Legislature(2019 - 2020)SENATE FINANCE 532
03/21/2020 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Economic Support for Alaskans Impacted by Covid-19 | |
| HB308 | |
| HB205 | |
| Presentation: Short and Long-term Impacts of Budget | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| *+ | HB 308 | TELECONFERENCED | |
| += | HB 205 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
March 21, 2020
9:01 a.m.
9:01:50 AM
CALL TO ORDER
Co-Chair von Imhof called the Senate Finance Committee
meeting to order at 9:01 a.m.
MEMBERS PRESENT
Senator Natasha von Imhof, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Lyman Hoffman
Senator Donny Olson
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Senator Josh Revak; Senator Cathy Giessel; Senator Gary
Stevens; Senator John Coghill; Senator Jesse Kiehl; Juli
Lucky, Staff, Senator Natasha von Imhof. Representative Ivy
Sponholz, Sponsor; Pat Pitney, Director, Legislative
Finance Division; Pete Ecklund, Staff, Senator Bert
Stedman.
PRESENT VIA TELECONFERENCE
Bryan Butcher, CEO Alaska Housing Finance Corporation,
Anchorage; Patsy Westcott, Director, Division of Employment
and Training Services, Department of Labor and Workforce
Development; Jon Bittner, Executive Director, Alaska Small
Business Development Center, Anchorage; Joe Schierhorn,
President and CEO, Northrim Bank; Cara Durr, Director of
Public Engagement, Food Bank of Alaska, Anchorage; Adam
Ziegler, Executive Director, New Hope Compassionate
Ministry, Anchorage; Tyson Gallagher, GCI, Juneau;
Christine O'Connor, Executive Director, Alaska Telecom
Association, Wasilla; Bal Dreyfus, Senior Vice President
Alaska, Matson, Anchorage. Patsy Westcott, Director,
Division of Employment and Training Services, Department of
Labor and Workforce Development.
SUMMARY
CSHB 205(FIN)(Corrected) am(brf sup maj fld)
APPROP: OPERATING BUDGET/LOANS/FUNDS
SCS CSHB 205(FIN) was REPORTED out of committee
with two "do pass" recommendations and five
"amend" recommendations.
HB 308 UNEMPLOYMENT BENEFITS FOR COVID-19
SCS HB 308(FIN) was REPORTED out of committee
with a "do pass" recommendation and with one
previously published indeterminate fiscal note:
FN 1(LWF).
PRESENTATION: ECONOMIC SUPPORT FOR ALASKANS IMPACTED BY
COVID-19
9:02:26 AM
Co-Chair von Imhof thanked all for being present on a
Saturday. She relayed the extreme stressors the virus
presented to humanity, both economic and health related.
She stated that the goal of the presentation was to explore
what programs and assets the state already had in place so
that both public and private existing infrastructure could
be leveraged in order to support Alaskans as quickly and
efficiently as possible. She shared that representatives
from housing, unemployment benefits, small business
support, food insecurity connectivity, and the supply chain
had been invited to testify before the committee. She
assured Alaskans that a plan was being developed to
sufficiently fund an infrastructure to provide the needed
resources to help people immediately during this time. She
said that the legislature was looking into enhanced
unemployment benefits, mortgage assistance, food aid,
interest free loans, expanded childcare and healthcare
services, direct aid to communities, and more. She relayed
that the legislature had appropriated $20 million in state
funds, specifically in healthcare, in the recently passed
supplemental budget. She stated that the several large
Covid-19 bills had been passed on the federal level that
would provide immediate financial assistance to both
individuals and businesses. She related that it was
imperative that the state maintain laser focus on its
accounts so that the scarce and dwindling resources could
be directed to create the greatest impact. She stressed the
importance of using federal funds as much as possible, and
avoid redundancies, to maximize all funding and ensure that
state agencies were ready to receive and use the money for
the broadest benefit.
Co-Chair von Imhof dubbed the states current situation the
hat trick from hell noting the trifecta of the stock
market crashing, oil prices plummeting, and the tourist
season at a standstill. She said that the legislature was
working on a bi-partisan plan to help Alaskans.
9:06:07 AM
Co-Chair von Imhof reiterated the urgency of the situation
and stressed that any plan put in place could not exploit
the pandemic to further any political agenda. She lamented
that Alaskans were already struggling financially and
stated that the legislature would work to provide
assistance to Alaskans.
9:06:16 AM
^PRESENTATION: ECONOMIC SUPPORT FOR ALASKANS IMPACTED BY
COVID-19
Co-Chair von Imhof solicited comments from the committee.
9:07:05 AM
Co-Chair Stedman thought there was clearly an expedited
process underway in the legislature. The state had
substantially constrained savings accounts, so the
legislature was working not to duplicate federal efforts.
He stressed that there were existing state agencies that
were working together over the next two to three days to
craft an assistance plan.
Co-Chair von Imhof hoped that each agency could state on
the record what they were doing during this time and what
could the state do to help with their efforts. She felt
that this would help to define legislatively what could be
done over the next few days.
9:08:47 AM
BRYAN BUTCHER, CEO ALASKA HOUSING FINANCE CORPORATION,
ANCHORAGE (via teleconference), explained that the state
housing market was very strong. He said that the
delinquency rate for the states 16,000 mortgage portfolio
was under 3 percent. He shared that foreclosure rates were
under a quarter of 1 percent, the lowest in state history.
He relayed that interest rates were low, compared to 2008
and 2009. Most people had been able to refinance their
mortgages to a low rate of 3 percent or 3.5 percent, which
gave homeowners more flexibility with funds.
Mr. Butcher stated that AHFC was looking at how to handle
the oncoming fallout from Covid-19. He mentioned the
governor's recent executive order that put forward a
moratorium on foreclosures and evictions for AHFC, for
Covid-19 related complications. He noted that AHFC worked
with the governor on the moratorium and he hoped that it
would help lower stress for Alaskans at this time.
9:11:28 AM
Mr. Butcher addressed public housing. He detailed that AHFC
ran over 16,000 apartments, in 13 different communities,
and administered between 5,000 and 6,000 rent vouchers that
were used for private sector rentals. The programs were
federally funded through Housing and Urban Development
(HUD). The state received approximately $60 million per
year for the program, with nearly $3 million going to
private landlords and vouchers. He discussed lower income
individuals that lived paycheck to paycheck and cited that
many of those individuals lived in AHFC housing. He noted
that 80 percent of the 12,000 people that lived in AHFC
housing would be homeless without assistance from AHFC
programs. He thought the group was the most vulnerable
population. He spoke to the governors announcement of a
moratorium of 60 days on evictions for Covid-19 related
issues; therefore, people would not have to worry about
losing their housing and could focus on the other staples
to continue living through the crisis.
9:13:27 AM
Mr. Butcher spoke to the Homeless Assistance program. He
thanked the legislature and governor for the early passage
of the mental health budget. He shared that the Homeless
Assistance program and the Special Needs Housing program
were both funded early in the mental health budget. He
commented that it did not take much for people receiving
benefits from the program to be in crisis. He said that the
way the program was administered was that shelters signed
three-year contracts with AHFC. He said that this was done
because it was difficult for non-profits to survive with
the expectation that funding could disappear in a year. He
reiterated that passing the budget early allowed AHFC to
execute grants early to 41 providers in 13 different
communities. He said that the funds would be administered
between FY20 and FY21; a spike in need was expected into
FY21.
9:15:23 AM
Co-Chair von Imhof pointed out that the committee had
adopted a Committee Substitute (CS) the previous evening
that included full funding for AHFC programs.
Mr. Butcher pointed out that AHFC also had a Homeless
Prevention program. He related that studies had shown that
it was four times less expensive to keep a family in a home
than to take a family out of homelessness and put them in a
home. He estimated that the average cost of helping someone
to avoid homelessness was $500. He relayed that AHFC saw
the possibility of many Alaskans becoming homeless related
to Covid-19. He said that the prevention program was a
priority.
9:16:33 AM
Co-Chair von Imhof asked Mr. Butcher about people that were
not current AHFC program participants and wondered whether
those people could get assistance. He stressed that the
shelters should be the first point of contact for those not
currently in an AHFC program.
Mr. Butcher stated that individuals could reach out to
shelters, and the information would pass through to AHFC.
He related that if Alaskans had issues with mortgage
payments, it was encouraged to contact their service
provider, and then the service provider would contact AHFC.
He encouraged people take early action on the issue to get
the process going.
9:17:49 AM
Senator Wilson asked how AHFC was handling mortgages still
in process.
Mr. Butcher stated that AHFC was still offering potential
homeowners the opportunity to lock in interest rates, which
had been going higher almost by the day. The interest rates
had dropped below 3 percent last week when the federal
government had dropped their numbers to zero. He said that
the lenders who made the loans were finding it difficult to
sell the loans. He said that Fannie Mae and Freddie Mac
were not buying, and AHFCs interest rates fluctuated based
on the cost of capital. He had found that the banks and
credit unions were unable to sell the loans. Currently
there was no liquidity in the capital markets. There were
still mortgages being done but it was shrinking by the day.
9:19:29 AM
Senator Bishop had heard on public radio the previous night
that a 12-month moratorium would be made for existing Fanny
Mae and Freddie Mac loans.
Mr. Butcher knew the president had put out an order for
suspension on those loans. He recalled that the suspension
was for 60 or 90 days. He said that he would get back to
the committee with more information.
9:20:36 AM
Co-Chair Stedman understood that there would be no
evictions in the rental market around the state.
Mr. Butcher explained that there was a 60-day moratorium on
all public housing voucher holders that were in AHFC
apartments. He said that most apartments in the state were
not run by AHFC. He did not know if the eviction suspension
applied to those apartments. He had seen different states
have a broader suspension of evictions. He believed that
conversations on the matter were ongoing.
9:21:55 AM
Co-Chair Stedman thought the information would be good to
get out to the public. He thought if there was a 60-day
moratorium and the virus expanded exponentially, it may be
important to extend the moratorium.
Co-Chair von Imhof asked Mr. Butcher to return to the
committee with additional information on the eviction
moratorium.
Co-Chair von Imhof asked whether AHFC was poised and able
to receive additional federal funds when the omnibus bills
were passed.
Mr. Butcher affirmed that AHFC was poised to receive
additional funds. He thought that federal appropriation
authority could be an issue if the funds were substantial.
The corporation had been used for a lot of federal
emergency funds. He noted that much of the disaster relief
funds that came through after the 1964 earthquake had gone
through AHFC.
Co-Chair von Imhof thought the goal was for the federal
government to get funding out as soon as possible.
9:23:51 AM
Senator Bishop asked how AHFC determined who qualified for
a rental voucher.
Mr. Butcher stated that AHFC followed federal rules, which
varied for public housing versus receiving a voucher. He
relayed that public housing required 50 percent of median
income and below, 80 percent for vouchers. There was a
prioritization based on need. He noted that 80 percent of
applicants were very low income, and there were waiting
lists in most communities. He offered to provide the
committee with waiting lists by community.
Senator Bishop asked Mr. Butcher whether people on
unemployment were eligible to apply.
Mr. Butcher answered in the affirmative.
9:25:26 AM
Co-Chair von Imhof noted that there was more than one way
to pay for rent. She relayed that AHFC was offering
financial assistance. She stated the legislature was also
looking at providing wage replacement.
Co-Chair von Imhof understood that people not currently
being served by AHFC should contact their banks if they
have a mortgage, or homeless shelters if they were
homeless, and those operations would contact AHFC. She
stated that the committee was going to try and get
telephone numbers to put on the committee website. She
directed attention to the AHFC website that was displayed
on screen.
Mr. Butcher explained that AHFC offices were closed to the
public, but that email and telephone were still
operational.
Co-Chair von Imhof asked whether AHFC had enough employees
to handle the call volume.
Mr. Butcher believed that AHFC had enough employees to
handle the current volume.
9:27:45 AM
Co-Chair von Imhof queried the available resources in the
Department of Labor and Workforce Development, Division of
Employment and Training Services, both financially and
employee capacity. She wondered whether the department was
poised to receive federal funding and what the legislature
could do to help the department with its efforts in
response to the virus.
PATSY WESTCOTT, DIRECTOR, DIVISION OF EMPLOYMENT AND
TRAINING SERVICES, DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT (via teleconference), relayed a brief overview
of the Unemployment Insurance Program (UI), which she
stressed was not a social service program, but rather like
any other insurance program. She shared that employers paid
contributions into the program to protect an employee's
future loss of wages. Alaska was one of three states that
had provision in statute where an employee also paid a
portion of the contribution. She related that the current
maximum benefit amount was $370. Alaska was also one of a
handful of states that provided a dependents allowance of
$24, per dependent, per week, with a 3-dependent cap. She
spoke of the various ways to apply for UI benefits: the
online application through the MyAlaska portal and the
virtual call center for those without internet access. She
said that there were several individual requirements to be
eligible for UI: the individual must be unemployed through
no fault of their own; and individual must be able,
available, and actively seeking work. She said that the
second requirement had proved challenging for unemployed
workers in the current environment. She shared some of the
current actions of the department to address the influx of
cases. She said that another cue had been created in the
virtual call center that dealt specifically with people who
were out of work because of Covid-19. She said that phone
hours had been expanded and that staff was working
overtime. She related 28 staff members that had been
working in other units of the program had been realigned to
help with the UI claims, which had increased sharply in the
previous week.
9:32:11 AM
Ms. Westcott stated that there had been a 50 percent to 70
percent increase in applications for UI from the previous
week. She said that the application had been simplified
over the past week. She reiterated the problematic nature
of the requirement that the applicant be actively seeking
work in the current environment and shared that the
department was liberally applying statutes and regulation
to allow as many individuals as possible to receive
benefits. She expressed appreciation for the US Department
of Labor for coming out with additional guidance to state
that allowed state more flexibility in relaxing that
requirement. She stated that she had worked in the program
for 27 years and, traditionally, when an individual filed
an initial claim, they filed every two weeks in order to
get their benefits. She said that a change was being
implemented for people to file weekly so that benefits
could be issued faster. She shared that the department was
developing a page on its website that was dedicated to
Covid-19, with information for unemployed workers and
employers. The hope was to have all the information
accessible on one page.
9:34:55 AM
Ms. Westcott stated that passage of legislation currently
before the legislature would be helpful to the department.
She referenced HB 308 or SB 240. Both pieces of legislation
would enable the program to further liberally interpret
work requirements to pay more individuals that were
unemployed due to the virus. The legislation would expand
eligibility, expand the number of dependents, and removed
the waiting week.
9:37:15 AM
Senator Bishop thought if HB 308 could be passed within the
next 24 hours it would be best. He was concerned with
people having to reapply after this week. He asked whether
it would be helpful to the department if the governor
signed the bill within the next 24-36 hours.
Ms. Westcott answered in the affirmative. She mentioned the
effective date of the legislative change. She thought the
legislation should contain a retroactive effective date.
Senator Bishop asked whether Ms. Westcott had drafted a
letter to the delegation regarding an emergency grant for
UI.
Ms. Westcott knew that letters had already been submitted
to the congressional delegation. She thought HR 5021 had
been passed and signed by the president; and included a
provision for additional administrative funding for UI in
direct response to the virus.
9:39:56 AM
Co-Chair von Imhof wanted to ensure that the division was
poised to receive federal funds when the funds were
released.
Ms. Westcott was concerned the division did not currently
have enough federal authority for FY20 to accommodate the
receipt of additional federal funds.
Co-Chair von Imhof stated that the committee would work
within HB 308 to increase the departments federal receipt
authority. She asked for an effective date that would be
enough for the department.
Ms. Westcott recommended the effective date be the first
week of March. She relayed that the beginning of March
would allow for the greatest flexibility to respond to the
growing needs of Alaskans.
Co-Chair von Imhof understood that if the federal receipt
authority were increased in the CS, it would allow the
department to receive the federal money when it was
released.
Ms. Westcott replied in the affirmative.
9:41:56 AM
Co-Chair Stedman thought the committee had several vehicles
through which to expand federal receipt authority. He
thought the committee could take action to make sure that
the department had ample receipt authority.
9:42:27 AM
Senator Wielechowski had asked about a comparison with
other states. He had looked the figured up online and it
appeared that Alaskas weekly maximum was $370. He noted
that Oregons weekly maximum was $648, Washington's was
$790, Hawaiis was $630 per week. He pointed out that other
oil producing states had limits as high as $618 per week.
He lamented that the limit in Alaska was woefully
inadequate in comparison to other states.
Ms. Westcott stated that Alaska's maximum weekly
unemployment insurance rate was very low. She said that his
request had been sent to the commissioners office and she
apologized that he had not yet received the requested
information. She cited that Alaska was 37th in the nation
with regard to the maximum weekly benefit amount; Alaska
was last in the country with regard to the wage replacement
rate, after Puerto Rico and the Virgin Islands.
Co-Chair von Imhof thought Ms. Westcott had cited that
there was a provision for a temporary higher weekly amount.
Ms. Westcott answered "no" that the bill did not include
provision for increasing the weekly amount. The bill
increased the dependents allowance from $24 per week to
$75, per dependent, per week; as well as lifting the cap on
the number of dependents that could be considered.
Co-Chair von Imhof asked whether there was a way to do a
temporary higher amount for weekly benefits.
Ms. Westcott affirmed that benefits were set in statute,
and a statute change would be needed to increase the
maximum weekly benefit amount. She explained that back in
2008, the Congress had passed a piece of legislation called
Federal Additional Compensation, which added a dollar
amount to every payment, in all states. She understood that
congress was currently looking into a similar provision
that would add to the states weekly benefit amount and
would be 100 percent federally financed. She said that the
amount was currently unknown.
9:47:06 AM
Co-Chair von Imhof reiterated that the bill increased the
money for dependents.
9:47:19 AM
Senator Wielechowski thought there was a significant
balance in the UI trust fund. He asked how much it would
impact the fund if the weekly maximum benefit was increased
by $100.
Ms. Westcott replied that she did not know. She said she
could get back to the committee on the matter. She stated
that there had been stress tests run on the fund. She said
that the fund was extremely healthy and was poised to
weather this storm.
9:48:34 AM
Co-Chair von Imhof noted that the bill needed to move
quickly, as the number of UI applicants had increased
dramatically. She commented that the benefits should be
provided to get Alaskans through the crisis without
stressing the states accounts. She hoped that federal
dollars would be arriving soon to help with the financial
burden. She said that wage replacement would be ideal,
along with business loans so wages could be paid, to
alleviate paying out UI.
9:49:38 AM
Co-Chair von Imhof introduced the next testifier. She said
that Mr. Bittner would speak first, then the banks would
weigh in on the matter.
9:50:36 AM
JON BITTNER, EXECUTIVE DIRECTOR, ALASKA SMALL BUSINESS
DEVELOPMENT CENTER, ANCHORAGE (via teleconference), gave a
quick overview of the Alaska Small Business Development
Center (ASBDC). He noted that small businesses employed
less than 500 people and composed 99 percent of the
businesses in the state. He noted that the center provided
workshops and training, and served over 100 communities,
with 7 centers across Alaska. He relayed that small
businesses were being hit particularly hard by the current
situation. He mentioned a survey that had circulated by the
Anchorage Economic Development Corporation (AEDC) to judge
the impact of Covid-19 on businesses, which had received
over 500 responses, with 95 percent of surveyed businesses
reporting negative affects due to the virus. Revenues had
been slashed from 32 percent to 100 percent. Workers were
being laid off from breweries, restaurants, retail stores,
and hotels by the hundreds. He said that rural Alaska had
been having trouble moving to telework, and many telecom
utilities were stepping up to provide assistance.
9:53:28 AM
Mr. Bittner lamented that food and beverage, entertainment,
tourism had all been negatively affected. He warned that
the energy industry, manufacturing, seafood, and retail
industries would be hit hard soon. He said that every
industry in the state would be negatively affected. He
shared that the CEO of Marriot International had recently
sent an email to all employees explaining that the impact
of the virus was worse than that of 9/11 and the 2009
financial crisis combined. The virus was causing a 75
percent reduction in Marriots bottom line. He said that
all ASBDC workshops had been moved online and all offices
were working remotely. Every training was being offered for
free to be sure people had the information they need
without worrying about how to pay for the information. He
said that ASBCD was working with national restaurant chain
representatives to develop webinars to help restaurants
transition from in-house dining to take away and delivery.
He shared that ways to help the tourism industry were being
explored.
9:56:08 AM
Mr. Bitter informed that short-term contractors were being
hired to help with overflow, to get assistance to people as
quickly as possible. He shared that a dedicated webpage
would be launched later in the day that would collect all
business assistance resources information and local
government and state government websites that would serve
as central repository for small businesses to find what
they need as quickly and efficiently as possible. He
related that he had been working with local governments
across the state as well as regional economic development
organizations to help get ahead of the issue and stay
informed while providing accurate information. He noted
that Alaska was next in line to get approved for a loan
program that funded up to $2 million to qualifying
businesses at a rate of 3.75 percent, up to 30 years. He
added that non-profits were also eligible for the loans at
a rate of 2.5 percent. The loans could be used for bill,
payroll, and accounts payable to keep businesses afloat. He
thought the program would be helpful. He relayed that not
all businesses would be eligible. He mentioned that
businesses had been stepping up to help during this trying
time.
Mr. Bittner relayed that the banking community had been
working with businesses to keep doors open and make sure
that loan payments could be managed. He said that the
telecom industry was working to provide internet to people
and the transportation industry had been doing good work.
He highlighted that supermarkets were providing food and
had been doing a fantastic job trying to prevent hoarding
and offering special hours for seniors.
9:59:20 AM
Mr. Bittner addressed receipt of federal dollars. He said
that ASBDC was included in the trillion-dollar relief bill
currently working its way through congress and would be
provided additional funding to expand operations. He
understood that the funding did not come with a match
requirement. He affirmed that the program would be able to
accept finds and would deploy them as rapidly as possible.
9:59:58 AM
Co-Chair von Imhof asked whether ASBDC needed additional
receipt authority for the federal funds.
Mr. Bittner replied in the affirmative.
Co-Chair von Imhof appreciated the level of information
provided by the testifier. She solicited questions from the
committee.
10:00:30 AM
Co-Chair Stedman recalled that the interest rate was at
2.75, with a $2 million cap for small businesses.
Mr. Bittner stated the nonprofit rate was 2.75 and the
small business interest rate was 3.75.
Co-Chair Stedman understood the cap was $2 million.
Mr. Bittner answered in the affirmative.
Co-Chair Stedman thought there needed to be clarity as to
what the federal response was going to be for small
businesses versus the state agency response. He wanted to
ensure there would be capacity to help small businesses, so
they did not have to shutter their doors.
Co-Chair von Imhof believed that that the issue should be
brought up to the states congressional delegation.
10:01:38 AM
Senator Wilson asked when Mr. Bittner expected the new
centralized website to be up and running.
Mr. Bittner anticipated that the site would be online
within the day.
Co-Chair von Imhof asked whether there were enough
employees to handle the call volume and additional work.
Mr. Bittner said that currently, yes, but if the volume
grew exponentially, no. The program was looking to possibly
hire extra employees to fill the gap.
Co-Chair von Imhof asked whether any statute change was
needed in order to accommodate the ASBDC.
Mr. Bittner replied that he did not believe so. He said he
would get back to the committee.
10:02:51 AM
JOE SCHIERHORN, PRESIDENT AND CEO, NORTHRIM BANK (via
teleconference), acknowledged the wide-sweeping impact on
the economy of the COVID-19 virus. He considered that
several his customers would have entire seasons curtailed,
particularly the tourism industry Southeast Alaska. He
stated he was a member of the Alaska Bankers Association.
He stated that Northrim Bank was actively reaching out to
its customers and would work on a case by case basis for
modifying and deferring payments or offering additional
capital. He stated the bank would fully support the
recently announced state-guaranteed loan program which
mirrored the SBA disaster relief program alluded to by Mr.
Bittner.
Mr. Schierhorn continued his remarks. He stressed that
Northrim was open for business to customers. The bank was
directing customers to utilize online banking and a 24/7
call center was available to customers. He stated the
banking industry within Alaska was quite strong and had
worked hard to build up significant reserves of capital and
liquidity in order to provide services to customers. He
stressed that the bank was here to support the state during
this time of need. He hoped that the legislature would
support the loan program proposed by the governor.
Mr. Schierhorn thought there was a huge volume of mortgage
refinance activity currently in play, as well as other
transaction that would require recording of deeds of trust
in the state recorders office. He stated it was critical
that the state recorder's office be open for people to be
able to take advantage of the refinances in process and
other purchase transactions. He warned that it would be
very disruptive to close the recorders office at this time.
10:07:41 AM
Co-Chair Stedman thought everyone was comfortable with the
physical positioning of the banks throughout the state. He
wanted to know what was happening with bank customers. He
spoke to earlier comments made about Marriot hotels and
thought that business customers would be discussing fiscal
positions and how to get some help. He asked for examples
of those conversations.
Mr. Schierhorn stated the bank was beginning to get such
requests. He mentioned that there were businesses that had
been more proactive in requesting altered payments or
additional working capital to be able to pay employees. He
said that as the situation evolved, he anticipated that a
large part of the banks activity would be dealing with
businesses hardest hit in hospitality, bar/restaurant,
hotel, and tourism industries.
10:10:19 AM
Co-Chair Stedman thought there was a significant need in
the tourism industry. He thought people pre-paid for
vacations in Alaska. He queried whether Mr. Schierhorn was
seeing a significant amount of the industry asking for help
with cashflow dealing with potential returns of funds for
pre-purchased activities.
Mr. Schierhorn stated that requests were beginning to
happen, and he thought the number would increase
dramatically over the next 90 days. He said that in many
cases the entire season would be cancelled for large
sections of the industry.
10:11:29 AM
Co-Chair von Imhof added that regarding pledging state
assets, no executive branch could pledge state assets,
appropriate or provide loan guarantees without legislative
approval. She thought it was imperative to leverage federal
funds where appropriate and available. Although Mr. Bittner
stated that there was no federal match requirement, to the
degree that it made sense, it was imperative that the
public and private work together to share the risk among
the different entities and funding sources.
10:12:39 AM
Senator Bishop asked Mr. Schierhorn to confirm that the
governor's moratorium on foreclosures applied to private
financial institutions.
Mr. Schierhorn thought the moratorium pertained only to
AHFC. He shared that the different mortgage programs that
were supplied by investors (Fannie Mae, Freddie Mac,
Veterans Administration) was administered according to
their own guidelines and set their own rules. He believed
AHFC was separate from those investors. He thought there
was a wide spectrum of mortgages that were controlled by
the investors in the federal programs. He stated that the
bank was actively working with each investor-sponsored
program to be able to work with customers on deferment or
modification of payments.
Mr. Schierhorn responded to Co-Chair von Imhof's comment
and stated his bank was engaged with the Small Business
Administration. The bank would actively support the program
with regard to disaster relief financing and would work
with other available programs. He highlighted several other
agencies that could be leveraged to provide financing, and
modifications to existing debt.
10:15:48 AM
CARA DURR, DIRECTOR OF PUBLIC ENGAGEMENT, FOOD BANK OF
ALASKA, ANCHORAGE (via teleconference), spoke to food
insecurity in the state. She relayed that Food Bank of
Alaska was a statewide agency; there are three sister
foodbanks in Kenai, Fairbanks, and Juneau. She stated that
food insecurity and ensuring adequate food resources was a
concern during the pandemic. She said that food pantries
were bracing for a huge surge in need in the coming months.
Ms. Durr stated that the food bank was delivering food
through the usual channels and was focusing on adapting to
the rising needs and challenges the virus placed on the
distribution model. She said that there was a lot of food
already ordered that would arrive within the week. She
thought that it was likely that the food bank would need to
purchase some food locally to deal with the spike in need.
She noted there had been an outpouring of community support
in recent days.
Ms. Durr addressed action being taken on the congressional
level, which could provide $400 million in commodity
purchases that might benefit foodbanks in the network. She
said that mobile food pantry distribution had been adapted
to minimize client exposure. She shared that grocery gift
cards, donated by Safeway, would be distributed clients.
She relayed that preparations for delivering boxes to
seniors who wanted to stay in their homes had begun.
Ms. Durr thought the pre-boxed food option made the most
sense during this time and stressed the need for volunteers
to assist with that effort. She noted that many of the
foodbanks long-term volunteers were seniors and were
currently self-isolating.
Ms. Durr addressed feeding kids while schools were closed.
She stated that the state child nutrition programs had
applied for waivers to help get food to kids. She said that
grab and go meals were being provided. She was working with
the state to identify schools that were having a hard time
with the current model and was exploring a recently adopted
USDA model that mailed food directly to school aged kids in
rural communities. She said that additional resources for
children and families in the form of supplemental EBT funds
were available.
10:19:38 AM
Ms. Durr stressed that the Supplemental Nutrition
Assistance Program SNAP was critical at this time. She said
that after UI, SNAP was the most important response to a
worsening economy. She commented that the Division of
Public Assistance had done a good job in quickly applying
for waivers and bracing for a spike in applications. She
said that people who needed help with applying could
contact the foodbanks outreach team. She shared that
additional adjustments in the SNAP program were being
considered on the federal level, such as raising the
minimum benefit, which the foodbank supported
wholeheartedly.
Ms. Durr thought that the foodbank was reasonable prepared
as an anti-hunger network. She emphasized the importance of
thinking long-term and emphasized the needs of rural areas.
She commented on transportation costs. She stated that much
of the commodities that would be received came with limited
shipping dollars. She said that depending on the length of
the pandemic and the magnitude of the economic recession,
the foodbank could see a downturn in community donations in
the coming months. She felt that state agencies that were
going to be hit hard should have the resources that they
need. She reiterated that all the resources she mentioned
today, could be found on their website.
10:21:33 AM
Co-Chair von Imhof summarized that people could go to the
Foodbank of Alaska or the United Way for further
information. She reminded that it was the state that might
have to pay for things that federal dollars would not, such
as shipping food to needy communities.
10:22:16 AM
ADAM ZIEGLER, EXECUTIVE DIRECTOR, NEW HOPE COMPASSIONATE
MINISTRY, ANCHORAGE (via teleconference), stated that after
the first week of social distancing, food pantries had seen
an up to 50 percent increase in clients. He remarked that
the Anchorage pantry saw a 20 percent increase in new
clients. He said that Covenant House had reached out for
assistance in feeding the youth served by that
organization. He said that it had been found that SNAP
benefits were not going as far as they used to as most of
the food stockpiled by the general public has been low-cost
food. He shared that people were increasingly losing their
jobs and growing increasingly food insecure, especially
when having to chose between paying for food or paying for
utilities or rent.
Mr. Ziegler anticipated growing numbers over the next two
to three weeks. He thought if the numbers increased by the
same amount each week, there would be a strain on food
security systems currently in place. He encouraged the
committee to think of delayed response tactics. He said
that the SNAP waiver for able bodied adults would be a good
first step. He recommended fully funding the Homelessness
Prevention program as well as investing in shipping and
supply chains.
Mr. Ziegler mentioned an app called "Got Food?" as a
resource that would provide information to legislators to
give to constituents in need.
10:24:59 AM
Co-Chair von Imhof asked Mr. Ziegler about revenue sources
for his agency.
Mr. Ziegler stated that the Anchorage programs were mostly
privately funded, with a few business contributions. He
said that his program did not receive state or federal
funding and was anticipating reduced funding as people cut
back on contributions.
Co-Chair von Imhof thought it might make sense to provide
funding specifically for food pantries across the state.
10:26:03 AM
Co-Chair von Imhof thanked the testifiers for their time
and information.
TYSON GALLAGHER, GCI, JUNEAU (via teleconference),
referenced the massive increase in internet use during the
quarantine. He stated the GCI had extended an offer
statewide for current GCI customers; an upgrade to the next
level, with more speed and data, would be offered for no
charge. Additionally, non-GCI customers would be offered
free entry level internet for the next two months.
Co-Chair von Imhof asked about the increased user volume.
Mr. Gallagher thought GCI felt confident in its ability to
maintain its networks. He said that it depended on the
technology that served a community; a middle-mile
connection through fiber, satellite, or microwave
technology could bring about capacity constraints.
10:28:35 AM
Senator Wilson asked whether a person would need to cancel
the free upgrade after two months.
Mr. Gallagher informed that GCI would automatically upgrade
customer plans and would automatically revert to original
plans in two months. He said that people who were not
currently customers but took advantage of the entry level
plan would need to return the modem at the end of two
months in order to not be charged.
Senator Wilson asked how the upgrade would work in rural
areas where people used satellite and microwave to access
internet service.
Mr. Gallagher said that GCI is working on the issue. He
stated that GCI was devising scenarios where home install
kits, with instructions, were doing delivered. He noted
that GCI had closed many of its stores and converted to
them to call centers.
10:30:16 AM
Senator Hoffman thanked Mr. Gallagher for the service being
offered. He asked how GCI was disseminating the information
so that all people of Alaska could benefit, including those
in the far reaches of the state.
Mr. Gallagher stated that GCI was currently trying to
communicate to customers through email and social media.
Additionally, GCI was working with commercial customers and
business clients, and residential customers to communicate
options. He relayed that GCI was working with eligible
applicants to get them signed up for the FCC Lifeline
Program, which would provide access to a low-cost wireless
device that could be used as a hot spot. He shared that GCI
was also working with the Department of Education to
deliver education on a broader level.
Co-Chair von Imhof thanked the testifier for the
information. She noted that there were granular questions
that members could ask GCI directly. She added that there
were many people waiting online to testify.
10:32:07 AM
Senator Olson considered the internet options for Alaskas
students and teachers. He stated that he had authored a
letter to GCI on March 17, 2020. He asked whether there was
consideration being taken to provide service to student
without charging extra fees.
Mr. Gallagher stated that GCI was taking steps to offer
free additional data and speed to all GCI customers
statewide - in rural and urban Alaska. He recognized that
there would be simultaneous usage of the internet and
different parts of the network had different constraints.
He relayed that in order to keep the network viable on a
broad scale and deliver premium levels of service to all,
upgrades to the next plan would be made free of charge,
which would provide the greatest lift to all while
maintaining the networks viability.
Senator Olson appreciated the work being done by GCI.
10:34:26 AM
CHRISTINE O'CONNOR, EXECUTIVE DIRECTOR, ALASKA TELECOM
ASSOCIATION, WASILLA (via teleconference), gave a brief
update on the status of the Alaska Telecom Network during
the unfolding pandemic. She relayed that the goal of the
network was to keep employees safe and customers connected.
She stated that the association was following guidelines
from the Centers for Disease Control (CDC) and the Alaska
Department of Health and Social Services. She shared that
the association was also following direction of Speaker
Edgmond and the Bush Caucus, which had advised against
travel to villages. She said that the association was
following the governors daily travel and safety
restrictions. She thought it was important to understand
the different technologies that had different capabilities.
She said that in more populated areas the connection was
undersea fiber from South-Central Alaska to Seattle, which
was robust and allowed for increased demand. She shared
that over 80 percent of Alaskans were served by this fiber
backhaul. She said that other areas were connected by
satellite and microwave, which were more limited. She noted
the concern that the networks might not be able to handle
the influx of internet traffic and assured the committee
that the load was being handled. She added that ACS had
shared that the current increase in traffic was less than
what was experienced when the last two versions of Call of
Duty were released. She related that all providers were
monitoring usage levels; monitoring network performance was
standard practice to ensure proper traffic management,
detect and resolve problems before they impact users, and
minimize disruptions as soon as possible. She said that ATA
members were working with communities to expand access to
residents. She gave an example of drive-in hot spots in the
Mat-Su so people could access the internet in their cars,
which supported social distancing. She recognized that the
current situation was bringing economic hardship to many
across the state.
10:37:31 AM
Ms. O'Connor stated that ATA was committed to the Keep
Americans Connected pledge, which included commitments to:
1. Not terminate service to any residential or small
business customers because of their inability to pay
bills dues to the disruption caused by the Corona
virus pandemic.
2. Waive any late fees that any residential and small
business customers incur because to their economic
circumstances related to the Corona virus pandemic.
3. Open existing Wi-Fi hot spots to any American who
needs them.
Ms. O'Connor stated that additional hot spots were being
added. She furthered that families needing greater
assistance could qualify for discounted internet services
through the Lifeline program; more information on the
program was available on every providers website or by
calling local providers. She relayed that ATA was working
with all anchor institutions on what they need and how ATA
could support them in the short and long-term. She stated
that ATA was keeping close contact with other utilities and
coordinating efforts to the maximum possible extent. She
shared that ATA was coordinating with the federal response
team and various state agencies working on the crisis. She
said that ATA was working with the rural healthcare program
participants to increase bandwidth for healthcare
facilitates, as need, for no charge. She said that the
length of time needed to implement the increases would
depend on FCC guidance and the waiver of certain rules.
Ms. O'Connor addressed helping with educational needs while
schools were closed. She stressed that ATAs member
companies were committed to helping with education
services; every provider was working with school districts
throughout the state to provide solutions that fit their
schools and the available networks. She continued that ATA
was coordinating with Commissioner Johnson and the Alaska
Council of School Administrators to do everything possible
to help kids keep learning.
10:40:44 AM
Senator Wilson asked how many months the non-disconnect for
lack of payment would be offered.
Ms. O'Connor thought the situation was developing daily.
She stated that ATA was working with its national
association and was in communication with the congressional
delegation to identify resources that could be used for the
long-term.
Co-Chair von Imhof thought the pandemic would last for
months and would have unknown fallout. She thought it was
important for everyone to stay flexible moving forward
while keeping an eye on liquidity.
Co-Chair von Imhof commented on the importance of
considering education when discussing connectivity.
10:43:23 AM
Co-Chair von Imhof addressed the topic of the supply chain.
BAL DREYFUS, SENIOR VICE PRESIDENT ALASKA, MATSON,
ANCHORAGE (via teleconference), shared that the supply
chain was operating without interruption. He stated that
updates were available at matson.com. He stated that Matson
was taking steps to ensure continued services, including
the deployment of reserve vessels if needed. He explained
that sailings (twice per week from Tacoma to Anchorage,
twice weekly to Kodiak, weekly to Dutch Harbor) would
continue. He thought people should feel comfortable and
confident that goods were getting to market. He added that
other carriers in the state were continuing service without
interruption. He believed that the supply chain in the
state was strong.
10:45:30 AM
Mr. Dreyfus commented that stakeholders had been working
well together to ensure that goods were delivered to their
appropriate destination. He shared that CDC updates and
Coast Guard regulations were monitored to assure the safety
of people and goods. He stressed that the teamwork within
the supply chain, including customers, had been
outstanding.
Mr. Dreyfus relayed that Matson had expanded its technology
to allow more employees to work from home. He reiterated
that there were reserve vessels that could be deployed if
necessary.
Mr. Dreyfus acknowledged the importance of communication
during the pandemic.
10:48:09 AM
Senator Olson thanked Mr. Dreyfus for keeping the supply
chain open. He was concerned with the port in Tacoma and
thought there had been issues with longshoremen not showing
up for work. He had understood that the National Guard
could be called in to make sure that the Northbound vessels
were carrying the necessary goods.
Mr. Dreyfus stated that the labor on the West Coast had
been very good they came to work and got the job done.
Co-Chair von Imhof had shared the concern and wanted to
ensure the Tacoma port stayed open for business.
10:49:41 AM
Senator Wilson asked about the port in Anchorage and
whether there were any expected issues.
Mr. Dreyfus replied that there were no issues with the
Anchorage port.
Co-Chair von Imhof said it was reassuring to know that
goods and services were still coming to the state. She
thought it was important to be sure that the state had
enough medical supplies.
Co-Chair von Imhof thought that the mornings testimony had
been reassuring. She noted that the UI bill needed to move
out of committee soon.
10:51:37 AM
RECESSED
3:05:47 PM
RECONVENED
HOUSE BILL NO. 308 am
"An Act relating to unemployment benefits during a
period of state or national emergency resulting from a
novel coronavirus disease (COVID-19) outbreak; and
providing for an effective date."
3:06:22 PM
Co-Chair von Imhof relayed that the committee had heard the
companion bill, SB 240 on March 19, 2020. She invited her
staff to discuss changes in the legislation.
3:06:59 PM
JULI LUCKY, STAFF, SENATOR NATASHA VON IMHOF, stated that
the changes in the Committee Substitute (CS) were minimal.
She spoke to the Explanation of Changes (copy on file):
The Senate Finance CS for CS for House Bill 308 (FIN)
has two differences from Senate Bill 240, which was
heard in the Senate Finance Committee on March 19,
2020.
1. The period that the protections against
disqualification in this bill apply has been
lengthened to 120 days (from 90). The period
starts when the bill becomes law or when a person
applies, whichever is later.
2. The bill has a retroactive effective date to
March 1, 2020. This change would result in
minimal fiscal impact and will not require a new
fiscal note.
Ms. Lucky reviewed previously published FN 1 from the
Department of Labor and Workforce Development, OMB
Component 2276. The fiscal note was indeterminate. The
narrative spoke to why the note was indeterminate, and
there would be a required regulation change. She stated
that it was difficult to determine the fiscal impacts
because the number of possible applicants was unknown.
3:09:54 PM
PATSY WESTCOTT, DIRECTOR, DIVISION OF EMPLOYMENT AND
TRAINING SERVICES, DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT (via teleconference), discussed the fiscal
note. She shared that the division had already taken
measures to realign staff to respond to the anticipated
increase in workload. She stressed that the division was
ready to respond to the workload, but the possible increase
in applicants was unknown. She felt that additional federal
authority could be needed.
3:11:57 PM
Co-Chair von Imhof thought the appropriate place to add the
federal receipt authority was in the budget.
3:12:22 PM
Co-Chair von Imhof invited the sponsor to the table.
REPRESENTATIVE IVY SPONHOLZ, SPONSOR, supported all the
changes in the current CS.
Senator Bishop MOVED to ADOPT proposed committee substitute
for HB 308, Work Draft 31-LS1711\U (Wayne, 3/21/20). There
being NO OBJECTION, it was so ordered.
3:13:48 PM
Senator Bishop asked whether Permanent Fund Dividends were
included in base period wages.
Ms. Westcott answered in the negative.
Senator Bishop asked whether a federal dividend would be
included in base period wages.
Ms. Westcott answered in the negative.
Senator Bishop asked whether independent contractors or
sole based proprietorships would be covered under UI.
Ms. Westcott replied in the negative.
3:14:29 PM
Senator Wielechowski asked whether people who were employed
by companies such as Uber and Lyft were covered by
unemployment insurance.
Ms. Westcott stated "yes and no." She relayed that the
legislature had exempted transportation network drivers
from the definition of employment covered under UI. She
said that the provision did not apply to drivers that
carried cargo other than human passengers.
Senator Wielechowski asked whether there was a number of
Uber and Lyft drivers that were being impacted by the
COVID-19 virus.
Ms. Westcott did not have data on Uber and Lyft drivers in
the state. The drivers were not covered under UI and were
not required to report to the division.
3:16:20 PM
Senator Bishop MOVED to report SCS HB 308(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note.
SCS HB 308(FIN) was REPORTED out of committee with a "do
pass" recommendation and with one previously published
indeterminate fiscal note: FN 1(LWF).
Co-Chair Stedman briefly told members that there were a
couple of amendments and a brief presentation to consider
for the Operating Budget. He hoped to be finished with the
days business before dinner.
3:17:32 PM
RECESSED
4:04:59 PM
RECONVENED
[Co-Chair von Imhof handed the gavel to Co-Chair Stedman].
CS FOR HOUSE BILL NO. 205(FIN)(Corrected) am(brf sup maj
fld)
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; making
supplemental appropriations; and providing for an
effective date."
4:05:30 PM
Co-Chair Stedman discussed the agenda. He explained that
LFD had been invited to present an overview.
^PRESENTATION: SHORT and LONG-TERM IMPACTS OF BUDGET
4:06:30 PM
PAT PITNEY, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
discussed the presentation "State of Alaska - Short and
Long-Term Revenue Impact and Impact on Budget Reserves"
(copy on file). She stated that the presentation was a
short slide deck that would illustrate the impact of the
decline in the price of oil, as well as the impact on the
POMV annual draw to the state.
4:07:04 PM
Ms. Pitney spoke to Slide 2, "Traditional (non-PMOV)
Revenue, FY19-FY29," which showed a line graph. She noted
that she would show three slides with graphs that were all
scaled the same. The graph on Slide 2 showed traditional
revenue, largely made up of petroleum revenue. She pointed
out that the state was under $3 billion in FY19 and
expected to be at $2 billion in fall 2020. The blue bar
showed the fall forecast. There were additional sources of
revenue from entities other than oil: marijuana tax, motor
fuel tax, and corporate income tax.
Ms. Pitney noted that the red line showed a $600 million
difference, on average, across the timeframe FY21 through
FY29, so the state had $600 million less coming in through
the traditional revenue streams. She said that the red line
was based on $40/bbl. She stated that the current price of
oil hovered close to $35/bbl. She relayed that assuming
$35/bbl oil on an inflation adjusted basis would result in
$700 million less; approximately $1.2 billion in
traditional revenue.
4:09:16 PM
Ms. Pitney discussed Slide 3, "POMV "Revenue, FY19-FY29,"
which showed a line graph. She explained that POMV took 5
percent of the permanent fund value on annual basis. She
related that the POMV was calculated by only drawing from
the fund the amount that, over time, the fund could
continue to grow at inflation, so the fund value was strong
for future generations. She said that at this point the
state had $2.9 billion from the POMV in FY19. She relayed
that the effects of the market were delayed in the POMV
because it was on a 5-year rolling average. At the peak,
the state would have $400 million less than expected from
the fall revenue source. She discussed the slow recovery
scenario:
Slow recovery: FY20 ending balance matches actual
balance as of 3/19/20. No growth in FY21, then 10
percent growth for 5-years, then 7 percent growth.
Peak impact of $700 million in FY26.
4:11:40 PM
Ms. Pitney reviewed Slide 4, "Total Revenue, FY19-FY29,"
which showed a line graph that combined traditional revenue
with the POMV revenue. She said that the fall revenue had
been expected to be $6 billion by FY29. She pointed out
that the red bar was at 40/bbl and steady recovery, plus
one draw with decent returns thereafter. She noted the $1
billion dollar difference at the peak of the decline in
FY26. She said that if the state took an additional year to
recover at $35/bbl, the difference was $1.5 billion less in
revenue per year. She highlighted that revenue would go
from $6 billion to $4.6 billion in the out years. She said
that the amazing figures was the cumulative impact on
revenue. Cumulatively, the gap between the fall forecast
and the $40/bbl plus steady recovery, was a cumulative $8
billion in revenue that did not exist in the states
revenue streams from what was considered last fall. She
added that if oil stayed at $35/bbl, the figure increased
to $11 billion. She stressed the significant differences in
the states fiscal situation over the last two-week period.
4:13:39 PM
Ms. Pitney showed Slide 5, "Scenario 1: $40/bbl, POMV
impact, Senate Finance Budget without Dividend, no
Stimulus," which showed a table using modest revenue
decline. She noted that the slide showed a modest, steady
recovery of the permanent fund. The UGF assumption
reflected a drop from $4.8 billion in 2020, to $4.4 billion
in 2022. The total spending, not counting supplementals,
was $4.3 billion; there were $360 million in supplementals.
Included in last years spending was a $1600 dividend,
which totaled $1.1 billion. She said that because of the
drop in revenue the division anticipated a $728 million
draw on the CBR, after $142 from the CBR for the capital
budget, and $172 million from the SBR for dividends. She
relayed that the year-end balance (June 30, 2020) for the
CBR was expected to be $1.5 billion. She furthered that
coming into 2020 with the current spending level,
additional capital budget items, and $100 million in
supplemental items, the state would have a $300 million
deficit (reflected on Line 12) without a dividend and
without any money towards stimulus. The CBR would be drawn
down to under $1.4 billion. She directed committee
attention to Line 18, which showed the CBR balance for FY20
through FY22. She noted the ERA balance on Line 20, which
was $16 billion in FY20, dropped to $12 billion in FY 21
and $10 billion in FY21, with lower returns into the ERA.
She said that under this scenario, assuming no stimulus and
no dividend, the deficit would be $500 million by FY22,
with a CBR balance below $1 billion. The ERA balance would
be 8.5 billion.
4:16:59 PM
Ms. Pitney referenced Slide 6, "Scenario 2: $40/bbl, POMV
impact, Senate Finance Budget $400/person Dividend, $100M
Stimulus," which showed the same table as the previous
slide with the assumption of a $400 dividend and $100
million in stimulus. She relayed that under the scenario,
FY 20 remained the same, FY21 brought the deficit to $700
million and the CBR was drawn below $1 billion. She noted
that there were no additional draws to the ERA beyond the
POMV. She said that in FY22 there would be a $500 million
deficit, before dividends or stimulus, which drew the CBR
under $600 million.
Ms. Pitney explained that given the tight cash flow
arrangement, drawing the CBR below $600 million would
require another cash flow solution for the state. She
thought that the $563 million was as low as the CBR should
drop unless another source of cash flow for the state was
discovered.
4:18:43 PM
Ms. Pitney discussed Slide 7, "Scenario 3: $40/bbl, POMV
impact, Senate Finance Budget $1000/person Dividend, $300M
Stimulus," which showed the same table as the previous two
slides, but with a $1000 dividend and $300 million in
stimulus. This scenario would result in a deficit of $1.2
billion, which would draw the CBR down to $600 million and
would require an ad hoc draw from the ERA. The draw could
be $276 million at $40/bbl. She pointed out that in the
next year, with no dividend and no stimulus, the deficit
would be $500 million and because the CBR was drawn down,
another ad hoc draw would be required on the ERA.
Ms. Pitney explained that for every billion dollars draw
out of the ERA, future annual POMV revenue was reduced by
$50 million. Future cash flows would be reduced, on top of
what was going to happen due to the market and oil price
crash.
4:20:32 PM
Senator Hoffman asked Ms. Pitney to review the deposits on
Line 14.
Ms. Pitney explained that the deposits on Line 14
represented oil tax settlements. She relayed that the $235
million was the amount already received in FY20, the
additional numbers were estimates based on Department of
Revenues forecast.
4:21:30 PM
AT EASE
4:23:11 PM
RECONVENED
Co-Chair Stedman informed the public that the committee
would now take up amendments on the operating budget.
Co-Chair Stedman MOVED to ADOPT Amendment 1 (copy on file):
DEPARTMENT: DCCED
APPROPRIATION: AIDEA
ALLOCATION: AIDEA
RESTORE: $110.3 AIDEA Receipts (code 1102)
EXPLANATION: Corrects funding inadvertently removed
DEPARTMENT: LAW
APPROPRIATION: Civil Division
ALLOCATION: Labor and State Affairs
DELETE: $400.0 UGF
ADD INTENT: It is the intent of the legislature that
when making reductions to outside counsel contracts,
the department use staff instead of outside contracts
whenever possible; and the department should not make
reductions to contracts if the contract is a possible
revenue generator.
Co-Chair Stedman OBJECTED for discussion.
PETE ECKLUND, STAFF, SENATOR BERT STEDMAN, spoke to
Amendment 1, which he described as a technical clean-up
amendment.
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
further OBJECTION, Amendment 1 was ADOPTED.
4:25:12 PM
Co-Chair Stedman MOVED to ADOPT Amendment 2 (copy on file):
Agency: Environmental Conservation
Project:
Village Safe Water and Wastewater Infrastructure
Projects
Village Safe Water and Wastewater Infrastructure
Projects: Expansion, Upgrade. and Replacement of
Existing Service
Amount:
$20.900,000 Federal Receipts (1002)
$4.832.000 GF/Match (1003)
$200.000 Stat Desig (1108)
Village Safe Water and Wastewater Infrastructure
Projects: First Time Service Projects
Amount:
$31,350.000 Federal Receipts (1002)
$7.248.000 OF/Match (1003}
$300.000 Statutory Designated Program Receipts (1108)
Agency: Commerce, Community & Economic Development
Project:
Alaska Energy Authority - Rural Power Systems Upgrades
Amount:
$12,500.000 Federal Receipts (1002)
$5,000,000 Unrestricted General Funds (1004)
APPROPRIATION: National Petroleum Reserve
ADD: NATIONAL PETROLEUM RESERVE - ALASKA IMPACT
GRANT PROGRAM. The amount received by the National
Petroleum Reserve-Alaska special revenue fund (AS
37.05.530(a)) under 42 U.S.C. 6506a(l) or former 42
U.S.C. 6508 by August 31, 2020, estimated to be
$13,100,000, is appropriated from that fund to the
Department of Commerce, Community, and Economic
Development for capital project grants under the
National Petroleum Reserve - Alaska impact grant
program.
EXPLANATION: Fund the NPRA receipts, per the
Governor's requested level.
Co-Chair Stedman OBJECTED for discussion.
Mr. Ecklund explained that Amendment 2 had three
components. The first part would add the water and sewer
projects across the state. The second part would add
funding for rural power system upgrade to DECCED. The third
was $13.1 million for the National Petroleum Reserve Alaska
Impact Grant Program.
Co-Chair Stedman WITHDREW his OBJECTION.
4:26:45 PM
Senator Olson stated that there was a name missing from the
list of co-sponsors on the amendment.
Senator Bishop wanted to be a co-sponsor of the amendment,
as well as Senator Wielechowski and Senator Wilson.
There being NO further OBJECTION, Amendment 2 was ADOPTED.
4:27:32 PM
Co-Chair Stedman MOVED to ADOPT Amendment 3, 31-GH2197\O.4
(Bruce, 3/21/20) (copy on file):
Page 74, following line 23:
Insert a new subsection to read:
"(d) The sum of $680,000,000 is appropriated from the
general fund to the dividend fund (AS 43.23.045(a))
for the payment of permanent fund dividends and for
administrative and associated costs for the fiscal
year ending June 30, 2021."
Reletter the following subsection accordingly.
Page 97, lines 29 - 30:
Delete "secs. 21(a), (b), and (d)"
Insert "secs. 2l(a), (b), (d), and (e)"
Co-Chair Stedman OBJECTED for discussion.
Mr. Ecklund explained that the purpose of the amendment was
to pay a $1000 dividend in October.
Co-Chair Stedman understood that each qualified Alaskan
would receive a $1000 dividend.
Co-Chair von Imhof OJBECTED. She believed that paying a
large dividend at this point had serious fiscal
consequences. She asserted that the focus should be on
paying stimulus money and Covid-19 associated money
directly to the people who truly needed it for food
security, energy assistance, and supplemental UI benefits.
Senator Wielechowski thought the amount was woefully
inadequate. He said that people have been ordered out of
work and he supported the recently passed UI legislation.
He lamented that Alaska had the lowest unemployment
replacement wage in the country. He argued that the $1000
dollars was far below what was required in statute and was
inadequate for the current crisis Alaskan were
experiencing.
Senator Bishop agreed with Senator Wielechowski's comments
- to a point. He was afraid the proposed dividend was the
last one Alaskans would receive for a while. He was
concerned that future generations would not benefit in the
same was as past and current generations.
4:30:34 PM
Senator Olson lamented that businesses were losing revenue
and families continued to have expenses to pay. He found
that the dividend amount was wanting but was a good first
step in getting money to Alaskans.
Co-Chair Stedman WITHDREW his OBJECTION.
Co-Chair von Imhof MAINTAINED her OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Hoffman, Wilson, Olson, Stedman
OPPOSED: Bishop, Wielechowski, von Imhof
The MOTION PASSED (4/3). There being NO further OBJECTION,
Amendment 3 was ADOPTED.
4:32:02 PM
AT EASE
4:34:12 PM
RECONVENED
Co-Chair Stedman stated that there was a conceptual
amendment brought to the committee by Senator Wielechowski.
Senator Wielechowski MOVED to ADOPT Conceptual Amendment 4:
An emergency PFD of $1,000 payable to each individual
who is eligible to receive a 2020 Permanent Fund
Dividend to be appropriated from the Earnings Reserve
Account to the dividend fund payable on June 15, 2020.
Co-Chair Stedman OBJECTED for discussion.
Co-Chair Stedman summarized that the conceptual amendment
was for an additional $1000 dividend from the ERA to be
paid out June 15, 2020.
Senator Wielechowski offered rationale for the amendment.
He explained that the COVID-19 virus had caused an
unprecedented unemployment, which was not likely to end
soon. The conceptual amendment would provide a payment out
of the ERA for every man, woman, and child who was eligible
for a 2020 dividend. He was worried for the people in his
district, in which there were many low-income people that
worked in restaurants, hotels, gyms, and were struggling.
He thought the amount of money in the amendment was small
considering the magnitude of the crisis. He expressed great
concern for the financial hardships and suffering of the
people of Alaska.
4:37:55 PM
Senator Wilson asked whether the amendment applied to the
2020 application process.
Co-Chair Stedman stated in the affirmative.
Senator Wielechowski thought the amendment was better to
base off the applicants that were due by March 31, 2020.
th
Giving until June 15 would allow a determination of who
was legitimately eligible.
4:38:59 PM
Co-Chair von Imhof asked Senator Wielechowski to check
whether the governor had extended the application period
for a PFD.
Senator Wielechowski stated if there had been an extension,
he would be happy to amend his amendment.
4:39:41 PM
Senator Olson believed that the communities he represented
could use the additional funds sooner rather than later.
Co-Chair Stedman thought there was clearly a need for
relief for citizens across the state. He thought the
federal government was targeting May and June for
assistance. He considered that the severity of the economic
downturn could extend into 2021. He did not believe that
the virus and its effects would only last several months.
He felt that the severity of the draw to support the
amendment was not prudent at this time.
Co-Chair Stedman MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Wilson, Olson, Wielechowski
OPPOSED: Hoffman, Bishop, von Imhof, Stedman
The MOTION to adopt Conceptual Amendment 4 FAILED (3/4).
4:43:21 PM
AT EASE
4:43:41 PM
RECONVENED
Co-Chair Stedman checked in with committee members to
determine whether anyone needed further explanation of the
amendments.
Co-Chair von Imhof MOVED to report SCS CSHB 205(FIN) out of
Committee with individual recommendations. There being NO
OBJECTION, it was so ordered.
SCS CSHB 205(FIN) was REPORTED out of committee with two
"do pass" recommendations and five "amend" recommendations.
Co-Chair Stedman explained that the bill would move next to
the Senate Rules Committee and then it would move to the
Senate Floor.
4:45:29 PM
AT EASE
4:47:45 PM
RECONVENED
Co-Chair Stedman relayed that there would be a 9:00 am
meeting the following morning, but he expected a delay.
There was a floor session scheduled for 11:00am. He
anticipated the committee would meet at 1 PM. He thanked
everyone for coming to work on a Saturday and stressed that
the committee was on an expedited schedule to get ahead of
the virus and keep people safe.
ADJOURNMENT
4:48:40 PM
The meeting was adjourned at 4:48 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 308 Work Draft v. U.pdf |
SFIN 3/21/2020 9:00:00 AM |
HB 308 |
| 032120 LFD HB 205 Presentation SFIN .pdf |
SFIN 3/21/2020 9:00:00 AM |
HB 205 |
| HB 308 Work Draft v. U Explanation of Changes.pdf |
SFIN 3/21/2020 9:00:00 AM |
HB 308 |