                                          
Mr. Ecklund  gave a high-level  overview of the  dollars and                                                                    
fund sources appropriated  in the bill. He  affirmed that he                                                                    
would list  all of the reports  in front of members  and may                                                                    
reference them  but did  not intend for  members to  look at                                                                    
the reports each  time. He noted he would  use round numbers                                                                    
for clarity.                                                                                                                    
Mr. Ecklund addressed the budget totals:                                                                                        
     FY22 Operating totals                                                                                                      
               All Funds      10.78 billion                                                                                     
               UGF            4.56 billion                                                                                      
               General funds  5.42 billion                                                                                      
     FY21 Operating supplemental totals                                                                                         
               All funds      1.27 billion                                                                                      
               UGF            77.2 million                                                                                      
        General funds 76.1 million (neg DGF sup of                                                                              
               just over 1 M)                                                                                                   
     FY21 Capital supplemental totals                                                                                           
               All funds      168.7 million                                                                                     
               UGF            10.2 million                                                                                      
               General funds 30.8 million                                                                                       
Mr. Ecklund noted  that there was a typo  on member's sheets                                                                    
and that the capital supplemental  total should be for FY 21                                                                    
rather than FY 22.                                                                                                              
Mr.  Ecklund addressed  a  packet of  reports  with a  cover                                                                    
sheet entitled  "CS1 Reports Master  Sheet" (copy  on file).                                                                    
The reports  went into detail  listing the fund  sources and                                                                    
dollars  in  the   CS.  He  noted  that   there  were  three                                                                    
spreadsheets  in the  packet,  which OMB  had presented  the                                                                    
previous  Friday.  The  spreadsheets covered  operating  and                                                                    
capital governor  supplemental requests  as well  as federal                                                                    
direct or 'inflexible' grant funds.  He noted that there was                                                                    
an added a Senate column  that denoted whether a request had                                                                    
been  included  in  the  CS. Further,  there  was  a  column                                                                    
labeled  'lang', which  stood for  'language'. He  clarified                                                                    
that  a  'Y'  in  that  column  denoted  that  an  item,  if                                                                    
included, could be  found in the language  section; while an                                                                    
'N'  in  the  column  instructed   that  if  that  item  was                                                                    
included,  it could  be found  in  the supplemental  numbers                                                                    
1:13:46 PM                                                                                                                    
Mr. Ecklund highlighted language items of note in the bill:                                                                     
     Sec 14 (f)     the  Administration requested  extension                                                                    
     of   an   'estimated   to  be   $9   million   federal'                                                                    
     appropriation related  to CARES  act funding  from last                                                                    
     year, we are partially  granting that request. There is                                                                    
     approximately $331 million  of Coronavirus Relief Funds                                                                    
     (CRF)   associated    with   the   estimated    to   be                                                                    
     appropriation that  we are not rolling  forward to next                                                                    
     fiscal year                                                                                                                
     Sec 20    amends  the current  year 'Federal  and Other                                                                    
     Program   Receipts'  or   RPL  language,   to  restrict                                                                    
     designated program  and federal receipt  authority from                                                                    
     being   added  to   the   Alaska  Gasline   Development                                                                    
     Corporation and for natural gas pipeline expenditures.                                                                     
     It also restricts  the RPL process from  being used for                                                                    
     the  'flexible' CRRSAA  DOTPF  funds  and the  flexible                                                                    
     ARPA  funds. This  section  further  restricts the  RPL                                                                    
     process   from  being   used  for   any  future   funds                                                                    
     appropriated by the  117th Congress for infrastructure,                                                                    
     jobs, or as part of  the American Jobs Plan and federal                                                                    
     funds related to economic recovery.                                                                                        
     Sec 21 (a) supplemental fund  cap of $21,315,700 of UGF                                                                    
     to the  Community Assistance Fund to  bring the balance                                                                    
     of the fund  to $90 million dollars so  the FY22 payout                                                                    
     to communities will be $30 million                                                                                         
     (b)  $30 million  UGF to the Disaster  Relief Fund, the                                                                    
     Administration  had asked  for  a re-appropriation  for                                                                    
     this, we are using UGF                                                                                                     
     (c)  $6.7  million re-appropriation  of FY21  FAA match                                                                    
     that  is no  needed  for match,  to  the Alaska  Marine                                                                    
     Highway fund to bring the  AMHS fund balance up to zero                                                                    
     at the end of FY21                                                                                                         
     Sec 27    NPRA Impact  Grant Program, updated  the FY21                                                                    
     estimate  available and  listed out  the projects  that                                                                    
     are to receive funding in FY21                                                                                             
     Sec 31    Updated    the    Alaska    Industrial    and                                                                    
     Development and Export  Authorities (AIDEA) dividend to                                                                    
     the correct amount, $17,305,000                                                                                            
     Sec 32 (e) $2 billion  transfer from the Permanent Fund                                                                    
     Earnings Reserve  to the Corpus: leaving  9 billion 652                                                                    
     million of  spendable realized earnings  in the  ERA on                                                                    
     June 30th (based on March 31st statement)                                                                                  
     Sec 35    Carry forward language  allowing FY21 federal                                                                    
     funds from man-day billings to  be carried forward into                                                                    
     FY22 for the Anchorage Correctional Complex                                                                                
     Sec 37    Deleted: former  section 13 (e),  the request                                                                    
     to  carry forward  $35 million  of  Medicaid lapse  for                                                                    
     FY22 expenses                                                                                                              
     Sec 38    Deleted:  former section  14  (f) open  ended                                                                    
     federal authority  to the Dept of  Labor for employment                                                                    
     and training services                                                                                                      
  Sec 40    Deleted:   former   section    16   (e)   re-                                                                       
     appropriation  request of  $5 million  in lapsing  fire                                                                    
     suppression funds  to DNR for  fire break  activities                                                                      
     will be addressed in the capital budget.                                                                                   
1:18:13 PM                                                                                                                    
Mr. Ecklund continued to highlight notable language items:                                                                      
     Sec 41 (b-j)   this  is  the  18-month  Marine  Highway                                                                    
     Funding plan.  The total  AMHS budget  for one  year is                                                                    
     proposed to  be the  same level the  Legislature passed                                                                    
     last year, $123.5  million. The proposal uses  a mix of                                                                    
     CRRSAA  FTA and  FHWA federal  funds (53,093,700),  UGF                                                                    
     ($66  million)  and  other   funds  ($4.4  million)  to                                                                    
     support   Marine  Highway   operations  for   the  next                                                                    
     calendar year.  This one-time  18-month plan  uses one-                                                                    
     time federal  funds to move  the funding of  the System                                                                    
     onto a calendar year basis.                                                                                                
     Moving to calendar year funding  will allow managers to                                                                    
     get the  ferry schedule  out to the  public in  July or                                                                    
     August  for  the  following  calendar  year.  Having  a                                                                    
     reliable schedule out in advance  has shown to increase                                                                    
     system revenues by over $5 million dollars.                                                                                
     Sec 41  (k) $10,525,400  dollars of federal  CRRSAA and                                                                    
     ARPA FTA funds for Coordinated Transportation Grants                                                                       
     Sec 41 (l)  $6 million of federal CRRSAA  grants to the                                                                    
     Inter-Island Ferry Authority  to replace their depleted                                                                    
     reserves and allow them to continue operation                                                                              
     Sec 44    debt  and  other  obligations    Deleted  the                                                                    
     former section 20, relating  to allowing the Department                                                                    
     of Revenue to issue Revenue Anticipation Notes                                                                             
     Sec 44 (L)     full  funding   for  school   bond  debt                                                                    
          $52,744,460 UGF                                                                                                       
          $30,799,500 School Fund                                                                                               
     Sec 45 (c) Same RPL restrictions as FY21, but for FY22                                                                     
     Sec 46  (g) $12,394,800  in FY22  from the  PCE formula                                                                    
     payment to the Community Assistance Fund                                                                                   
     Sec 46  (h) $17,605,200 in  FY22 from the  general fund                                                                    
     to  the community  assistance fund  to  bring the  FY22                                                                    
     balance of  the C.A. Fund  to $90 million so  there can                                                                    
     be a $30 million dollar payout to communities in FY23.                                                                     
     Sec  46 (k)  $34,238,00 from  the general  fund to  the                                                                    
     Regional Educational Attendance  Area (REAA) Fund (full                                                                    
     Deleted:  former section 22 (u)  $50 million in program                                                                    
     receipt authority for AGDC for  deposit into the Alaska                                                                    
     liquefied natural gas project fund                                                                                         
     Deleted:  former  section  22  (v) open  ended  federal                                                                    
     receipt authority for AGDC                                                                                                 
     Sec 46 (u) Oil and gas  tax credits: not to exceed $114                                                                    
     million from the general fund.                                                                                             
     Sec  46 (v)  $100  thousand from  general fund  program                                                                    
     receipts  collected  by  DMV  to  the  abandoned  motor                                                                    
     vehicle  fund  for  removing  abandoned  vehicles  from                                                                    
     Sec  47 (L)  Fund  transfers:  authorizes repayment  of                                                                    
     WWAMI loans  to the Alaska Commission  on Postsecondary                                                                    
     Education  to be  deposited into  the Higher  Education                                                                    
     Fund, $504,044                                                                                                             
     Sec 47  (m) change  the estimate to  a zero  balance of                                                                    
     the large  passenger vessel gaming tax  account deposit                                                                    
     into the general fund.                                                                                                     
     Sec 52  (a) Statutory Budget Reserve:  The unencumbered                                                                    
     balance of the Unrestricted  General Fund available for                                                                    
     lapse  on June  30, 2021  are appropriated  to the  SBR                                                                    
     (estimated to be $100 million)                                                                                             
     Sec  52 (b)  the sum  of $325  million is  appropriated                                                                    
     from   the   general  fund   to   the   SBR  (an   FY21                                                                    
     Deleted the Constitutional Budget Reserve sections                                                                         
     Effective  Dates:  Made supplementals  effective  April                                                                    
     15th  for agency  supplemental funding  needs and  June                                                                    
     30th, for lapse and reappropriation provisions                                                                             
1:23:43 PM                                                                                                                    
Senator Wielechowski  asked about Section 31  and the Alaska                                                                    
Industrial   Development   and  Export   Authority   (AIDEA)                                                                    
dividend, which  referred to the "correct  amount." He asked                                                                    
if there was a statutory formula for the dividend.                                                                              
Mr. Ecklund affirmed that there  was a statutory formula for                                                                    
the AIDEA dividend.                                                                                                             
Senator Wielechowski  asked if the  formula was for  a range                                                                    
or a set number.                                                                                                                
Mr. Ecklund  could not  recall the  formula but  thought the                                                                    
amount would approximate half of the earnings.                                                                                  
Co-Chair  Stedman  thought  the   committee  could  ask  the                                                                    
question of LFD.                                                                                                                
Senator Hoffman  thought the general public  should be aware                                                                    
that  although the  Permanent Fund  Dividend  (PFD) was  not                                                                    
addressed in  the CS,  it was  the intent  of the  Senate to                                                                    
fund a PFD. He asked if his assumption was correct.                                                                             
Co-Chair Stedman affirmed that  Senator Hoffman was correct.                                                                    
He stated that the  topic of the PFD had yet  to be taken up                                                                    
by the committee. The committee's  intent was to work on the                                                                    
topic over  the following  two weeks.  he informed  that the                                                                    
proposed  $2   billion  transfer  from  the   corpus  was  a                                                                    
placeholder. The committee would  discuss and further review                                                                    
the  Earnings  Reserve Account  (ERA)  with  input from  all                                                                    
members as  to whether to  increase or decrease  the amount.                                                                    
He  recalled  that the  previous  legislature  had put  $4.9                                                                    
billion in as a transfer.                                                                                                       
1:26:14 PM                                                                                                                    
Senator Olson  asked how  $2 billion was  decided upon  as a                                                                    
Co-Chair Stedman relayed  that he had grabbed  the number as                                                                    
a starting  point after consideration  of inflation-proofing                                                                    
numbers. He stated  that a data sheet would  be available to                                                                    
the  members when  the topic  was up  for consideration.  He                                                                    
thought it  would be  nice if members  had time  to consider                                                                    
the issue.                                                                                                                      
Senator Olson  asked about Section  41, and the  AMHS moving                                                                    
to an 18-month funding plan.  He wondered why the department                                                                    
would not go to a six-month funding plan.                                                                                       
Co-Chair  Stedman explained  that the  bill proposed  to add                                                                    
six months  of one-time  funding to the  AMHS appropriation,                                                                    
and  later adjustments  could be  made with  COVID-19 relief                                                                    
funds. The following  year would return to  a 12-month cycle                                                                    
with 6 months of lead time.                                                                                                     
Senator Wilson asked about the  proposed deletion of the CBR                                                                    
section  and  asked if  there  would  need  to be  a  three-                                                                    
quarters vote to enact the proposed budget.                                                                                     
Co-Chair Stedman stated there was  currently no need for the                                                                    
three-quarters  vote, but  as the  budget process  continued                                                                    
the provision would have to be put back in.                                                                                     
Senator  Wielechowski  asked  about Section  44  (l),  which                                                                    
proposed full funding for school  bond deb reimbursement. He                                                                    
asked if the funding was  typical and normally drew from the                                                                    
School Fund.                                                                                                                    
Mr.  Ecklund  answered  in the  affirmative,  and  that  the                                                                    
number  used in  the CS  was the  amount available  that was                                                                    
unspent in other parts of the budget.                                                                                           
Senator Hoffman asked about Section  46(u) pertaining to oil                                                                    
and  gas  tax  credits.  He  knew that  the  item  had  been                                                                    
discussed by the committee as  well as both bodies. He noted                                                                    
that  the language  for funding  the credits  used the  word                                                                    
"may,"  which had  been pointed  out many  times by  Senator                                                                    
Wielechowski; while  the language  for funding the  PFD used                                                                    
the word "shall." He felt  a little uncomfortable in funding                                                                    
the  credits  without  knowing  what  the  support  was  for                                                                    
different level of funding.                                                                                                     
Co-Chair  Stedman thought  the original  submission was  for                                                                    
$60  million  and  there  had been  an  amendment  from  the                                                                    
administration that had been added.  He thought the item was                                                                    
open for discussion by the committee.                                                                                           
Senator Hoffman asked about discretionary capital funds.                                                                        
Co-Chair Stedman  noted that  the committee  was considering                                                                    
the operating budget.                                                                                                           
1:31:50 PM                                                                                                                    
AT EASE                                                                                                                         
1:31:55 PM                                                                                                                    
Senator von Imhof asked about  Section 52(a) relating to the                                                                    
Statutory Budget  Reserve (SBR)  Fund, and  the sum  of $325                                                                    
million. She asked for explanation of the section.                                                                              
Co-Chair  Stedman   noted  that  the  issue   might  warrant                                                                    
discussion or  changes by the  committee. He  explained that                                                                    
that at  the end of the  fiscal year, the excess  revenue in                                                                    
the General  Fund was swept  into the CBR. The  action would                                                                    
"front-run"  the  balance  available  to sweep  to  the  CBR                                                                    
(which took  a three-quarter vote  to access) and put  it in                                                                    
the  SBR, which  only took  a  majority vote  to access.  He                                                                    
considered  that  the  action  would  make  the  funds  more                                                                    
accessible,  while  the  funding   amounts  in  the  state's                                                                    
accounts  would be  the same.  He anticipated  the committee                                                                    
would  discuss  the matter  and  had  the option  of  making                                                                    
changes. He  noted that LFD would  discuss projected account                                                                    
balances shortly.                                                                                                               
Senator  Hoffman referenced  Section 32(e),  which addressed                                                                    
the transfer  of $2 billion  from the  ERA to the  corpus of                                                                    
the Permanent  Fund. He asked  how the proposal  was brought                                                                    
forward to be included in the budget.                                                                                           
Co-Chair Stedman  thought the state  needed to make  sure it                                                                    
was inflation-proofing  the Permanent Fund, and  even though                                                                    
there  was a  substantial appropriation  the previous  year,                                                                    
the  proposed appropriation  would be  an additional  amount                                                                    
into the constitutionally protected  portion of the fund. He                                                                    
reiterated that  the amount  was just  a starting  point for                                                                    
the  committee   to  consider.  He  acknowledged   that  the                                                                    
committee may  consider not doing the  appropriation at all,                                                                    
or changing the  amount. He thought the  committee needed to                                                                    
consider  a presentation  on the  Permanent Fund,  including                                                                    
the corpus  and the ERA. He  reminded that the PFD  came out                                                                    
of the  ERA. He estimated  that there was about  $10 billion                                                                    
unencumbered in  the ERA, and perhaps  $17 billion including                                                                    
encumbered funds.                                                                                                               
1:36:47 PM                                                                                                                    
Co-Chair  Stedman WITHDREW  his  OBJECTION.  There being  NO                                                                    
further OBJECTION, it  was so ordered. The CS for  SB 49 was                                                                    
Co-Chair Stedman  encouraged members  to contact  his office                                                                    
with concerns  or proposed amendments by  midday Friday, and                                                                    
work with committee aides to resolve issues.                                                                                    
Senator Wilson MOVED to  ADOPT proposed committee substitute                                                                    
for SB 51, Work Draft 32-GS1508\G (Marx, 5/4/21).                                                                               
Co-Chair Stedman OBJECTED for discussion.                                                                                       
Mr. Ecklund  explained that the dollars  appropriated in the                                                                    
mental  health  bill were  accounted  for  in the  operating                                                                    
budget reports.  He noted that  the other body  would remove                                                                    
the  capital projects  listed in  the bill,  and the  Senate                                                                    
would do the  opposite, so all items  were coferenceable. He                                                                    
highlighted that  there were  six proposed  capital projects                                                                    
in  the  mental  health  budget bill,  and  the  other  body                                                                    
removed five  of the projects.  The Senate proposed  to fund                                                                    
deferred  maintenance  and  accessibility  improvements  for                                                                    
Co-Chair  Stedman WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
1:40:18 PM                                                                                                                    
ALEXEI  PAINTER,  DIRECTOR,  LEGISLATIVE  FINANCE  DIVISION,                                                                    
addressed an earlier question  by Senator Wielechowski about                                                                    
the  AIDEA dividend.  He specified  that the  AIDEA dividend                                                                    
could be anywhere  between 25 percent and 50  percent of net                                                                    
income, and the proposed  $17.3 million represented the full                                                                    
50 percent.                                                                                                                     
Mr.  Painter  discussed   a  presentation  entitled  "Fiscal                                                                    
Update with Senate Committee Substitute" (copy on file).                                                                        
Mr.  Painter turned  to slide  2, "Fiscal  Summary Based  on                                                                    
Senate  Committee Substitute,"  which  showed a  table of  a                                                                    
fiscal summary  of SB  49. He detailed  that the  table went                                                                    
back to FY 20 and  showed the final budget and supplementals                                                                    
for  that  year. The  information  for  FY 21  included  the                                                                    
enacted budget  and the supplementals included  in the bill.                                                                    
Information  for  FY  22 only  included  the  appropriations                                                                    
listed   in  the   bill.  The   numbers  for   supplementals                                                                    
referenced by Mr. Ecklund were on  line 9 and line 12, which                                                                    
resulted in  a total  deficit for  FY 21  of just  over $600                                                                    
million. He  explained that if the  operating appropriations                                                                    
in  the   bill  for  FY   22  on   line  6  were   the  only                                                                    
appropriations,  there  would  be   a  $172.4  million  pre-                                                                    
transfer surplus.  After transfers there would  be a surplus                                                                    
of $157.8 million.                                                                                                              
Co-Chair Stedman asked if there  was an expectation that the                                                                    
capital budget would go against the $157.8 million.                                                                             
Mr.  Painter  explained  that the  next  slide  showed  more                                                                    
1:42:31 PM                                                                                                                    
Mr. Painter spoke  to slide 3, "Fiscal  Summary with Capital                                                                    
Budget  Placeholder,"   which  showed  a  table   using  the                                                                    
governor's  amended  capital  budget of  $62.2  million  and                                                                    
added UGF  in place of the  AHFC bonds. He relayed  that the                                                                    
bonds were in  a bill that had not advanced  very far in the                                                                    
legislative  process  and  were  not  relied  upon  for  the                                                                    
calculations. Adding  the two amounts together  would result                                                                    
in  a capital  budget of  $166.2 million  of UGF,  which was                                                                    
highlighted  in red  on line  10. He  summarized that  there                                                                    
would be a post-transfer deficit  of $8.4 million with using                                                                    
the  placeholder, and  the  amount could  end  up higher  or                                                                    
lower. He noted that the numerics did not reflect the PFD.                                                                      
Co-Chair Stedman  asked if Mr.  Painter was  indicating that                                                                    
the   state's  recurring   revenue  equaled   its  recurring                                                                    
expenses if  the legislature  paid all  the oil  tax credits                                                                    
and did not pay a PFD.                                                                                                          
Mr. Painter answered in the affirmative.                                                                                        
Co-Chair Stedman  reminded that there was  an estimation for                                                                    
the price of oil.                                                                                                               
Mr. Painter  agreed. He  thought as oil  prices went  up and                                                                    
down, the state could end up  with a surplus or deficit, and                                                                    
it was difficult to project.                                                                                                    
Mr.  Painter discussed  slide  4, Use  of  Lapsing Funds  in                                                                    
Senate CS":                                                                                                                     
     ?According to OMB, $100.7 million of FY21 UGF                                                                              
     appropriations are expected to lapse:                                                                                      
           $90.0 million in Medicaid (reduction from                                                                            
          previous $100.0 million                                                                                               
          $4 million in Department of Corrections                                                                               
          $5.7 million in Department of Education                                                                               
           $1.0 million in other agencies                                                                                       
           Senate CS directs this to the Statutory Budget                                                                       
     ?$75 million CBR direct appropriation for COVID 19                                                                         
     relief is also set to lapse to CBR as CARES Act made                                                                       
     it unnecessary                                                                                                             
           Governor  requested  reappropriating $30  million                                                                    
          of this  to the Disaster Relief  Fund and carrying                                                                    
          forward  the remaining  $45 million  to FY22  this                                                                    
         would require a ? vote of the legislature                                                                              
           Senate CS allows full amount to lapse to the                                                                         
          Constitutional Budget Reserve                                                                                         
       Direct  appropriations from the  CBR in  FY21 coupled                                                                    
     with  increased  oil  prices  leads  to  post  transfer                                                                    
     surplus in  FY21 estimated to  be $367.5  million after                                                                    
     supplemental appropriations                                                                                                
   Senate CS includes $325.0 million appropriation from                                                                         
   general fund to SBR in FY21, essentially redirecting                                                                         
     this money from the CBR to the SBR"                                                                                        
Mr.  Painter noted  that in  the CS  for SB  49, the  $100.7                                                                    
million  was directed  towards the  SBR.  In the  governor's                                                                    
budget, $35 million of the  amount was reappropriated for FY                                                                    
22, and  in the  other body the  budget reflected  about $87                                                                    
million of Medicaid lapsing funds  were directed towards the                                                                    
FY 22 budget as well.                                                                                                           
1:46:55 PM                                                                                                                    
Mr. Painter continued  to address slide 4.  He recalled that                                                                    
the  previous  year the  legislature  had  funded about  one                                                                    
quarter  (about $980  million) of  the budget  directly from                                                                    
the CBR.  There was  a balanced  budget after  the transfer,                                                                    
however  higher revenue  led to  a projected  $367.5 million                                                                    
post-transfer surplus  for FY 21.  He explained that  the CS                                                                    
redirected $325 million  of the surplus to  the SBR. Instead                                                                    
of the  funds entirely  lapsing back to  the CBR,  a portion                                                                    
would go to the SBR.                                                                                                            
Senator  Wilson wondered  why  it was  necessary  to have  a                                                                    
three-quarters vote  for an appropriation from  the CBR, but                                                                    
not necessary to divert the funds to the SBR.                                                                                   
Mr. Painter explained that because  the funds were not being                                                                    
appropriated from  the CBR, the three-quarters  vote was not                                                                    
needed. However, at the end  of the year the sweep provision                                                                    
would capture  the funds because  the SBR was  a "sweepable"                                                                    
account. To  keep the funds out  of the CBR would  require a                                                                    
reverse-sweep three-quarters vote on July 1.                                                                                    
Co-Chair Stedman  thought the reverse  sweep could  occur on                                                                    
August 1  or September  1, whenever  the legislature  got to                                                                    
doing a reverse sweep.                                                                                                          
Mr. Painter referenced slide  5, "Projected Reserve Balances                                                                    
in   Senate  Committee   Substitute   with  Capital   Budget                                                                    
Placeholder," which  showed a  table entitled  'CBR Balance'                                                                    
and a table entitled 'SBR  Balance.' The starting balance of                                                                    
the  CBR available  for appropriation  was  projected to  be                                                                    
about  $1.4 billion  for FY  21. He  highlighted that  about                                                                    
$980  of direct  appropriations that  came out  of the  CBR,                                                                    
while the  $75 million  from the COVID-19  appropriation and                                                                    
the  post-transfer  surplus  went   back  in,  and  the  SBR                                                                    
transfer came  out. All the  transactions roughly  netted an                                                                    
ending  balance of  $615 million.  Based on  the placeholder                                                                    
capital budget,  in FY 22  there would be some  deposits and                                                                    
earnings,  a  small  post-transfer deficit,  and  an  ending                                                                    
balance of $657 million.                                                                                                        
Mr. Painter addressed  the SBR balance table  shown on slide                                                                    
5.  He  identified  that  the SBR  would  receive  the  $325                                                                    
million  appropriation, then  the  $1.7  million of  lapsing                                                                    
appropriations for  an ending balance of  $425.7 million and                                                                    
a  combined   $1  billion  in  reserves.   Without  the  SBR                                                                    
appropriations, the  CBR balance at  the end of FY  21 would                                                                    
be approximately $1 billion based on the CS.                                                                                    
1:51:06 PM                                                                                                                    
Co-Chair  Stedman  thought  the  committee  would  need  the                                                                    
assistance  of LFD  and perhaps  the  Alaska Permanent  Fund                                                                    
Corporation (APFC) to  get an estimate and  breakdown of the                                                                    
ERA. He also thought  assistance in understanding the amount                                                                    
of  the statutory  dividend  for  FY 22.  He  wanted LFD  to                                                                    
return  and  present  a wholistic  picture  for  members  to                                                                    
consider. He  referenced Senator Hoffman's  earlier question                                                                    
about  the inter-tangling  of  appropriations and  political                                                                    
relationships.  He  thought it  would  be  nice for  LFD  to                                                                    
present  some history  of contributions  into the  corpus of                                                                    
the Permanent  Fund in  order to  understand the  effects of                                                                    
Co-Chair Stedman  asked the members to  communicate with his                                                                    
office regarding any data requests for LFD.                                                                                     
Co-Chair  Stedman  asked  for  Mr.  Painter  to  look  at  a                                                                    
hypothetical oil price  of $70/bbl for FY  22. He considered                                                                    
state revenues if oil prices were strong.                                                                                       
SB  49  was   HEARD  and  HELD  in   committee  for  further                                                                    
SB  51  was   HEARD  and  HELD  in   committee  for  further                                                                    
Co-Chair  Stedman discussed  the  agenda  for the  following                                                                    
1:55:27 PM                                                                                                                    
The meeting was adjourned at 1:55 p.m.                                                                                          

Document Name Date/Time Subjects
SB 50 Supplemental All Funds-UGF-GF.pdf SFIN 5/5/2021 9:00:00 AM
SB 50
SB 50 Supplemental Capital Spreadsheet 5.5.21.pdf SFIN 5/5/2021 9:00:00 AM
SB 50
SB 49 Supplemental All Funds-UGF-GF.pdf SFIN 5/5/2021 9:00:00 AM
SB 49
SB 49 Supplemental Operating Spreadsheet 5.5.21.pdf SFIN 5/5/2021 9:00:00 AM
SB 49
SB 49 Federal Direct Inflexible ARPA Spreadsheet 5.5.21.pdf SFIN 5/5/2021 9:00:00 AM
SB 49
SB 49 OP All Funds-UGF-GF Summary.pdf SFIN 5/5/2021 9:00:00 AM
SB 49
SB 49 CSSB 49-50-51 Reports Master Sheet.pdf SFIN 5/5/2021 9:00:00 AM
SB 49
SB 49 work draft version N.pdf SFIN 5/5/2021 9:00:00 AM
SB 49
SB 51 work draft version G.pdf SFIN 5/5/2021 9:00:00 AM
SB 51
SB 49-SB 51 SFIN Fiscal Position 5-4-21.pdf SFIN 5/5/2021 9:00:00 AM
SB 49
SB 51