Legislature(2021 - 2022)SENATE FINANCE 532

05/18/2021 09:00 AM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Moved HB 182 Out of Committee
Heard & Held
Heard & Held
Heard & Held
                 SENATE FINANCE COMMITTEE                                                                                       
                       May 18, 2021                                                                                             
                         9:51 a.m.                                                                                              
9:51:31 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Bishop called the Senate Finance Committee meeting                                                                     
to order at 9:51 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Click Bishop, Co-Chair                                                                                                  
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Natasha von Imhof                                                                                                       
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Pete Ecklund, Staff, Senator Bert Stedman;                                                                                      
PRESENT VIA TELECONFERENCE                                                                                                    
CSHB 41(FIN)                                                                                                                    
          SHELLFISH PROJECTS; HATCHERIES; FEES                                                                                  
          CSHB 41(FIN) was HEARD and HELD in committee for                                                                      
          further consideration.                                                                                                
CSHB 69(FIN) am(brf sup maj fld)(efd fld)                                                                                       
          APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
          CSHB 69(FIN) am(brf sup maj fld)(efd fld) was                                                                         
          HEARD and HELD in committee for further                                                                               
CSHB 71(FIN) am                                                                                                                 
          APPROP: MENTAL HEALTH BUDGET                                                                                          
          CSHB 71(FIN) am was HEARD and HELD in committee                                                                       
          for further consideration.                                                                                            
HB 182    EXTEND FISHERY RESOURCE LAND. TAX CREDIT                                                                              
          HB 182 was REPORTED out of committee with a "do                                                                       
          pass" recommendation and with one previously                                                                          
         published fiscal impact note: FN 1(REV).                                                                               
HOUSE BILL NO. 182                                                                                                            
     "An  Act extending  the  fishery  resource landing  tax                                                                    
     credit  for  certain  taxpayers  that  harvest  fishery                                                                    
     resources   under  the   provisions   of  a   community                                                                    
     development quota;  providing for an effective  date by                                                                    
     amending the  effective date  of secs.  16 and  23, ch.                                                                    
    61, SLA 2014; and providing for an effective date."                                                                         
9:52:33 AM                                                                                                                    
Co-Chair Bishop discussed housekeeping.                                                                                         
Co-Chair Bishop discussed a fiscal note from the Department                                                                     
of Revenue, OMB Component 2476. He read from the analysis                                                                       
on page 2 of the fiscal note:                                                                                                   
     Prior to December 31,  2020, Fisheries Resource Landing                                                                    
     Tax   (FRLT)   taxpayers   that   harvested   fisheries                                                                    
     resources  under a  community  development quota  (CDQ)                                                                    
     and  that made  contributions  during the  tax year  to                                                                    
     Alaska  nonprofit corporations  that  are dedicated  to                                                                    
     fisheries industry-related  education, research, and/or                                                                    
     work were allowed  to claim a credit of  100 percent of                                                                    
     the  contribution amount,  up to  45.45 percent  of the                                                                    
     taxpayer's   tax   liability   on   fishery   resources                                                                    
     harvested under  a CDQ. However, the  CDQ Credit sunset                                                                    
     on  December 31,  2020. This  bill  extends the  sunset                                                                    
     date  of  the CDQ  credit  to  December 31,  2030,  and                                                                    
     provides for  an immediate effective date.  The bill is                                                                    
     retroactive to December 30, 2020.                                                                                          
Senator Hoffman MOVED to report HB 182 out of Committee                                                                         
with individual recommendations and the accompanying fiscal                                                                     
note. There being NO OBJECTION, it was so ordered.                                                                              
HB 182 was REPORTED out of committee with a "do pass"                                                                           
recommendation and with one previously published fiscal                                                                         
impact note: FN 1(REV).                                                                                                         
CS FOR HOUSE BILL NO. 41(FIN)                                                                                                 
     "An Act  relating to management  of enhanced  stocks of                                                                    
     shellfish; authorizing  certain nonprofit organizations                                                                    
     to engage  in shellfish enhancement  projects; relating                                                                    
     to  application fees  for salmon  hatchery permits  and                                                                    
     shellfish enhancement project  permits; relating to the                                                                    
     marketing  of  aquatic  farm  products  by  the  Alaska                                                                    
     Seafood  Marketing  Institute;  and  providing  for  an                                                                    
     effective date."                                                                                                           
9:54:41 AM                                                                                                                    
Co-Chair Bishop noted that he had formed a subcommittee to                                                                      
work on the bill over the interim. The committee included                                                                       
Senator Hoffman and Senator Wilson.                                                                                             
Co-Chair Bishop handed the gavel to Co-Chair Stedman.                                                                           
9:55:17 AM                                                                                                                    
AT EASE                                                                                                                         
9:58:38 AM                                                                                                                    
CS FOR HOUSE BILL NO. 69(FIN) am(brf sup maj fld)(efd fld)                                                                    
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain   programs;    capitalizing   funds;   amending                                                                    
     appropriations;  and   making  capital  appropriations,                                                                    
    supplemental appropriations, and reappropriations."                                                                         
CS FOR HOUSE BILL NO. 71(FIN) am                                                                                              
     "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."                                                                                                           
9:58:40 AM                                                                                                                    
Co-Chair Stedman discussed housekeeping. He noted that the                                                                      
committee would adopt the current work versions and                                                                             
reconvene at 1PM for the amendment process.                                                                                     
Co-Chair Bishop MOVED to ADOPT proposed committee                                                                               
substitute for CSHB 69(FIN), Work Draft 32-GH1509\L (Marx,                                                                      
Co-Chair Stedman OBJECTED for discussion.                                                                                       
10:00:13 AM                                                                                                                   
PETE ECKLUND, STAFF, SENATOR BERT STEDMAN, gave a high-                                                                         
level overview using his written remarks (copy on file):                                                                        
     Mr. Chairman, last week this  committee adopted the 2nd                                                                    
     Committee Substitute for the                                                                                               
     operating budget, Version F of HB 69.                                                                                      
     The CS you have in front  of you, Version L, is what we                                                                    
     refer to as CS 3.                                                                                                          
     Before I explain the changes from  CS 2 to CS 3, just a                                                                    
     reminder of what was in CS 2.                                                                                              
     CS 2, Version F of  HB 69, adopted last week, contained                                                                    
     FY22  operating items  and FY21  supplemental operating                                                                    
     and capital items.                                                                                                         
     The new CS  in front of you, Version L  (which we refer                                                                    
     to as  CS 3),  also contains  those same  operating and                                                                    
     supplemental items, but has  added American Rescue Plan                                                                    
     Act  (ARPA) funds,  a  few  operating and  supplemental                                                                    
     changes,  plus  has added  the  capital  budget, SB  50                                                                    
     Version  D, that  this  committee  went over  yesterday                                                                    
     I will  highlight the  changes in  a minute,  but first                                                                    
     would  like to  go over  the structure  of the  bill so                                                                    
     members and the public know  which sections of the bill                                                                    
     to  look  at   when  they  are  trying   to  locate  an                                                                    
     appropriation item.                                                                                                        
     Structure of the Bill                                                                                                    
     The bill  has been  divided into sections  and grouping                                                                    
     to attempt to make it  easier to understand for members                                                                    
     and the public.                                                                                                            
     The Numbers Section                                                                                                      
     Sections 1-3  are the  regular operating  budget, which                                                                    
     contains the  recommendations from  all of  the finance                                                                    
     subcommittees (See pages 2-49)                                                                                             
     Sections   4-6  are   the  numbers   section  operating                                                                    
     supplemental items. {See pages 50-55.)                                                                                     
     Sections 7-9  are the numbers section  for FY22 capital                                                                    
     items (see pages 56-86)                                                                                                    
     Sections  10-12 are  the  numbers  section for  capital                                                                    
     supplemental items. (See pages 87-95)                                                                                      
     The Language Sections                                                                                                    
     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 13  -49 of the  language section are  the bulk                                                                    
     of those  varying language supplemental items  for FY21                                                                    
     I just referred to.                                                                                                        
     Most of the remaining  sections {50-73) are mainly more                                                                    
     'normal' or 'usual' FY22 language appropriations.                                                                          
10:03:38 AM                                                                                                                   
Mr. Ecklund continued to read from his prepared remarks:                                                                        
     The Substance of the bill                                                                                                
     There  are  many  reports   that  describe  in  varying                                                                    
     degrees  of  detail the  funding  laid  out in  the  CS                                                                    
     before you.  For anyone interested, there  will be even                                                                    
     more detailed  reports posted on  legislative finance's                                                                    
     website after this hearing.                                                                                                
     Mr. Chairman, I  will go over verbally  at a high-level                                                                    
     the  dollars  and  fund sources  appropriated  in  this                                                                    
     bill. I  will list out in  a minute all of  the reports                                                                    
     you have in front of you  and may reference them, but I                                                                    
     do not  intend for members to  try and look at  each of                                                                    
     the reports while  I am speaking, that  would just lead                                                                    
    to confusion. I am also going to use round numbers.                                                                         
10:04:05 AM                                                                                                                   
Mr. Ecklund offered a high-level overview of the dollars                                                                        
and fund sources appropriated in the bill:                                                                                      
     FY22 Operating totals:                                                                                                     
     All Funds  $10.23 billion                                                                                                  
     UGF  $4.51 billion                                                                                                         
     Federal funds  $3.28 billion                                                                                               
     FY21 Operating supplemental totals:                                                                                        
     All Funds - $1.28 billion                                                                                                  
     UGF - $66.6 million                                                                                                        
     Federal funds - $1.1 billion                                                                                               
     FY22 Capital totals:                                                                                                       
     All Funds  2.33 billion                                                                                                    
     UGF  274.7 million                                                                                                         
     Federal funds - $1.9 billion                                                                                               
     FY21 Capital supplemental totals:                                                                                          
     All Funds  639.5 million                                                                                                   
     UGF - $15.7 million                                                                                                        
     Federal funds - $577.6 million                                                                                             
     FY22 Operating and Capital totals:                                                                                         
     All Funds - $12.56 billion                                                                                                 
     UGF - $4.78 billion                                                                                                        
     Federal funds - $5.18 billion                                                                                              
Mr. Ecklund referenced a packet of 5 reports and                                                                                
spreadsheets that detailed the dollars and funds sources                                                                        
associated with the bill version (copy on file).                                                                                
Mr. Ecklund continued to read from his written remarks:                                                                         
     Changes to the Operating                                                                                                 
        • Fish and Game  Commercial Fisheries  Statewide                                                                        
          Fisheries   Management   $800.0   UGF   one   time                                                                    
             o This  is   to  cover  the   negative  account                                                                    
               balance projected as a result of several                                                                         
               years of deficit spending against the CFEC                                                                       
     Language Section                                                                                                         
        • AMHS 18-Month Plan                                                                                                    
             o Reduce  AMHS  UGF  from $66  million  to  $61                                                                    
              million (a negative $5 million)                                                                                   
Mr.  Ecklund  drew  attention  to  page  2  of  the  packet,                                                                    
entitled  "ARPA," which  showed  all  of the  appropriations                                                                    
using the  ARPA CSLRF funds.  He shared that there  was $500                                                                    
million in  ARPA funds available  to spend in FY22,  and the                                                                    
bill appropriated $1 billion with  the caveat that decisions                                                                    
would  be  made in  Conference  Committee  which adjust  the                                                                    
dollar amount.                                                                                                                  
10:07:59 AM                                                                                                                   
Mr. Ecklund continued to read from his written remarks:                                                                         
     ARPA ADDITIONS: 'CSLRF' or 'flexible fund uses                                                                             
Me. Ecklund highlighted a couple of the significant uses:                                                                       
     • Fund Transfers  new subsection $500 million of UGF                                                                       
        revenue replacement                                                                                                     
          o The sum of $500,000,000 in federal receipts                                                                         
             received from  the  American  Rescue Plan  Act:                                                                    
             Title IX,  Committee  on  Finance, Subtitle  M,                                                                    
             Coronavirus State  and  Local  Fiscal  Recovery                                                                    
             Funds, Section  9901,  is  appropriated to  the                                                                    
             general   fund   for   general   fund   revenue                                                                  
     • Health and Social Services      Public Health                                                                            
        Emergency Programs $30,000.0 ARP CSLRFR one time                                                                        
          o This is to cover a full year of FY22 COVID-19                                                                       
             health related costs.                                                                                              
     • Grants to tourism and other businesses to offset                                                                         
        revenue loss - $280 million.                                                                                            
     Capital Budget, SB 50 Version D added                                                                                    
     We have added the substance of SB 50, version D of the                                                                     
     capital budget that the committee reviewed yesterday.                                                                      
10:09:07 AM                                                                                                                   
Senator Wielechowski understood the  total ARPA spend was $1                                                                    
Mr.  Ecklund   clarified  that   the  bill   authorized  the                                                                    
expenditure of $1 billon.                                                                                                       
Senator Wielechowski queried the  rationale for the spending                                                                    
Mr. Ecklund stated that since  the House version of the bill                                                                    
had  passed,  there  had  been  further  guidance  from  the                                                                    
Treasury  Division.  He relayed  that  the  bulk of  revenue                                                                    
replacement that could be done  was for FY22, and beyond. He                                                                    
said  that  the  bill  proposed   $500  million  in  revenue                                                                    
replacement  in  FY22. He  reiterated  that  the $1  billion                                                                    
number  would  decrease to  no  more  than $500  million  in                                                                    
conference committee.                                                                                                           
Co-Chair  Stedman noted  that his  office  had been  working                                                                    
with   the  Office   of  Management   and  Budget   and  the                                                                    
Legislative Finance Division on  the federal guidance issues                                                                    
and  restrictions.  He  said   that  the  proposed  CS  gave                                                                    
authorization to expend  the full $1 billion  but the number                                                                    
would  be  brought  down in  conference  committee  to  $500                                                                    
million or less. The  co-chairs were working collaboratively                                                                    
with the administration. He  asserted that the configuration                                                                    
allowed for maximum flexibility.                                                                                                
10:12:02 AM                                                                                                                   
Senator  Wielechowski  understood   that,  after  conference                                                                    
committee,  the actual  total that  would be  spent in  FY22                                                                    
would be $500 million.                                                                                                          
Co-Chair Stedman replied in the affitmative.                                                                                    
Senator  Wielechowski asked  whether there  was more  detail                                                                    
available regarding  the $280 million for  tourism and other                                                                    
business grants.                                                                                                                
Mr. Ecklund  explained that more  details would  be revealed                                                                    
in Conference Committee.                                                                                                        
Co-Chair Stedman added  that the dollar amount  would not be                                                                    
$280 million in the final conference committee report.                                                                          
Senator  Wielechowski spoke  of the  ending of  unemployment                                                                    
benefits (UI) and  felt that it was unfair to  give funds to                                                                    
business owners and not to out  of work Alaskans. He said he                                                                    
would be crafting an amendment to address the matter.                                                                           
10:14:28 AM                                                                                                                   
Co-Chair  Stedman   stated  he   would  work   with  Senator                                                                    
Wielechowski on  the amendment for later  in the afternoons                                                                     
Senate floor session.                                                                                                           
10:14:45 AM                                                                                                                   
Senator von  Imhof noted that the  ARPA funding specifically                                                                    
called  out tourism,  leisure, and  hospitality. She  agreed                                                                    
with Senator  Wielechowski that members  wanted to  see more                                                                    
detail but  contended that there  were some  details already                                                                    
known. She  spoke about the  effects of the pandemic  on the                                                                    
tourism and hospitality industry in the state.                                                                                  
Senator Wielechowski  clarified that he did  not think those                                                                    
industries  should  not receive  funds.  He  noted that  the                                                                    
governor had just turned down  $150 million in federal funds                                                                    
to  extend UI  benefits.  He argued  that  the pandemic  was                                                                    
still  ongoing for  all  Alaskans and  giving  funds to  one                                                                    
group   while  cutting   off  funding   to  another   seemed                                                                    
10:16:20 AM                                                                                                                   
Senator  Hoffman felt  that  the  committee should  consider                                                                    
food   security  grants.   He   was   concerned  that   when                                                                    
considering the  total spending picture, Alaskans  needed to                                                                    
feel  like  there was  food  security.  He would  support  a                                                                    
larger  number  and  would consider  an  amendment  to  that                                                                    
affect.  He   knew  Alaskans   were  concerned   about  food                                                                    
Co-Chair Stedman said that the  issue would be considered in                                                                    
the conference committee process.                                                                                               
10:18:47 AM                                                                                                                   
Senator Olson considered page 3  of Mr. Ecklunds remarks. He                                                                    
noted that adding  the UGF and Federal funds  under the FY22                                                                    
Operating and Capital  totals was equal to  $9.6 billion and                                                                    
wondered where the additional $2.5 billion came from.                                                                           
Mr.  Ecklund affirmed  that the  additional funds  came from                                                                    
 other  funds  and  designated general  funds (DGF)  and had                                                                    
been were left out for brevity. He had highlighted                                                                              
10:19:59 AM                                                                                                                   
Co-Chair  Stedman WITHDREW  his  objection.  There being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
Co-Chair Stedman discussed housekeeping.                                                                                        
10:20:43 AM                                                                                                                   
Co-Chair   Bishop   MOVED   to  ADOPT   proposed   committee                                                                    
substitute for CSHB 71 (FIN), Work Draft 32-GH1508\N.                                                                           
Co-Chair Stedman OBJECTED for discussion.                                                                                       
Mr. Ecklund  addressed the SCS  for CSHB 71(FIN).  He stated                                                                    
that the  only difference  between the current  and previous                                                                    
bill versions was  the correction to a  salary adjustment in                                                                    
the Alaska Psychiatric Institute (API).                                                                                         
Co-Chair  Stedman WITHDREW  his  objection.  There being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
Senator  Wielechowski  asked  for  more detail  on  the  API                                                                    
funding changes.                                                                                                                
Mr. Ecklund  did not  recall the  exact numbers  but thought                                                                    
the number was approximately $60 thousand.                                                                                      
Co-Chair Stedman  interjected that the information  could be                                                                    
retrieved and given to Senator Wielechowski.                                                                                    
Senator Olson assumed that the  $60 thousand was an increase                                                                    
in the amount.                                                                                                                  
Mr. Ecklund replied in the affirmative.                                                                                         
Senator Olson  understood the figure  was reflected  on Page                                                                    
3, line 22.                                                                                                                     
10:22:37 AM                                                                                                                   
AT EASE                                                                                                                         
10:23:20 AM                                                                                                                   
Co-Chair Stedman asked Mr. Ecklund  to address the questions                                                                    
about the Mental Health Budget and the API funding.                                                                             
Mr. Ecklund  noted that the item  could be found on  Page 3,                                                                    
line 22. He related that  the total salary adjustment amount                                                                    
was $84,100, $23,000 in general fund mental health funds.                                                                       
Co-Chair  Stedman WITHDREW  his  objection.  There being  NO                                                                    
further OBJECTION, it was so ordered.                                                                                           
Co-Chair  Stedman he  relayed that  both  budget bills  were                                                                    
still open  for amendments which  would be presented  to the                                                                    
committee during the 1PM meeting.                                                                                               
Co-Chair Stedman discussed further housekeeping.                                                                                
10:27:08 AM                                                                                                                   
The meeting was adjourned at 10:27 a.m.                                                                                         

Document Name Date/Time Subjects
HB 69 Additional Documents - Agency Summaries.pdf SFIN 5/18/2021 9:00:00 AM
HB 69
HB 69 Ecklund Script.pdf SFIN 5/18/2021 9:00:00 AM
HB 69
HB 69 work draft L.pdf SFIN 5/18/2021 9:00:00 AM
HB 69
HB 71 work draft version N.pdf SFIN 5/18/2021 9:00:00 AM
HB 71