Legislature(2017 - 2018)SENATE FINANCE 532
04/05/2018 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB287 | |
| HB286 | |
| HB285 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 286 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 287 | TELECONFERENCED | |
| + | HB 285 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
April 5, 2018
2:37 p.m.
2:37:15 PM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 2:37 p.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Peter Micciche
Senator Gary Stevens
Senator Natasha von Imhof
MEMBERS ABSENT
Senator Donny Olson
ALSO PRESENT
Pete Ecklund, Staff, Senator Lyman Hoffman; Angela Rodell,
Executive Director, Alaska Permanent Fund Corporation; Mike
Barnhill, Deputy Commissioner, Department of Revenue.
SUMMARY
CSHB 285(FIN)
APPROP: MENTAL HEALTH BUDGET
CSHB 285(FIN) was HEARD and HELD in committee for
further consideration.
CSHB 286(FIN) am(brf sup maj fld)(efd fld)
APPROP: OPERATING BUDGET/LOANS/FUNDS
CSHB 286(FIN) am(brf sup maj fld)(efd fld)was
HEARD and HELD in committee for further
consideration.
HB 287(brf sup maj fld)
APPROP: PUPIL TRANSPORTATION; EDUCATION
HB 287(brf sup maj fld) was HEARD and HELD in
committee for further consideration.
HOUSE BILL NO. 287(brf sup maj fld)
"An Act making appropriations for public education and
transportation of students; and providing for an
effective date."
2:38:02 PM
Vice-Chair Bishop MOVED to ADOPT proposed committee
substitute for HB 287, Work Draft 30-LS1229\R (Wallace,
3/23/18).
Co-Chair MacKinnon OBJECTED for discussion.
2:38:33 PM
AT EASE
2:40:06 PM
RECONVENED
Co-Chair MacKinnon relayed that the House had proposed
early funding for education and transportation The Senate
agreed that instability of educators, superintendents, and
students that were trying to learn. The proposed Committee
Substitute (CS) addressed that issue.
Co-Chair Hoffman thanked the House for its work on the
bill. He noted that the committee had not taken up the bill
until it had received the operating budget.
2:41:33 PM
PETE ECKLUND, STAFF, SENATOR LYMAN HOFFMAN, discussed the
proposed CS.
Mr. Ecklund looked at page 2, Section 1, which were
elements of K-12 aid that were held in the other body's
version of the bill. He stated that it was aid to different
school districts, and to Mt. Edgecumbe. He announced that
pages 3 and 4 were the funding sources contained in Section
1. He shared that page 5, Section 4 was the legislative
intent. He paraphrased that the intent instructed the
Department of Revenue (DOR) and the Permanent Fund
Corporation to work together to utilize the constitutional
budget reserve (CBR) borrowing language. The language was
in the FY 18 budget, and would appear in the FY 19 budget.
The language allowed the CBR to be used for cashflow
purposes in anticipation of general fund revenue. The
intent was for the permanent fund to make cash transfers to
the general fund in the most prudent way possible
throughout t the fiscal year. He looked at line 11, Section
5, which contained a 5.25 percent draw from the Earnings
Reserve Account (ERA). He explained that it was an
unstructured draw, because there was no current statute
that would instruct the draw. He remarked that there was
another bill, SB 26, which had a 5.25 percent draw. That
bill would have taken effect in FY 18, so the language
reflected the language in SB 26. He remarked that there was
a $726 million dividend paid in the prior year, so the
language took a 5.25 percent from the ERA, and subtracts
the dividend payment. The remainder was $1.792 billion,
which went to the general fund in FY 18. That money became
FY 18 revenue.
2:45:22 PM
Co-Chair MacKinnon asked if the budget from the House
contained a percentage draw.
Mr. Ecklund answered in the affirmative, and specified that
that the effective rate was a 4.21 percent effective rate.
Mr. Ecklund drew attention to Line 20 in Section 6, which
was fund capitalization for K-12 Base Student Allocation
(BSA) funding for FY 19. He stated that $1.89 billion was
fully funding the BSA for FY 19. He looked at Section B,
which was $78.1 million for transportation FY 19. He
remarked that Section C was fully funding the BSA for FY
20. He shared that Section D was fully funding
transportation for FY 20. He remarked that page 6, Section
7 was a standard lapse. He stated that Section 8 was
contingency, which referred to Section 6 that held the FY
20 appropriations for K-12 education and people
transportation. Those two sections would go into effect
upon the enactment of SB 26. He shared that Sections 9, 10,
and 11 were effective dates.
Co-Chair MacKinnon WITHDREW her OBJECTION. There being NO
further OBJECTION, the proposed committee substitute was
ADOPTED.
Co-Chair MacKinnon stated that Alaskans wanted assurance
that there was protection for the corpus of the permanent
fund. She asked for comments on the bill.
ANGELA RODELL, EXECUTIVE DIRECTOR, ALASKA PERMANENT FUND
CORPORATION, stated that the CS being considered would
protect the corpus of the fund. She emphasized that the
corpus of the fund was protected constitutionally, and the
bill did not touch the corpus of the fund. She shared
observations that generated questions for the Alaska
Permanent Fund Corporation (APFC). She stressed that there
needed to be a statutory framework. She remarked that the
fund should not be placed in a political discussion, but
rather provide a working framework to plan each year
accordingly. She stated that work would be done with the
treasury to plan the draws over the course of year. She
encouraged the body to continue to work. She referenced the
contingency language.
Co-Chair Hoffman asked if it was fair to say that the
corporation was concerned about potential unstructured
draws that might compromise the earnings.
Ms. Rodell answered in the affirmative.
2:51:33 PM
MIKE BARNHILL, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE,
thought it seemed as though the salient provisions of the
bill were set out in Section 4, which called on the
department to use the CBR as a backstop to the general
fund. He stressed that there would be assistance to the
permanent fund in maximizing its investment revenue. He
stated that, presently, DOR worked internally to schedule
transfers from the CBR into the GF periodically throughout
the year. There was a model to predict when the daily
balance of the GF would go below $400 million, and that was
the moment to draw from the CBR. That model would be used
at the end of FY 18 to assist in providing a schedule to
the permanent fund appropriately to hopefully maximize
investment revenue.
2:53:39 PM
Co-Chair MacKinnon informed that she would be setting the
bill aside and taking it up again the following day and the
committee would be hearing public testimony.
Co-Chair MacKinnon handed the gavel to Co-Chair Hoffman.
2:54:10 PM
AT EASE
2:58:23 PM
RECONVENED
Co-Chair MacKinnon discussed forward-funding of education.
The house had provided a separate bill for funding
education. The bill was being considered separately at the
House's request.
HB 287 was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 286(FIN) am(brf sup maj fld)(efd fld)
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; and making supplemental
appropriations."
2:59:48 PM
Vice-Chair Bishop MOVED to ADOPT proposed committee
substitute for CSHB 286, Work Draft 30-GH2564\N (Wallace,
4/4/18).
Co-Chair Hoffman OBJECTED for discussion.
Mr. Ecklund listed documents that were available for
reference. He drew attention to a booklet entitled "FY 19
Operating Budget Subcommittee Closeout Narratives," which
showed a synopsis of what happened in Senate Finance
Subcommittees (copy on file). He stated he would not
address the booklet, but would address language changes to
the bill. He stated there was a report from the Legislative
Finance Division (LFD) entitled "2018 Legislature -
Operating Budget, Agency Summary - Senate Structure" (copy
on file).
Mr. Ecklund informed that the committee had removed funding
items for K-12 education and pupil transportation from the
bill and placed them in HB 287. He stated that the change
was reflected in the reports in order to compare the
Senate's proposed total budget to that of the House and the
governor.
Co-Chair Hoffman pointed out that subcommittee chairs had
been having hearings and had closed out reports earlier in
the week, which were incorporated in the booklet mentioned
by Mr. Ecklund.
Mr. Ecklund furthered that once the proposed Committee
Substitute (CS) was adopted, LFD would provide a myriad of
reports for members and the public to compare the CS to
earlier versions of the bill. He stated he would address a
4-page document that listed all the changes from a
previously adopted CS [which he referred to as "CS Zero"]
from the Senate version of the bill [CSSB 144(FIN), adopted
February 9, 2018]. The bill rearranged the governor's
budget into the format that was preferred by LFD and the
Legislative Legal Department.
Mr. Ecklund detailed that the CS contained $5.5 billion of
UGF, which included a dividend. He remarked that there was
$868 million of DGF; $1.428 million of other state funds;
$2.45 billion of federal funds; which totaled $10.2
billion.
Co-Chair Hoffman asked for Mr. Ecklund to state the amount
for the amount of the dividend in the bill.
Mr. Ecklund replied that the individual dividend was $1600
per individual.
3:04:28 PM
Mr. Ecklund read from the document "Summary of Changes from
the CS SB 144(FIN) and SCS CSHB 286(FIN)" (copy on file):
Sections 1-3:
Incorporate all changes adopted by the Senate Finance
Subcommittees, with the exception that all funding for
the Department of Education and Early Development that
is included in SCS HB287 has been removed from the
committee substitute.
Section 4(a), page 53, lines 1-3: Discourages future
supplemental requests by adding legislative intent
stating that the amounts appropriated in the bill are
the full amounts that will be appropriated for FY19.
Section 7, page 54, lines 16-24: Revises language
submitted by the Governor regarding the declaration of
the FY19 Alaska Industrial Development and Export
Authority dividend. Similar language was adopted by
the legislature last year.
Section 8 (Permanent Fund), pages 54-55:
Subsections (a) and (b) regarding royalty deposits to
fund corpus and earnings deposits to the capital
income fund remain as proposed.
Subsection (c) retains the Governor's proposed 5.25%
payout from the Earnings Reserve Account to the
general fund but corrects the amount of the payout
($2,722,842,518).
Subsection (d) modifies the Governor's proposed
appropriation to the dividend fundwas $819 million
for an estimated dividend of $1,216, and is now the
amount necessary to pay a $1,600 dividend (estimated
to be $1,023,847,200).
The committee substitute also
1. Eliminates the Governor's request of $1.45
billion from the Earnings Reserve Account to the
Alaska Permanent fund for FY16, FY17 and FY18
inflation proofing.
2. Eliminates the Governor's appropriation of $943
million from the Earnings Reserve Account to the
Alaska Permanent fund for FY19 inflation proofing.
3. Moves the Governor's request to fund operating
costs of the Alaska Permanent Fund Corporation to
section 1.
Section 9(f) and (g), page 56, lines 19-26: replaces a
Governor's Department of Administration request for a
single open-ended appropriation with two distinct
sections.
1. Appropriates an amount necessary, not to exceed
$500,000, from the general fund for retirement plan
sponsor costs (settlor costs).
2. Appropriates the amount necessary, estimated to
be zero, to cover retirement system actuarial costs
associated with bills introduced by the legislature.
The committee substitute eliminates the following
Governor's requests:
1. Page 56, lines 27-29: Department of
Administration, Public Defender AgencyFY18
Supplemental request of $453,500 UGF for public
defenders.
2. Page 58, line 31 and page 59, line 1-3:
Department of Corrections, Institution Director's
Office FY18 Supplemental request of $10,447,600 UGF
for facility operations.
3. Page 59, lines 4-6: Department of Corrections,
Inmate Health Care FY18 Supplemental request of
$10,341,500 UGF for inmate health care costs.
4. Page 59, lines 7-11: Department of Education and
Early Development, Mt. Edgecumbe Boarding School
Supplemental multi-year (FY18 and FY19) request of
$400,000 Municipal Capital Project Matching grant fund
for maintenance and operation of the Mt. Edgecumbe
Aquatic Center.
5. Page 59, lines 12-19: Department of Education &
Early Development, Executive Administration
Supplemental lapse date extension from FY18 to FY19
for funding associated with the Every Student Succeeds
Act.
6. Page 59, lines 30-31 and page 60, lines 1-4:
Department of Health & Social Services, Medicaid
Services open-ended FY19 general fund appropriation
language.
7. Page 60, lines 5-9: Department of Health & Social
Services, Medicaid Services open-ended FY19 federal
appropriation language.
8. Page 60, lines 10-15: Department of Health &
Social Services, Medicaid Services open-ended FY18
Supplemental UGF appropriation language.
9. Page 60, lines 16-21: Department of Health &
Social Services, Medicaid Services FY18 Supplemental
request of $7,014.0 UGF for Children's Health
Insurance Program.
10. Page 60, lines 22-24: Department of Health &
Social Services, Medicaid Services open-ended FY18
federal appropriation language.
11. Page 60, lines 25-28: Department of Health &
Social Services, Behavioral Health Supplemental
multi-year (FY18-FY21) request of $18,000.0 UGF for
Substance Use Disorder Grants.
12. Page 61, lines 23-26 Department of Law, Judgments
& Settlements FY18 Supplemental request of $322,000
UGF for payment of judgments and settlements.
13. Page 61, lines 27-31: Department of Law,
Judgments open-ended FY19 general fund appropriation
language.
14. Page 62, lines 7-10: Department of Military &
Veterans' Affairs, Office of the Commissioner FY18
Supplemental request of $94,100 UGF for a Base
Realignment and Closure position.
15. Page 62, lines 11-15: Department of Military &
Veterans' Affairs, Air Guard Facilities Maintenance
FY18 Supplemental request of $221,000 UGF and $663,000
Federal Receipts for maintenance and operation of
eight C-17 aircraft.
16. Page 63, lines 8-11: Department of Transportation
& Public Facilities FY18 Supplemental request of
$350,000 UGF for a Klutina Lake Road Survey.
Section 17(e), page 64, lines 16-31 and page 65 lines
1-7: Moves debt service items from the Constitutional
Budget Reserve section to the Debt Service section and
funds the appropriations with general funds.
Section 17(h)(14)-(15), page 67, lines 11-19: In lieu
of general funds, utilizes $12.3 million of lapsing
general obligation bond authorization to repay the
principal of 2013 series B bonds.
Section 17(m), page 69, lines 29-31 and page 70 lines
1-7: Replaces $17.6 million of general funds with
Alaska Comprehensive Health Insurance funds for school
debt reimbursement.
Sections 18(a), page 70, lines 13-24: Amends the FY18
Legislative Budget and Audit language to prevent the
Alaska Gasline Development Corporation from spending
additional designated program receipts.
3:08:42 PM
Mr. Ecklund continued reading from the summary of changes
document:
Sections 18(b), page 70, lines 25-31 and page 71,
lines 1-2: Amends the FY19 Legislative Budget and
Audit language to prevent the Alaska Gasline
Development Corporation from spending additional
designated program receipts.
Section 19(c), page 71, lines 23-24: Replaces $2
million of general funds with Alaska Comprehensive
Health Insurance funds for deposit into the Disaster
Relief Fund.
Section 19(f), page 72, lines 2-8: Deposits an
estimated $184 million ($168 million general funds and
$16 million Alaska Comprehensive Health Insurance
funds) into the Oil & Gas Tax Credit fund based on the
statutory calculation.
Section 19(g), page 72, lines 9-10: Changes the
effective date of the $30 million Power Cost
Equalization Endowment fund deposit into the Community
Assistance fund from FY18 to FY19.
The committee substitute eliminates the following
Governor's requests:
1. Page 72, lines 11-26: FY19 deposit of general
funds into the Public Education fund for K-12
Foundation Formula and Pupil Transportation.
(Duplicates the deposits proposed in HB287.)
2. Page 73, lines 1-3: FY18 and FY19 open-ended
deposit of designated program receipts collected by
the Alaska Gasline Development Corporation into the
AKLNG Fund.
3. Page 73, lines 4-6: Transfer of $12 million from
the In-state Natural Gas Pipeline fund to the Alaska
Liquefied Natural Gas Project fund.
Section 20(c), page 75, lines 9-13: Appropriates an
amount equal to 50 percent of punitive damages imposed
under AS 09.17.020(j) during FY18 into the Civil Legal
Services fund. The amount is estimated to be $1,000.
Section 20(f), page 76, lines 1-2: Changes the
effective date of the $14 million Power Cost
Equalization Endowment fund deposit into the Renewable
Energy fund from FY18 to FY19.
The committee substitute eliminates the following
Governor's request:
1. Page 76, lines 3-4: FY18 deposit of $23,918,200
from the general fund into the Alaska Marine Highway
System fund.
Section 21 (Retirement System Funding), page 77, lines
5-31 and page 78, line 1:
1. Moves retirement system items from the
Constitutional Budget Reserve section to the
Retirement System Funding section and funds the
appropriations with general funds.
2. Eliminates a contingent appropriation requested
by the Governor reducing retirement appropriations by
$25.5 million based on potential savings under the
Medicare Part D Employer Group Waiver Plan.
3. Adds intent language for the Alaska Retirement
Management Board to consider the funding ratio when
making recommendations for the Alaska National Guard
and Alaska Naval Militia retirement system.
Section 23(b), page 79, lines 20-24: Amends the amount
of shared taxes to local governments to the full
amount of aviation fuel tax or surcharge collected,
from $100,000 to $182,900.
Section 25 (Constitutional Budget Reserve Fund), pages
80 through 83:
1. Subsection (a) is FY18 reverse sweep language.
2. Subsection (b) is FY19 deficit filling language.
3. Subsection (c) is FY19 head room totaling $100
million.
4. Subsection (d) is borrowing language for the
general fund from the Constitutional Budget Reserve
Fund.
5. Subsection (e) identifies sections (a)-(c) as
needing a ? vote by the legislature in order to be
effective.
The document compare for the Constitutional Budget
Reserve section reflects items that are being moved
elsewhere in the bill, not being eliminated. For
example, debt service and retirement system
appropriations have been relocated to the appropriate
section of the bill.
The committee substitute eliminates the following
Governor's request:
1. Page 80, lines 9-13: Use of the Statutory Budget
Reserve Fund for FY19.
2. Page 81, lines 6-7: The Governor's request for
$27 million to pay interest on a debt financing
mechanism for the purpose of retiring oil and gas tax
credit certificates.
3. Page 83, lines 28-31 and page 84, line 1: Deletes
contingency language related to the Senior Benefits
Payment Program.
Legislative Legal Services made editorial and
technical changes throughout the bill that are not
included in this list, including revising section
references for Lapse of Appropriations, Retroactivity
and Effective Dates.
3:16:37 PM
Co-Chair Hoffman asked Mr. Ecklund to review the document
"HB 286 Supporting Document A" (copy on file). He asked for
a comparison of the two versions of the bill.
Mr. Ecklund detailed the columns within the document.
Co-Chair Hoffman asked Mr. Ecklund to identify why the
Senate number was substantially higher than the governor's
under statewide items
Mr. Ecklund stated that oil and gas tax credits affected
that number. He remarked that the governor's version had
$27 million in anticipation of legislation passing. The
other body's version was $49 million, and the Senate
version had a total of $184 million of which $168 million
was UGF.
Co-Chair Hoffman asked if the $184 million was statutorily
required after the spring forecast.
Mr. Ecklund replied in the affirmative.
Co-Chair Hoffman asked if the number was before the
forecast.
Mr. Ecklund believed that that the fall forecast $206
million.
Senator Micciche clarified that Mr. Ecklund had mentioned
that there was contingency language and intent language
that would return the funding as bills pass.
3:20:14 PM
Co-Chair Hoffman WITHDREW his OBJECTION. There being NO
OBJECTION, it was so ordered. SCS CSHB286(FIN) was ADOPTED.
Co-Chair Hoffman reviewed the schedule for public testimony
the following day.
Co-Chair Hoffman thanked the subcommittee chairs for their
work on the budget. He thanked members for work on the
budget.
CSHB 286 was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 285(FIN)
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
3:23:58 PM
Vice-Chair Bishop MOVED to ADOPT proposed committee
substitute for CSHB 285, Work Draft 30-GH2566\R (Wallace,
4/4/18).
Co-Chair Hoffman OBJECTED for discussion.
Mr. Ecklund stated that the mental health budget held the
programs funded with the Mental Health Trust Authorized
Receipts. He shared that the general fund mental health
funds were removed from the operating budget, and were in
the mental health budget to be tracked accordingly. He
stated that all the items were included in the other
reports.
Co-Chair Hoffman WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered.
Vice-Chair Bishop thanked those responsible for their work
on the budget.
Co-Chair MacKinnon thanked the committee, and discussed
housekeeping.
CSHB 285 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
3:26:22 PM
The meeting was adjourned at 3:26 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 287 Resolution Kenai.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 287 |
| HB 287 Support Spangler.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 287 |
| HB 287 Sen FIN 2-23-2018.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 287 |
| HB 287 Letters of Support.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 287 |
| HB 287 Sponsor Statement.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 287 |
| HB 287 Summary of Changes.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 287 |
| HB 287 Support Letter.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 287 |
| HB 287 SCSHB 287 work draft version R.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 287 |
| HB 286 Numbers and Language Spreadsheet Supporting Document A.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 286 |
| HB 286 Summary of Changes version N.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 286 |
| HB 287 Supporting Document A.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 287 |
| HB 286 SCSforCSHB work draft version N.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 286 |
| HB 285 SCSforCSHB 285 work draft version R.pdf |
SFIN 4/5/2018 1:30:00 PM |
HB 285 |