Legislature(2021 - 2022)SENATE FINANCE 532

04/06/2022 01:00 PM Senate FINANCE

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                 SENATE FINANCE COMMITTEE                                                                                       
                       April 6, 2022                                                                                            
                         1:02 p.m.                                                                                              
1:02:45 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stedman called the Senate Finance Committee                                                                            
meeting to order at 1:02 p.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; Amanda  Ryder,                                                                    
Staff,  Senator  Bert  Stedman;  Alexei  Painter,  Director,                                                                    
Legislative  Finance  Division; Neil  Steininger,  Director,                                                                    
Office  of Management  and Budget,  Office of  the Governor;                                                                    
Miles Baker,  Infrastructure Investment  Coordinator, Office                                                                    
of the Governor.                                                                                                                
SB 162    APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
          SB 162 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
SB 163    APPROP: MENTAL HEALTH BUDGET                                                                                          
          SB 163 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
SB 241    APPROP: SUPPLEMENTAL; CAPITAL                                                                                         
          SB 241 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
SENATE BILL NO. 162                                                                                                           
     "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. 163                                                                                                           
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive  mental  health program;  making  capital                                                                    
     appropriations  and  supplemental  appropriations;  and                                                                    
     providing for an effective date."                                                                                          
1:04:19 PM                                                                                                                    
Co-Chair Bishop MOVED to ADOPT the committee substitute for                                                                     
SB 162, Work Draft 32-GS2686\W (Marx, 4/5/22).                                                                                  
Co-Chair Stedman OBJECTED for discussion.                                                                                       
1:04:58 PM                                                                                                                    
PETE ECKLUND, STAFF, SENATOR BERT STEDMAN, discussed                                                                            
"Differences between SB 162(FIN) Version I (AKA CS 0.5) and                                                                     
Version W (AKA CS 1) The Big Picture" (copy on file):                                                                           
     ? FY 23 revenue based on $80 per barrel of oil                                                                             
     o The  revenue forecasts  have been very  volatile, the                                                                    
     more volatile a forecast, the less valuable it is                                                                          
     o  The  Chair wanted  to  base  the  budget on  a  more                                                                    
     realistic,   historical    revenue   assumption,   with                                                                    
     windfall  revenue  going  to  the  capital  budget  and                                                                    
     ? Replenished the $660 million  savings we used in FY22                                                                    
     to  pay  out an  $1,100  dividend  and to  balance  the                                                                    
     current budget.                                                                                                            
     o  The Chair  wanted  to first  repay  money used  from                                                                    
     savings,  which were  taken down  to below  $1 Billion,                                                                    
     before making new appropriations                                                                                           
1:06:56 PM                                                                                                                    
Senator Wielechowski  asked whether the  replenished savings                                                                    
would  go into  the Statutory  Budget Reserve  (SBR) or  the                                                                    
Constitutional Budget Reserve CBR.                                                                                              
1:07:05 PM                                                                                                                    
Mr. Ecklund stated he was referring to the SBR.                                                                                 
1:07:15 PM                                                                                                                    
Co-Chair Stedman  added that under revenue  assumptions from                                                                    
spring  2021  it had  been  difficult  to  get to  an  $1100                                                                    
dividend   for  every   Alaskan   without  overdrawing   the                                                                    
permanent fund.  The challenge  led to  the drawing  down of                                                                    
$660 million in  savings to produce the  $1100 dividend. The                                                                    
price of  oil had increased,  which changed things,  but put                                                                    
the state at net zero for the year.                                                                                             
Mr. Ecklund continued:                                                                                                          
     ? Fully funded the  following FY22 statutory items that                                                                    
     were vetoed or partially funded.                                                                                           
     o Community Assistance ($7.1 million  added to the FY22                                                                    
     payout  to  communities   so  communities  receive  $30                                                                    
     Million in FY22)                                                                                                           
     ? Added $31.8 million  to the community assistance fund                                                                  
     (bringing the fund balance to  $90 M) in FY22 to ensure                                                                    
     a $30 million payout in FY23                                                                                               
     o School Debt Reimbursement                                                                                                
     o Rural Education Attendance Areas (REAA)Fund                                                                              
     o Oil  and Tax  Credits, $60 million  UGF to  bring the                                                                    
     FY22 total to the statutory calculated amount                                                                              
Co-Chair Stedman asked what the REAA Fund was.                                                                                  
Mr.  Ecklund  replied  that  REAA  stood  for  the  Regional                                                                    
Educational Attendance Area fund.  Under statute the formula                                                                    
connected the amount appropriated for school bond debt                                                                          
reimbursement to the fund.                                                                                                      
Mr. Ecklund continued:                                                                                                          
     Supplemental items  agreed upon  by the  four co-chairs                                                                    
     were also added:                                                                                                           
     The FY23 totals in this bill (rounded) are:                                                                                
     Unrestricted General Funds $4,663,521.0                                                                                    
     Designated General Funds $870,435.2                                                                                        
     Other Funds $1,643,598.1                                                                                                   
     Federal Funds $3,089,157.0                                                                                                 
     Total Funds $10,266,811.3                                                                                                  
     Differences  between  CS0.5  and CS1  incorporates  the                                                                    
          ? Sections 1 through  6 incorporate the actions of                                                                    
          the operating budget subcommittees for FY23.                                                                          
          ? I will  not be walking through  the changes that                                                                    
          occurred   in  section   1   because  reports   of                                                                    
          differences  were  part   of  the  Senate  Finance                                                                    
          subcommittee  closeout process  and are  available                                                                    
          on the Legislative Finance Division's website.                                                                        
          Because some appropriations in  this bill were not                                                                    
          part  of  the  subcommittee  process,  I  will  be                                                                    
          highlighting  changes  to  these sections  of  the                                                                    
          Pages 58 - 66                                                                                                         
               o Sections 7-9 are Governor's operating                                                                          
               supplemental items that were agreed upon by                                                                      
               the four co-chairs.                                                                                              
               o See the attached Legislative Finance                                                                           
               report and detailed reports on the web.                                                                          
     2.  Pages  67 -  69.  Sections  10-12 add  supplemental                                                                    
     capital funding for  an Information Technology Security                                                                    
     Program  Assessment   project  in  Health   and  Social                                                                    
     Services.   This   item,    combined   with   the   two                                                                    
     supplemental   operating    requests,   completes   the                                                                    
     requests made  by the Department  of Health  and Social                                                                    
    Services to address the impacts of a cyber-attack.                                                                          
          o As  a side note,  we will be having  a Committee                                                                    
          hearing on cyber-security in the near future                                                                          
     3. Page  70. Sec. 13:  Added $1,783,000 funding  to the                                                                    
     Court  System  to  address   the  trial  backlog.  This                                                                    
     funding is available FY22 and for FY23.                                                                                    
     4.  Page  70. Sec  14.  Appropriates  a total  of  $199                                                                    
     million UGF  to the  principal of the  Alaska Permanent                                                                    
     Fund  to   address  Legislative  Audit   Findings  that                                                                    
     mandatory statutory deposits were  not paid in FY18 and                                                                    
     5. Page 70.  Sec 15. Restores the  Governor's FY22 veto                                                                    
     of  half  of  the  statutory formula  for  School  Debt                                                                    
     Reimbursement. $48.6 million                                                                                               
     6. Page  70. Sec  16. Adds  a lapse  extension, through                                                                    
     the end of FY25,  for the Department of Administration,                                                                    
     Labor  Relations for  labor  contract negotiations  and                                                                    
     arbitration support.                                                                                                       
     7. Page 70. Sec. 17                                                                                                        
          a. 17a.  Clarifies that the $1  million of program                                                                    
          receipts   for   actuarial    support   costs   is                                                                    
          appropriated to the Division of Insurance.                                                                            
          b. 17b.  Fully funds the FY22  Statutory Community                                                                    
          Assistance payments shortfall of $7.1 million.                                                                        
     8.  Page   71.  Sec   18.  Adds  the   Governor's  FY22                                                                    
     supplemental requests for the  Department of Health and                                                                    
     Social Services.                                                                                                           
          Subsection a  adds $7.4  million to  cover grantee                                                                    
          Subsection  b  adds  $20 million  federal  funding                                                                    
          (Coronavirus  State  and   Local  Fiscal  Recovery                                                                    
          Funds,  CSLRF)  for  COVID response  needs  to  an                                                                    
          existing  FY22   $20  million   appropriation  and                                                                    
          extends the lapse date through FY25.                                                                                  
     9. Page  71-72. Sec 19  is a FY22  supplemental request                                                                    
     from the  Governor to place $1,953.7  of federal CRRSAA                                                                    
     funding in  AMHS, where it  can be expended,  then swap                                                                    
     and  backfill unavailable  federal  funds  with UGF  in                                                                    
     Highways and Aviation.                                                                                                     
     10. Page  72. Sec 20 Adds  Election's FY22 supplemental                                                                    
     request  for $4.3  million to  for  voter outreach  and                                                                    
     other election purposes.                                                                                                   
1:15:35 PM                                                                                                                    
Mr. Ecklund continued:                                                                                                          
     11.   Page    72.   Sec   21.    Supplemental   Funding                                                                    
          21a. Appropriates  $31.8 million to  the Community                                                                    
          Assistance Fund,  bringing the  total of  the fund                                                                    
          to  $90 million.  This  allows  for the  statutory                                                                    
          payout to communities of $30 million in FY23.                                                                         
          21b  restores  Rural Education  Attendance  Area's                                                                    
          $17 million FY22 veto that occurred last year.                                                                        
          21c.  A $60  million UGF  appropriated in  FY23 to                                                                    
          the Oil  and Gas Tax  Fund to fully fund  the FY22                                                                    
          statutory formula ($114 million total).                                                                               
          21d: $50 million UGF to the Disaster Relief Fund                                                                      
          12. Page  72. Sec 22 appropriates  $660 million of                                                                    
          FY22 UGF  to build up reserves  that were depleted                                                                    
          when savings  were used to pay  an $1,100 dividend                                                                    
          last year.                                                                                                            
     13. Page 72. Sec. 23  appropriates $7,050,000 UGF for a                                                                    
     capital grant  to a named  recipient to offset  some of                                                                    
     the  financial  impacts  for  the  Alaska  Longshoreman                                                                    
     Division. This  funding will  help maintain  the health                                                                    
     insurance component for their membership and families.                                                                     
     14.  Page 73.  Sec.  25 adds  intent  that OMB  provide                                                                    
     reports  to the  legislature  of all  transfers to  and                                                                    
     from the personal services line.                                                                                           
     15.  Pages  73-75.  Sec   27  includes  Legal  Services                                                                    
     language to ensure that the  prior Department of Health                                                                    
     and  Social   Services  appropriations   are  correctly                                                                    
     reappropriated  to  the  two  new  departments  created                                                                    
     under Executive Order 121.                                                                                                 
     16. Page 77. Sec 30                                                                                                        
          ? Subsection 30c appropriates $3.36 billion, the                                                                      
          full 5 percent POMV payout, to the general fund                                                                       
          ? Deleted the PFD appropriation of $1.68 billion                                                                      
          appropriation to pay a 50/50 dividend.                                                                                
               o The dividend will be debated in separate                                                                       
     17. Page  80. Sec 32h. Extended  ASMI's American Rescue                                                                    
     Plan Act (ARPA) funding through the end of FY24.                                                                           
     18.  Deleted  the  Department  of  Correction's  Manday                                                                    
     billing  language  in   anticipation  of  placing  this                                                                    
     carryforward wordage in the section 1 in the next CS.                                                                      
     19. Page 81,  lines 4-8. Sec 33(d)  adds $1,647,000 UGF                                                                    
     to expand  WWAMI (Washington, Wyoming,  Alaska, Montana                                                                    
     and Idaho)  seats from 20  to 30. This is  a multi-year                                                                    
     appropriation to  allow expansion of the  program in an                                                                    
     appropriate time frame                                                                                                     
1:19:07 PM                                                                                                                    
Mr. Ecklund continued:                                                                                                          
     20.  Pages 81-86.  Sections 34  and  35 includes  Legal                                                                    
     Services reappropriation language  to ensure that prior                                                                    
     Department    of    Health    and    Social    Services                                                                    
     appropriations   are  transferred   to   the  two   new                                                                    
     departments created under Executive Order 121                                                                              
     21. Deleted  Labor's Unemployment  Insurance open-ended                                                                    
     federal language.  This was replaced  by a  $10 million                                                                    
     federal, Section 1 (numbers) appropriation.                                                                                
     22.  Deleted Department  of Law's  $4  million UGF  for                                                                    
     litigation relating to defense of state's rights.                                                                          
     23. Page  88. Sec 39  added CDVSA grant funding  to the                                                                    
     Department  of Public  Safety.  To  allow for  smoother                                                                    
     distribution  of   declining  federal   receipts,  this                                                                    
     funding  was  moved from  the  numbers  section of  the                                                                    
     budget and will be available through FY25.                                                                                 
          o $8 million total, $3 million UGF and $5 million                                                                     
     24. Page 88. Sec.  40b replaced the originally proposed                                                                    
     AMHS funding source in the  backstop language with UGF.                                                                    
     Because federal funds should  be sufficient, UGF should                                                                    
     not be needed.                                                                                                             
     25.  Page 88,  lines 30-page91,  lin17. Sections  41b-e                                                                    
     adds  fuel trigger  funding that  varies  based on  the                                                                    
     price of oil.                                                                                                              
          o $27 million UGF, to be distributed per formula                                                                      
          used for many years in the past                                                                                       
     26. Page 91, lines 18-24.  Sec 41f reflects moving half                                                                    
     of  the  UGF  for   two  of  the  Governor's  Executive                                                                    
     Operations   allocations  and   all  $250,000   of  the                                                                    
     Contingency Fund to the second  half of FY23 (effective                                                                    
     Jan 1, 2023).                                                                                                              
     27.  Deleted the  University  of  Alaska's request  for                                                                    
     Drone program funding  ($10 million), Critical minerals                                                                    
     and rare  earth elements ($7.8 million),  and Heavy Oil                                                                    
     Recovery method research and development ($5 million).                                                                     
     28. Pages 92-93. Sec 43d  Adds funding to pay statutory                                                                    
     municipalities'  debt  service obligations  for  ports,                                                                    
     harbors,  and other  projects that  were authorized  by                                                                    
     the legislature in 2002.                                                                                                   
     29.  Page  97.  Sec   44e  prohibits  authorization  of                                                                    
     certain federal  receipts through  the RPL  process. In                                                                    
     addition, it prohibits AGDC from  using the RPL process                                                                    
     to add any expenditure authorization.                                                                                      
     30. Deleted  two appropriations for the  Alaska Gasline                                                                    
     Development Corporation.                                                                                                   
          o SDPR language capped at $10 million - Removed                                                                       
          o Open-ended federal authorization - Removed                                                                          
     31. Page  100. Sec 45t  replaces an open-ended  oil and                                                                    
     gas  tax credits  appropriation  with a  set amount  of                                                                    
     $250 million.                                                                                                              
          o Based on oil revenue of $80 a barrel for FY23                                                                       
     32.  Page   103.  Subsection  46m   appropriates  large                                                                    
     passenger  vessel  gaming   and  gambling  tax  account                                                                    
     funding to the general fund ($10.2 million).                                                                               
     33.  Page  104,  lines  9-15.  Subsection  48b  revises                                                                    
     Salaries and Benefits language  to reflect the addition                                                                    
     of  the  Alaska  Higher  Education  Crafts  and  Trades                                                                    
     Employees, Local 60 ($357.6 UGF)                                                                                           
     34.  Page 106,  lines 24-28.  Subsection 49g  clarifies                                                                    
     that calendar year 2022 tax  revenue collected from the                                                                    
     commercial vessel passenger tax  is appropriated to the                                                                    
     first seven ports of call, proportionately.                                                                                
     35.  Page  107. Sections  52  and  53 include  standard                                                                    
     retroactivity and effective date clauses.                                                                                  
1:24:32 PM                                                                                                                    
Senator Hoffman looked at page 7,  item 25. He felt that the                                                                    
fuel  trigger was  essential for  the  departments but  also                                                                    
directly affected  the school  districts. He  thought school                                                                    
districts  could experience  higher  fuel  costs that  could                                                                    
take funding away from classrooms.                                                                                              
1:25:08 PM                                                                                                                    
Co-Chair  Stedman stated  that there  is more  to come,  and                                                                    
that  schools  with oil  boilers  would  be under  financial                                                                    
pressure due to the cost of oil.                                                                                                
Co-Chair Stedman WITHDREW their objection.                                                                                      
Co-Chair Stedman RE-OBJECTED for discussion.                                                                                    
Senator Wilson wondered about Page  4, line 8, subsection a.                                                                    
He  wondered  where  the additional  information  about  the                                                                    
grantee expenses could be found.                                                                                                
1:26:32 PM                                                                                                                    
AMANDA RYDER, STAFF, SENATOR BERT  STEDMAN, replied that she                                                                    
understood that  $7.4 million was to  cover grantee expenses                                                                    
She had been  told that the Department of  Health and Social                                                                    
Services  (DHSS)  had  been  struggling   to  keep  up  with                                                                    
paperwork  and  the  money  would   be  used  to  help  some                                                                    
providers  costs  due to  increased  caseload  brough on  by                                                                    
1:27:13 PM                                                                                                                    
Senator   Wilson  requested   more   information  from   the                                                                    
department on  how the  money would  be dispersed.  He asked                                                                    
about  Page  5,  line  16   and  the  deletion  of  the  PFD                                                                    
appropriation.  He  thought  that whatever  was  decided  it                                                                    
would be best not to leave a contingency in the bill.                                                                           
1:27:57 PM                                                                                                                    
Co-Chair  Stedman  said  that the  committee  was  currently                                                                    
crafting a bill to fund the  dividend with a fiscal note. He                                                                    
stressed that things were still  under discussion and that a                                                                    
dividend would be paid.                                                                                                         
1:28:28 PM                                                                                                                    
Senator  Wielechowski   echoed  Senator   Wilsons   dividend                                                                    
concerns.  He   whether  the  Department   of  Environmental                                                                    
Conservation  (DEC) assuming  primacy was  reflected in  the                                                                    
1:28:40 PM                                                                                                                    
Mr.  Ecklund replied  that the  DEC budget  subcommittee had                                                                    
included  it in  the subcommittee  report, and  it could  be                                                                    
found in the numbers section of the bill.                                                                                       
1:29:02 PM                                                                                                                    
Senator Wilson  asked about Page  6, item 22,  pertaining to                                                                    
state defense  rights. He wondered  whether the  funding was                                                                    
1:29:26 PM                                                                                                                    
Mr.  Ecklund  replied  that  there had  been  a  $4  million                                                                    
appropriation  made in  the current  year. He  said $600,000                                                                    
had  been  extended   to  date.  The  request   was  for  an                                                                    
additional  $4  million,  which  would  be  decided  by  the                                                                    
1:29:54 PM                                                                                                                    
Senator Wielechowski asked about full funding for lawsuits.                                                                     
1:30:13 PM                                                                                                                    
Mr. Ecklund replied  that Judgements and Claims  were not in                                                                    
the bill.                                                                                                                       
1:30:31 PM                                                                                                                    
Co-Chair  Stedman WITHDREW  the  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
Co-Chair Stedman stated that the  amendment deadline was 5pm                                                                    
on Monday, April 11.                                                                                                            
1:31:49 PM                                                                                                                    
Co-Chair Bishop MOVED to ADOPT  the committee substitute for                                                                    
SB 163, Work Draft 32-GS2687\G (Marx, 4/5/22).                                                                                  
Co-Chair Stedman OBJECTED for discussion.                                                                                       
1:32:30 PM                                                                                                                    
Ms. Ryder explained the committee substitute.                                                                                   
Co-Chair Stedman  WITHDREW their  objection. There  being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
Co-Chair Stedman stated that the  amendment deadline was 5pm                                                                    
on Monday, April 11.                                                                                                            
1:35:18 PM                                                                                                                    
ALEXEI  PAINTER,  DIRECTOR,  LEGISLATIVE  FINANCE  DIVISION,                                                                    
discussed  the  presentation,   "Fiscal  Update  and  Senate                                                                    
Committee Substitute" (copy on file).  He looked at slide 2,                                                                    
     ? Volatility and Spring Revenue Forecast                                                                                   
     ? Updated Fiscal Summary with Senate CS                                                                                    
            Outlook at different oil prices                                                                                     
     ? Operating Budget Growth                                                                                                  
     ? Position Count Growth                                                                                                    
1:35:42 PM                                                                                                                    
Mr. Painter addressed slide 3,  "Oil Price Forecast Update."                                                                    
He explained  that the red  line represented the  DOR spring                                                                    
forecast numbers.  He added that the  green line represented                                                                    
the futures  market, which  closely followed  the forecasted                                                                    
projections. He noted a declining  pattern in the market; he                                                                    
said that  prices were expected  to decline to  the $70/bbl.                                                                    
level by  the middle of  the decade. The current  oil prices                                                                    
were temporary.                                                                                                                 
1:37:16 PM                                                                                                                    
Mr. Painter pointed to slide  4, "Oil Prices, FY22 to Date."                                                                    
He  shared that  the rise  in  oil prices  began before  the                                                                    
Russian  invasion of  Ukraine and  was not  the sole  factor                                                                    
causing the current high prices.  He spoke to the volatility                                                                    
point and  pointed out that  there had  been a $60  range in                                                                    
price from day  to day during the market  year. He suggested                                                                    
making the budget work at varying oil prices.                                                                                   
1:38:24 PM                                                                                                                    
Co-Chair  Stedman lamented  that the  price of  oil was  the                                                                    
most sensitive variable in  the states  revenue projections.                                                                    
He said  that taking a  point in time and  extrapolating out                                                                    
led  to projections  that were  highly  improbable. He  said                                                                    
that  the committee  had dismissed  the  DOR spring  numbers                                                                    
when crafting  the budget  and had  used $80/bbl.  for their                                                                    
projections.  He related  that  there  would be  discussions                                                                    
surrounding  what  would  be   done  with  any  money  above                                                                    
$80/bbl.  He  warned that  using  $100/bbl.  to balance  the                                                                    
budget would require relying on  the continuation of the war                                                                    
in Ukraine, which was not practical.                                                                                            
1:39:39 PM                                                                                                                    
Senator  Hoffman spoke  to the  $21/bbl.  swing between  the                                                                    
committee substitute and the  governors  proposed budget. He                                                                    
wondered about  what happens to surplus  revenue and whether                                                                    
there was  contingency for revenue  above the  projected per                                                                    
barrel price.                                                                                                                   
1:40:17 PM                                                                                                                    
Co-Chair Stedman  replied that  the committee had  crafted a                                                                    
plan for the surplus revenue.                                                                                                   
Senator Hoffman shared that he had some ideas.                                                                                  
Co-Chair  Stedman  noted  that  each  committee  member  had                                                                    
contributed to the plan, which  had stemmed from the concern                                                                    
of improbably sustainable revenue  projections. He asked Mr.                                                                    
Painter  to elaborate  on the  revenue spread  that resulted                                                                    
from extrapolating out from specific points in time.                                                                            
1:41:13 PM                                                                                                                    
Mr. Painter noted  that there had been  three forecasts from                                                                    
DOR in  FY 22.  He said that  the preliminary  forecast from                                                                    
October 2021  showed significant increase from  spring 2021,                                                                    
the fall forecast was more  pessimistic, the spring forecast                                                                    
came out when oil was at  the highest point for the year. He                                                                    
encouraged  looking  at  the   potential  revenues  using  a                                                                    
sensitivity  chart,  which offered  a  range  of prices.  He                                                                    
explained  that there  was significant  spread  just on  the                                                                    
difference of $1/bbl. He said  that the differences in price                                                                    
can change the revenue forecast  by billions of dollars very                                                                    
1:43:09 PM                                                                                                                    
Mr. Painter looked  at slide 5, "FY23  Oil Price Sensitivity                                                                    
1:43:53 PM                                                                                                                    
Co-Chair Bishop thought that the  smart thing to do would be                                                                    
to  pick  a   point  to  create  a  budget   that  would  be                                                                    
sustainable, protect  savings, and  not require a  change in                                                                    
the constitution.                                                                                                               
1:44:13 PM                                                                                                                    
Mr. Painter replied that in  the times of higher oil revenue                                                                    
for extended  periods, missing the projections  by a billion                                                                    
was not as worrisome  because savings were approximately $13                                                                    
billion. He spoke  to the budget deficit in  2013, which was                                                                    
not a catastrophe  because of the savings  cushion. He noted                                                                    
that currently  having only $1.3  billion in the  CBR should                                                                    
dictate  the   risk  level   that  the   legislature  should                                                                    
1:45:05 PM                                                                                                                    
Co-Chair Stedman interjected  that the CBR was  down to $700                                                                    
or $800 million.                                                                                                                
1:45:16 PM                                                                                                                    
Mr. Painter  agreed. He said  that the balance  increase was                                                                    
due to the failure of the  reverse sweep. The balance of the                                                                    
Higher Education fund was propping up the CBR.                                                                                  
1:45:46 PM                                                                                                                    
Mr.  Painter  highlighted  slide  6,  "Takeaways  on  Spring                                                                    
     ?  Oil prices  have skyrocketed  in recent  months, but                                                                    
     the market  does not  appear to  expect that  this will                                                                    
     last over the long term.                                                                                                   
     ? Oil  has been  extremely volatile recently  and there                                                                    
     is  no consensus  on  the price  outlook  in the  short                                                                    
     ? LFD  advises the  legislature to approach  oil prices                                                                    
     conservatively given  the level of  volatility combined                                                                    
     with  relatively  small  savings  account  balances  to                                                                    
     backstop any shortfall.                                                                                                    
1:46:31 PM                                                                                                                    
Mr.  Painter pointed  to slide  7,  "Fiscal Summary:  Senate                                                                    
Finance CS, Spring  Forecast (UGF only)." He  noted that the                                                                    
Capital  Budget  and  the  PFD  had been  left  out  of  the                                                                    
projection. He  noted line 22.  He shared that  the forecast                                                                    
for the FY  22 budget was 6,964.7, $8,331.0 for  FY 23. Line                                                                    
3 showed  the marginal increase  from the fall  forecast. He                                                                    
said that  the agency  operations number  on Line  8, showed                                                                    
that  the Senate  CS  was $103.2  million  about last  years                                                                    
level.  He  added  that statewide  items  had  increased  38                                                                    
percent due  to fully  funding items  and the  increased oil                                                                    
tax  credits.   He  explained,   assuming  the   DOR  spring                                                                    
forecast,  not  including the  Capital  Budget  and the  PFD                                                                    
resulted  in a  surplus  of approximately  $3.7 billion.  He                                                                    
said that  the reserves on Line  22 would go to  the SBR and                                                                    
1:48:52 PM                                                                                                                    
Co-Chair Stedman asked  about Line 23 and  FY22. He reminded                                                                    
the  committee that  the slide  was a  snapshot without  the                                                                    
Capital  Budget  or  the  PFD, neither  of  which  would  be                                                                    
excluded, the  exercise was become familiar  with the amount                                                                    
of potential excess revenue.                                                                                                    
Mr.  Painter shared  that in  FY  22 $400  million and  $250                                                                    
million combined,  which was  $660 million  into the  CBR to                                                                    
payback draws.  He said  that in the  bill the  $660 million                                                                    
was repaid back into the SBR.                                                                                                   
Co-Chair Stedman asked about Line 23.                                                                                           
Mr.  Painter replied  that it  reflected  the post  transfer                                                                    
surplus  if approximately  $1.2 billion  in FY  22 and  $3.7                                                                    
billion in FY 23.                                                                                                               
Co-Chair Stedman asked about the viability of projections.                                                                      
Mr. Painter  said that the  fiscal year would end  June 30th                                                                    
and oil  prices would  have to  drop dramatically  for there                                                                    
not to be  a significant surplus in FY 22.  He believed that                                                                    
even if  oil prices  were zero  for the  rest of  the fiscal                                                                    
year  there  would   be  an  FY  22   surplus,  barring  any                                                                    
additional appropriations  on the fiscal year.  He said that                                                                    
the  entire  year of  oil  prices  for  FY 23  could  change                                                                    
1:51:32 PM                                                                                                                    
Senator Hoffman asked  about line 23 and  the surplus listed                                                                    
there. He wondered whether it  would be transferred into the                                                                    
Co-Chair  Stedman asked  for an  explanation of  the reserve                                                                    
balance in the lower right-hand corner of the slide.                                                                            
Mr. Painter said  that the SBR balance was  $70 million, and                                                                    
he  discussed  the balances  as  they  pertained to  Senator                                                                    
Hoffman's question.                                                                                                             
Co-Chair Stedman  said that there were  large components yet                                                                    
mentioned. Additionally,  the committee had some  control as                                                                    
to where the surplus funds were put.                                                                                            
1:53:13 PM                                                                                                                    
Mr.  Painter  looked at  slide  8,  "Fiscal Summary:  Senate                                                                    
Finance CS, Spring Forecast (UGF  only)   with 50/50 PFD and                                                                    
Governor's Capital  Budget." The slide reflected  the Senate                                                                    
CS using  the spring forecast and  includeing the governors                                                                     
proposed budget and  the 50/50 PFD split.  Not included were                                                                    
the governors   recently introduced infrastructure  bill. He                                                                    
said  that the  additions decreased  the surplus,  but there                                                                    
was  still   significant  surplus,   based  on   the  spring                                                                    
forecast, in FY 22 and FY 23.                                                                                                   
1:54:40 PM                                                                                                                    
Mr.  Painter highlighted  slide  9, "Fiscal  Summary at  $80                                                                    
oil: Senate  Finance CS, Spring  Forecast (UGF only)    with                                                                    
50/50 PFD and Governor's Capital  Budget.  The result of the                                                                    
lower  oil  price  was  that  Line 23  was  just  over  $100                                                                    
million. There was  still a surplus and  the budget balanced                                                                    
  but  the surplus was  not as large  as it was  with higher                                                                    
projected oil prices.                                                                                                           
1:55:28 PM                                                                                                                    
Co-Chair Stedman  spoke to the  CBR balance and the  SBR. He                                                                    
thought  that the  minimum balance  should be  discussed for                                                                    
both accounts.  He thought  that the  $700 million  from the                                                                    
previous year was alarmingly low.                                                                                               
1:56:11 PM                                                                                                                    
Senator von Imhof asked about more funding for PCE.                                                                             
Co-Chair Stedman answered that was  one of the options under                                                                    
discussion.  He lamented  that the  state could  not be  run                                                                    
with $700  million in savings.  He reiterated his  desire to                                                                    
discuss the matter of savings.                                                                                                  
1:57:17 PM                                                                                                                    
Mr. Painter  pointed to  slide 10,  "Items Not  Addressed in                                                                    
the Senate CS":                                                                                                                 
    ? The current CS does not have a PFD appropriation.                                                                         
     ?  The committee's  version of  the capital  budget has                                                                    
     not yet been introduced.  The Governor's capital budget                                                                    
     was based  on the  Fall revenue  forecast and  does not                                                                    
     include  additional   items  that  the   committee  may                                                                    
     consider based on current  revenue expectations such as                                                                    
     additional deferred maintenance funding.                                                                                   
     ?  The Governor  introduced a  new infrastructure  bill                                                                    
     and several  budget amendments on Monday  that have not                                                                    
     yet been addressed by the committee.                                                                                       
     ?  The   House  Finance  Committee's  version   of  the                                                                    
     operating  budget included  K-12  forward funding,  $57                                                                    
     million  outside  the   formula  for  K-12,  additional                                                                    
     payments for oil tax credits,  a CBR reverse sweep, and                                                                    
     specified where surpluses would  go. The Senate CS does                                                                    
     not yet address these items.                                                                                               
1:59:30 PM                                                                                                                    
Co-Chair Stedman  said that there had  been discussion about                                                                    
the  state  savings  balance  and  liquidity.  He  spoke  of                                                                    
actions taken  15 years ago to  tackle deferred maintenance.                                                                    
He  thought  that  positioning   the  state  to  survive  an                                                                    
economic  dip  and  considering the  financial  security  of                                                                    
communities were areas  of concern, as well  as K-12 forward                                                                    
funding. He  spoke to the  variety of issues that  should be                                                                    
considered in the budgeting process.                                                                                            
2:02:13 PM                                                                                                                    
Co-Chair  Stedman continued  his remarks.  He believed  that                                                                    
excess revenue should  spill over to the  permanent fund. He                                                                    
thought  that the  state should  take care  to increase  its                                                                    
savings positions and tackle  deferred maintenance. He added                                                                    
that any  excess revenue deposited  into the  permanent fund                                                                    
would  benefit  future  generations. He  hoped  the  meeting                                                                    
today would set  the framework for positioning  the state to                                                                    
move forward financially into the future.                                                                                       
2:04:11 PM                                                                                                                    
Co-Chair Bishop noted that 14 years  ago the state had a $15                                                                    
billion surplus,  due in large  part to the  prudent actions                                                                    
of  Co-Chair  Stedman and  Senator  Hoffman.  He noted  that                                                                    
previous  committee   co-chairs  had  been   grateful  while                                                                    
spending those savings. He stressed  that those savings must                                                                    
be rebuilt.                                                                                                                     
2:05:08 PM                                                                                                                    
Senator  Wilson  wondered  whether  the  exemption  for  the                                                                    
possible additional  payment of  $75 million for  failure of                                                                    
the disparity test had been granted.                                                                                            
2:05:26 PM                                                                                                                    
Mr. Painter  replied that he  would not know the  answer for                                                                    
another month.                                                                                                                  
2:05:32 PM                                                                                                                    
Co-Chair Stedman asked Mr. Painter  to explain the situation                                                                    
Senator Wilson cited.                                                                                                           
2:05:50 PM                                                                                                                    
Mr. Painter  replied that  in the K-12  formula there  was a                                                                    
federal  disparity test  that compared  the best  funded and                                                                    
least  funded schools.  If  the state  passed  the test,  it                                                                    
could  deduct $75  million in  federal impact  aid from  its                                                                    
payment.  The   federal  government   changed  the   way  it                                                                    
interpreted  the test  to include  the pupil  transportation                                                                    
formula, which caused the state  to fail the test. The state                                                                    
has appealed  but if it  lost the appeal, it  would increase                                                                    
the cost to the state,  and ultimately the districts, by $75                                                                    
2:06:57 PM                                                                                                                    
Senator Wilson wondered whether  the change would affect the                                                                    
overall funding of the K-12 formula.                                                                                            
2:07:16 PM                                                                                                                    
Mr. Painter  looked at  slide 11, "Areas  of Growth  in FY23                                                                    
     ? Major increases in FY23 GovAmend:                                                                                        
            $45.0 million for Medicaid.                                                                                         
            $33.6 million UGF increases to offset DGF lost                                                                      
          in CBR sweep                                                                                                          
            $17.4 million combined increases in Department                                                                      
          of Public Safety                                                                                                      
     ? Major increases from GovAmend to Senate CS1:                                                                             
            $59.4 million for AMHS (Governor eliminated                                                                         
            $27.0 million for fuel trigger to offset high                                                                       
          oil prices                                                                                                            
           $14.5 million in University of Alaska                                                                                
            $13.4 million in Fish and Game                                                                                      
Mr.  Painter reminded  the committee  that the  fuel trigger                                                                    
only increased if  the price of oil  increased. For example,                                                                    
at $80/bbl.  the fuel trigger  would only be $5  million. He                                                                    
stated that  there were several  other smaller  increases in                                                                    
the governors budget  the ones listed on the slide were                                                                         
the ones over $10 million.                                                                                                      
2:09:59 PM                                                                                                                    
Senator Wilson spoke to the $45 million increase for                                                                            
Medicaid and asked whether the Federal Medical Assistance                                                                       
Percentage (FMAP) was expected to increase.                                                                                     
2:10:06 PM                                                                                                                    
Mr. Painter replied that he had not yet heard of an                                                                             
increase and deferred to the administration.                                                                                    
2:10:25 PM                                                                                                                    
Mr. Painter pointed to slide 12, "Many FY23 Increases                                                                           
Reverse Past Budget Reductions":                                                                                                
     ? Several increments in the Governor's FY23 budget                                                                         
     request reverse reductions or vetoes made since FY20:                                                                      
            $45.0  million Medicaid increase    Medicaid was                                                                    
          reduced by $35.0 million in FY22.                                                                                     
            $4.0 million University  of Alaska increase   UA                                                                    
          was reduced by $54.3 million from FY20-22.                                                                            
            $2.0  million for Legislative per  diem   vetoed                                                                    
          by Governor in FY22.                                                                                                  
             $0.7  million     GF/MH  items  vetoed  by  the                                                                    
          Governor in FY22.                                                                                                     
        Several other items reverse reductions made from                                                                        
     FY15-FY19 under previous governors:                                                                                        
            $4.9 million for DEC  404 Primacy   this was cut                                                                    
          in FY15.                                                                                                              
             $3.8   million  for  wildfire   prevention  and                                                                    
          academy  this was cut in FY16.                                                                                        
            $2.4 million for  Village Public Safety Officers                                                                    
            this was cut in FY16.                                                                                               
            $1.2  million for Judiciary for  increased hours                                                                    
            this was cut in FY16.                                                                                               
2:13:00 PM                                                                                                                    
Co-Chair Stedman noted that these were the highlights, and                                                                      
a more extensive list could be found in members packets.                                                                        
2:13:17 PM                                                                                                                    
Co-Chair  Bishop added  that the  University cuts  from 2016                                                                    
made the  total cuts to  the University $110 million  with a                                                                    
loss of 1200 employees out of Fairbanks alone.                                                                                  
2:13:37 PM                                                                                                                    
Mr. Painter pointed to slide  13, "What's the True Operating                                                                    
Budget Growth Rate?"                                                                                                            
     ?  Several changes  from FY22-23  give the  FY23 agency                                                                    
    operations budget a lower starting point than FY22.                                                                         
     ?   The  Governor's   FY23   budget  increases   agency                                                                    
     operations  by $94.9  million  (2.5  percent) over  the                                                                    
     FY23 baseline.                                                                                                             
     ?  However,   the  Governor's  budget   uses  temporary                                                                    
     federal funds  in place  of UGF  for the  Alaska Marine                                                                    
     Highway System. Keeping UGF funding  level (as the HFIN                                                                    
     and SCS1 budgets  do) would result in  a $154.3 million                                                                    
     (4.0 percent) over the baseline.                                                                                           
     ? Senate CS1  is $239.2 million (5.8  percent) over the                                                                    
     baseline.  HFIN is  $272.9 million  (6.7 percent)  over                                                                    
     the baseline.                                                                                                              
Mr. Painter said  that the passage of SB 55  moved a portion                                                                    
of retirement  funding to agency operations,  which resulted                                                                    
in significant savings ($45 million)  in FY 23. He said that                                                                    
much  of   the  savings  was  due   to  positive  investment                                                                    
performance and the decision by  the ARM board not to invest                                                                    
in the  Health Care fund.  He stated that the  savings could                                                                    
decrease  if  investment  returns  declined,  or  the  board                                                                    
resumed funding for  the Health Care fund. He  said that the                                                                    
net of  all the automatic  changes was a reduction  of $68.8                                                                    
million.  He relayed  that when  looking at  the comparisons                                                                    
between FY  22 and FY  23 the increase in  agency operations                                                                    
was undersold  because the starting point  was $65.8 million                                                                    
ahead. He pointed  to the table on the bottom  of the slide,                                                                    
which compared the growth rates  of different budgets to the                                                                    
starting  point rather  than the  previous years  budget. He                                                                    
related that  the governors  FY  23 budget  increased agency                                                                    
operations by  $95 million, or  2.5 percent, over the  FY 23                                                                    
baseline.  He said  that many  of the  governors  reductions                                                                    
were general funds for AMHS. He  noted an error on the slide                                                                    
and said that  the box numbers were correct  rather than the                                                                    
final bullet  point. He  said that  the growth  factors were                                                                    
above  the  rate  of  inflation   and  offered  a  point  of                                                                    
comparison:  between  FY  05  and   FY  13  there  had  been                                                                    
significant increases  in oil revenue and  agency operations                                                                    
had grown 7.9  percent per year on average  and doubled over                                                                    
the decade.  He stated that in  the past when the  state had                                                                    
increased oil revenue there had  been an increase in savings                                                                    
as  well as  an increase  in Operating  Budget spending.  He                                                                    
shared that previous budget reductions  and flat funding had                                                                    
increased   the  demand   for  spending   when  funds   were                                                                    
available,  but   the  growth  was  rapid   in  the  various                                                                    
scenarios presented so far.                                                                                                     
2:17:32 PM                                                                                                                    
Mr. Painter  looked at slide  14, "Full-Time  Position Count                                                                    
Comparison." He focused on the  numbers at the bottom of the                                                                    
slide. The  governors  budget  increased the  total position                                                                    
count  statewide  by  233 full  time  positions.  The  House                                                                    
Finance  budget  increase  that  by  another  34,  over  the                                                                    
governors  proposal.  The Senate CS  was 1 higher,  over the                                                                    
governors  budget.  Legislative Council had  recommended the                                                                    
reclassification  of security  personnel for  half to  full-                                                                    
time,  which  increase  the  count  by  8  but  was  only  a                                                                    
technical   reclassification.  He   said   that  there   was                                                                    
significant  growth  in  positions being  requested  by  the                                                                    
governor and being approves by both legislative houses.                                                                         
Co-Chair Stedman believed the  presentation had provided the                                                                    
committee much food for thought.                                                                                                
SB  162  was  HEARD  and   HELD  in  committee  for  further                                                                    
SB  163  was  HEARD  and   HELD  in  committee  for  further                                                                    
2:19:24 PM                                                                                                                    
AT EASE                                                                                                                         
2:29:41 PM                                                                                                                    
Co-Chair Stedman  handed the gavel  to Co-Chair  Bishop. Co-                                                                    
Chair Bishop  announced that there were  no backup documents                                                                    
to  accompany the  presentation for  SB 241.  He noted  that                                                                    
there  were numerous  members of  the administration  online                                                                    
for questions.                                                                                                                  
SENATE BILL NO. 241                                                                                                           
     "An  Act   making  appropriations  for   the  operating                                                                    
     expenses  of  state  government and  certain  programs;                                                                    
     making   capital    appropriations   and   supplemental                                                                    
     appropriations; capitalizing  funds; and  providing for                                                                    
     an effective date."                                                                                                        
2:31:15 PM                                                                                                                    
NEIL STEININGER, DIRECTOR, OFFICE  OF MANAGEMENT AND BUDGET,                                                                    
OFFICE OF THE GOVERNOR, introduced himself.                                                                                     
MILES BAKER,  INFRASTRUCTURE INVESTMENT  COORDINATOR, OFFICE                                                                    
OF THE GOVERNOR, introduced himself.                                                                                            
Mr.  Steininger   discussed  the  presentation,   "State  of                                                                    
Alaska;    Office    of   the    Governor;    Infrastructure                                                                    
Appropriation  Bill SB241;  Senate Finance  Committee; April                                                                    
6, 2022"  (copy on  file). He highlighted  slide 2,  "SB 241                                                                    
Infrastructure Overview."  He noted  that there  were backup                                                                    
documents posted to  the OMB website that  would be provided                                                                    
to  the   committee.  He  discussed  the   funding  for  the                                                                    
legislation as it was illustrated on the slide.                                                                                 
2:34:15 PM                                                                                                                    
Mr.  Steininger   pointed  to   slide  3,   "Updated  Fiscal                                                                    
Summary."  He  said  that  the  summary  included  both  the                                                                    
appropriations  the  bill  as well  as  all  the  amendments                                                                    
introduced, to date, by  the executive branch. Additionally,                                                                    
adjustments  had been  made to  oil and  gas tax  credits to                                                                    
reflect the  current oil price forecast.  He summarized that                                                                    
with all the  amendments and adjustments the  UGF budget for                                                                    
FY 23  was $4.8 billion,  with an All-Funds budget  of $11.7                                                                    
billion, this  with the  spring forecast  left a  surplus of                                                                    
$2.2 billion in FY 23.  He noted that there were differences                                                                    
in  this  presentations  numbers  versus  the  figures  just                                                                    
presented  by Director  Painter.  This was  because the  LFD                                                                    
presentation  was  based  on  the  Senate  CS  and  the  OMB                                                                    
presentation was based on the governors proposed budget.                                                                        
2:35:32 PM                                                                                                                    
Mr. Baker  addressed slide  4, "Federal  Infrastructure Bill                                                                    
     ?Enacted November 15, 2021 (PL 117-58; HR 3684)                                                                            
       -year   reauthorization    of   established   federal                                                                    
     programs and some new programs                                                                                             
     ?Only a portion of "Alaska" funding will come through                                                                      
     the State of Alaska                                                                                                        
     ?Many program details are still pending                                                                                    
     ?Much less discretionary than recent stimulus: CARES,                                                                      
     CRRSA, ARP                                                                                                                 
          oNo "tranches" of unrestricted federal payments                                                                       
          oSpending parameters established by federal                                                                           
     ?Traditional State/Local capital priorities largely                                                                        
     ?Funding   flows    by   formula    (apportionment   or                                                                    
     allocation) or grants (competitive and discretionary)                                                                      
          oApproximately 60 percent by formula and 40                                                                           
          percent in grants on a national basis                                                                                 
     ?Local governments, tribes and other entities eligible                                                                     
     for most programs                                                                                                          
Senator  Wilson  asked about  the  sixth  and eighth  bullet                                                                    
points. He  wondered whether the administration  was looking                                                                    
at projects that  would normally be state  funded that could                                                                    
be offset to local entities that receive federal funding.                                                                       
2:39:47 PM                                                                                                                    
Mr.  Baker replied  that because  of the  focused effort  on                                                                    
infrastructure part  of the  process had  been understanding                                                                    
the   federal  bill   and  how   it  ties   in  with   other                                                                    
appropriation  bills that  had  already  been submitted.  He                                                                    
believed that within the next 6  months there needed to be a                                                                    
continued effort to use the best funding sources available.                                                                     
2:41:09 PM                                                                                                                    
Senator Wilson  commented on  the possibility  of offsetting                                                                    
broadband funding.  He thought it  could he helpful  to find                                                                    
other projects that could be offset by federal dollars.                                                                         
2:41:51 PM                                                                                                                    
Senator von Imhof  noted the eighth bullet  points and asked                                                                    
about  audits that  could be  conducted to  assure that  the                                                                    
monies  were being  spent as  intended and  wondered whether                                                                    
they would be conducted by the state or the feds.                                                                               
Mr.  Baker responded  that he  had not  seen any  indication                                                                    
that the federal government would  audit the grants any more                                                                    
than normal. There would be  checks to assure that the state                                                                    
followed the federal highway and  EPA programs. He said that                                                                    
there was  no money specifically  in the bill  for technical                                                                    
assistance for  grantees. He did  not expect that  the state                                                                    
would  be expected  to conduct  audits. He  relayed that  if                                                                    
local   governments   were   seeking  a   rise   grant   for                                                                    
infrastructure projects it would  be their responsibility to                                                                    
meet the requirements.                                                                                                          
Mr. Steininger added that ARPA  and CARES Act funding flowed                                                                    
through the  state to  subgrantees, which  made the  state a                                                                    
responsible party  in the chain.  He noted that  those funds                                                                    
were audited.  He said that  if a state  was not a  party to                                                                    
the grants,  the grantee  applying would  be subject  to the                                                                    
2:44:54 PM                                                                                                                    
Senator Wielechowski  wondered whether SB 241  reflected all                                                                    
the  funds   available  to  the   sate  under   the  federal                                                                    
infrastructure bill.                                                                                                            
2:45:22 PM                                                                                                                    
Mr.  Baker replied  that the  bill  was the  best effort  to                                                                    
appropriate  and  ask  for authority  for  the  funding  the                                                                    
administration knew was coming to the state.                                                                                    
2:46:06 PM                                                                                                                    
Senator Wielechowski referred to Section 17 of the bill:                                                                        
     Sec.  17.   SUPPLEMENTAL  FEDERAL  AND   OTHER  PROGRAM                                                                  
     RECEIPTS.   Federal    receipts   from    P.L.   117-58                                                                    
     (Infrastructure   Investment   and    Jobs   Act)   and                                                                    
     designated  program receipts  under AS  37.05.146(b)(3)                                                                    
     that include  federal receipts received from  P.L. 117-                                                                    
     58 (Infrastructure  Investment and Jobs  Act), received                                                                    
     during the fiscal  year ending June 30,  2022, and that                                                                    
     exceed  the amounts  appropriated by  the Thirty-Second                                                                    
     Alaska State Legislature,  are appropriated conditioned                                                                    
     on compliance with the program  review provisions of AS                                                                    
     37.07.080(h).  For   the  purposes  of   this  section,                                                                    
     "exceed    the     amounts    appropriated"    includes                                                                    
     appropriations for  which no previous  federal receipts                                                                    
     from P.L. 117-58 (Infrastructure Investment and Jobs                                                                       
     Act) have been made.                                                                                                       
Senator  Wielechowski and  assumed  that there  would be  no                                                                    
objection  from the  administration  to  remove the  section                                                                    
from the bill.                                                                                                                  
2:46:39 PM                                                                                                                    
Mr. Baker thought that there  were so many unknown variables                                                                    
that  balance,  and  flexibility   was  necessary,  and  the                                                                    
administration needed to be able  to make decisions when the                                                                    
legislature was not in session.                                                                                                 
2:47:23 PM                                                                                                                    
Mr.  Steininger said  that the  administration would  oppose                                                                    
the removal of Section 17.                                                                                                      
2:48:04 PM                                                                                                                    
Senator Wielechowski commented that  the section would allow                                                                    
the  governor to  go through  a revised  legislative program                                                                    
process,  which meant  that  if  additional federal  funding                                                                    
were received  the governor  would only  have to  advise the                                                                    
Legislative Budget and  Audit Committee of how  he wished to                                                                    
spend  those   funds.  He  thought  that   the  process  was                                                                    
unconstitutional and that  the section should not  be in the                                                                    
2:49:04 PM                                                                                                                    
Senator  von Imhof  requested  clarification  on the  second                                                                    
bullet point  5-year  reauthorization of established federal                                                                    
programs and some new programs.                                                                                                 
2:49:52 PM                                                                                                                    
Mr.  Baker  stressed  that Congress  typically  reauthorized                                                                    
programs   in  5-year   increments  and   all  the   surface                                                                    
transportation and EPA Water and  Sewer programs were up for                                                                    
reauthorization.  He  relayed  that  much of  the  bill  was                                                                    
spending that would have occurred  anyway and had grown into                                                                    
the  infrastructure  bill as  most  of  those programs  were                                                                    
infrastructure  related. Some  new programs  had been  added                                                                    
such   as   broadband    and   electric   vehicle   charging                                                                    
infrastructure, critical  minerals, rare earth  elements and                                                                    
clean energy technologies.                                                                                                      
2:50:35 PM                                                                                                                    
Senator  von Imhof  asked whether  the 5-year  authorization                                                                    
for federal programs meant that the programs were funded.                                                                       
2:50:48 PM                                                                                                                    
Mr. Baker stated that  traditionally the authorizations were                                                                    
done separately,  and Congress would appropriate  yearly. In                                                                    
the  case  of   this  legislation  all  5   years  had  been                                                                    
appropriated, with some exceptions.                                                                                             
2:51:55 PM                                                                                                                    
Senator  von Imhof  surmised that  the bill  created forward                                                                    
funding  of   federal  dollars.   She  wondered   about  the                                                                    
difference  between state  and federal  forward funding  and                                                                    
noted  that  the  governor  had  sued  the  legislature  for                                                                    
forward   funding    education.   She    requested   further                                                                    
clarification from legislative legal.                                                                                           
2:52:31 PM                                                                                                                    
Mr. Baker responded  that the bill did not  forward fund. He                                                                    
said that  in some cases  grants would be given  upfront. He                                                                    
suggested some ways that it  could be perceived that forward                                                                    
funding was occurring.                                                                                                          
2:53:15 PM                                                                                                                    
Mr. Steininger furthered that the  bill did not forward fund                                                                    
any future  appropriations. He said any  forward funding was                                                                    
at the  federal level  where the  rules were  different from                                                                    
the state level.                                                                                                                
2:53:48 PM                                                                                                                    
Co-Chair  Stedman  commented  that   the  process  was  just                                                                    
beginning.  He  did  not  think that  the  bill  would  gain                                                                    
traction and that the projects  contained in the legislation                                                                    
would likely  be handled  in other  vehicles. He  hoped that                                                                    
the  issue  could  be handled  in  the  regular  legislative                                                                    
session  and  hoped  that  the  administration  would  avoid                                                                    
calling   any  special   sessions.  He   spoke  to   Senator                                                                    
Wielechowskis  concerns  about Section 17 and  noted that in                                                                    
the  previous year  the legislature  had  complied with  the                                                                    
governors  requests only  to have the governor  veto his own                                                                    
2:56:40 PM                                                                                                                    
Mr. Baker  pointed to slide 5,  "Federal Infrastructure Bill                                                                    
     ?Roads, bridges, airports, ports and waterways, rail,                                                                      
     public transit, electric vehicles (EV), and safety                                                                         
     Other Infrastructure                                                                                                       
     ?Energy, power grid, broadband, water, resiliency, and                                                                     
     environmental remediation                                                                                                  
     Federal Infrastructure Bill:                                                                                             
     $973 billion over 5 years                                                                                                  
     $423 billion in base spending                                                                                              
     $550 billion in new spending                                                                                               
     $284 billion for transportation                                                                                            
     $266 billion for other infrastructure                                                                                      
2:57:35 PM                                                                                                                    
Senator Wilson asked whether a  portion of the funding would                                                                    
go to the Alaska Railroad Corporation.                                                                                          
Mr. Baker replied in the  affirmative. He furthered that the                                                                    
funding  was  mostly  an increase  in  the  federal  transit                                                                    
administration   formula  dollars,   which  were   based  on                                                                    
passenger numbers.                                                                                                              
2:58:33 PM                                                                                                                    
Mr.  Baker  looked  at  slide   6,  "SB  241  Infrastructure                                                                    
     Key Principals:                                                                                                            
     ?Include identifiable funding coming in FY22 or FY23                                                                       
     ?Identify coordination and implementation needs                                                                            
     ?Maintain pressure on UGF spending                                                                                         
     ?Provide Local Government and Tribal Support                                                                               
     ?Maintain tight nexus to programs in federal                                                                               
     ?Pursue significant competitive opportunities for                                                                          
     which Alaska is uniquely positioned                                                                                        
3:00:24 PM                                                                                                                    
Co-Chair  Bishop  queried the  baseline  UGF  match for  the                                                                    
programs in the bill.                                                                                                           
Mr. Baker replied $50.8 million.                                                                                                
3:00:51 PM                                                                                                                    
Co-Chair Bishop asked about unknown  elements of the federal                                                                    
funding. He thought $50 million might not be enough.                                                                            
Senator  Wielechowski  asked  whether  there  was  a  simple                                                                    
document that  could be distributed  that defined  where the                                                                    
federal funds could be spent.                                                                                                   
3:02:19 PM                                                                                                                    
Mr.  Baker replied  that  the information  was  on the  next                                                                    
3:02:42 PM                                                                                                                    
Senator  Hoffman asked  about  local  government and  tribal                                                                    
support.  He wondered  what  support team  was  in place  to                                                                    
provide support for the over 500 tribes in the state.                                                                           
Mr. Baker replied that the  situation was evolving and there                                                                    
was a request for money to expand the effort.                                                                                   
3:04:14 PM                                                                                                                    
Senator  Hoffman thought  that  the work  to support  tribal                                                                    
entities   would  be   significant   and   hoped  that   the                                                                    
administration understood the immensity of the undertaking.                                                                     
3:04:26 PM                                                                                                                    
Co-Chair Stedman echoed Senator  Hoffmans  concern. He added                                                                    
that he hoped  for clear definition between  the branches of                                                                    
government  pertaining   to  what   the  executive   did  in                                                                    
execution  and what  the legislative  did  in oversight.  He                                                                    
believed  it  was in  the  states   best interest  that  the                                                                    
branches  of government  worked as  a team  to maximize  the                                                                    
utilization of the federal funds.                                                                                               
3:06:16 PM                                                                                                                    
Co-Chair  Bishop   asked  whether  the   administration  was                                                                    
prepared to come back on  Monday with a draft organizational                                                                    
3:06:41 PM                                                                                                                    
Mr. Baker  replied that nothing  had been solidified  as far                                                                    
as  administrative  support.  He  expressed  willingness  to                                                                    
continue the conversation.                                                                                                      
3:07:18 PM                                                                                                                    
Co-Chair Stedman stressed that  space in the Atwood Building                                                                    
in Anchorage could  be utilized to house  the support staff,                                                                    
which he believed needed to be more than 3 people.                                                                              
3:07:59 PM                                                                                                                    
Senator  Wielechowski  wondered  how  much  flexibility  was                                                                    
allowed  in the  appropriations and  how much  authority was                                                                    
available  to the  legislature. He  thought a  document that                                                                    
detailed the parameters could be helpful.                                                                                       
Mr. Steininger  thought that it  was important to  note that                                                                    
there  was  not  a  large amount  of  discretionary  funding                                                                    
coming, so everything  on the list in the  bill was directed                                                                    
by  the federal  government. The  funds could  not be  moved                                                                    
around, and  the administration  did not have  discretion as                                                                    
to where  the funds would  go. He  said that there  was more                                                                    
flexibility within the surface transportation program.                                                                          
3:10:34 PM                                                                                                                    
Senator  Wielechowski  asked  whether that  applied  to  the                                                                    
entire bill.  He understood that  the appropriations  in the                                                                    
bill could not be changed.                                                                                                      
3:11:05 PM                                                                                                                    
Mr. Baker cited the   Governors  Infrastructure Bill Summary                                                                    
(SB 241/HB  414   (copy  on file). He  stated that  the only                                                                    
difference  for  lines 1  through  10  from previous  budget                                                                    
requests submitted December  15  of every year  was that the                                                                    
bill provided  supplemental funding  in FY 22  and increased                                                                    
funding in FY 23 from  what was submitted in December. Lines                                                                    
12 through  16 contained  small UGF augmentations.  He noted                                                                    
that  the federal  earmarks  were  federally determined.  He                                                                    
said  that lines  21  through 23  were  subjective and  that                                                                    
based on  conversation at the  table would continue to  be a                                                                    
focus.  He stated  that the  last four  lines were  the most                                                                    
subjected and were  four areas where the  state was uniquely                                                                    
positioned to compete for large  amounts of federal dollars.                                                                    
He said  that proposal  in the  bill was  for seed  money to                                                                    
craft  competitive   applications  for   anticipated  future                                                                    
funding  opportunities  expected  in  the  second  or  third                                                                    
quarter of 2022.                                                                                                                
3:13:18 PM                                                                                                                    
Co-Chair  Stedman  believed  that   money  going  to  Tribal                                                                    
entities should  be considered. He thought  possible overlap                                                                    
should be  identified. He added  that broadband was  a prime                                                                    
area where duplicate efforts could be an issue.                                                                                 
3:14:24 PM                                                                                                                    
Senator von  Imhof was pleased  to see the $5,480.0  for the                                                                    
State Infrastructure  Planning and Coordination  (Slide 15).                                                                    
She hoped  that there was  a plan  for the funding  and that                                                                    
all  comprehensive guidance  was  provided by  the state  to                                                                    
stakeholders.   She  hoped   that   some   of  the   Surface                                                                    
Transportation funding could be  spent to improve particular                                                                    
trails in the state.                                                                                                            
3:16:37 PM                                                                                                                    
Co-Chair Bishop  understood that Senator  Sullivan supported                                                                    
the  National Trails  Program in  the highways  bill on  the                                                                    
federal level.                                                                                                                  
3:16:53 PM                                                                                                                    
Senator Hoffman  voiced his concern  that DOT  funding would                                                                    
not be spent equitably across the state.                                                                                        
3:17:47 PM                                                                                                                    
Co-Chair Bishop  felt that there  was a common theme  at the                                                                    
table, which was to work  with all entities and stakeholders                                                                    
to capture  and maximize  every federal dollar  possible for                                                                    
the state.  He noted that  DOT consistently worked  to bring                                                                    
in above and  beyond the expected number  of federal dollars                                                                    
to the state.                                                                                                                   
3:19:58 PM                                                                                                                    
Co-Chair  Stedman requested  an infrastructure  list divided                                                                    
by DOT region across the state.                                                                                                 
3:20:19 PM                                                                                                                    
Co-Chair  Bishop  noted  that the  Statewide  Transportation                                                                    
Improvement Program (STIP) might  have the projects included                                                                    
by house districts.                                                                                                             
Co-Chair Bishop discussed housekeeping.                                                                                         
SB  241  was  HEARD  and   HELD  in  committee  for  further                                                                    
3:21:33 PM                                                                                                                    
The meeting was adjourned at 3:21 p.m.                                                                                          

Document Name Date/Time Subjects
SB 241 22.04.06 Attachment 1 - Infrastructure Bill Summary.pdf SFIN 4/6/2022 1:00:00 PM
SB 241
SB 241 22.04.06 Attachment 2 - DOTPF Airport Improvement Program Details.pdf SFIN 4/6/2022 1:00:00 PM
SB 241
SB 241 22.04.06 Attachment 3 - DOTPF Surface Transportation Program Details.pdf SFIN 4/6/2022 1:00:00 PM
SB 241
SB 241 22.04.06 GOV Infrastructure Bill SFIN FINAL.pdf SFIN 4/6/2022 1:00:00 PM
SB 241
SB 162 Handout - FY23 Increments Restoring Decrements or Vetoes.pdf SFIN 4/6/2022 1:00:00 PM
SB 162
SB 162 LFD Presentation- SFIN Operating CS 4-6-22.pdf SFIN 4/6/2022 1:00:00 PM
SB 162
SB 162 LFD Spreadsheet Packet 040622.pdf SFIN 4/6/2022 1:00:00 PM
SB 162
SB 162 Work Draft version W.pdf SFIN 4/6/2022 1:00:00 PM
SB 162
SB 163 Work Draft version G.pdf SFIN 4/6/2022 1:00:00 PM
SB 163
SB 162 FY23 CS 1 Language Explanation.pdf SFIN 4/6/2022 1:00:00 PM
SB 162