Legislature(2021 - 2022)SENATE FINANCE 532
08/17/2021 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Update on Fiscal Summary and Governor's Vetoes | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
SENATE FINANCE COMMITTEE
THIRD SPECIAL SESSION
August 17, 2021
9:04 a.m.
9:04:13 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:04 a.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman
Senator Donny Olson
Senator Natasha von Imhof
Senator Bill Wielechowski (via teleconference)
Senator David Wilson (via teleconference)
MEMBERS ABSENT
None
ALSO PRESENT
Alexei Painter, Director, Legislative Finance Division
SUMMARY
^UPDATE ON FISCAL SUMMARY and GOVERNOR'S VETOES
9:06:48 AM
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
discussed the presentation, "Update on Fiscal Summary and
Governor's Vetoes" (copy on file). He looked at slide 2,
"UGF Short Fiscal Summary - FY21/FY22 Budget." He pointed
out the details and differences between the FY 21 and FY 22
budgets.
9:10:12 AM
Senator von Imhof surmised that the enacted budget of FY 22
included the reverse sweep funds, the vetoes, and the CBR
vote.
Mr. Painter agreed, and explained that the funds would
remain in the budget with or without the reverse sweep of
the CBR.
Senator von Imhof wondered whether any of the items
associated with the reverse sweep, except for the Power
Cost Equalization (PCE) funds, were
9:11:13 AM
Mr. Painter replied that there were a couple of funds that
had no funds available without the reverse sweep, such as
the Higher Education Fund. He stated that there were other
items where the sweepable balance was only a portion of
what was needed to fund the item, such as Washington,
Wyoming, Alaska, Montana, and Idaho (WWAMI).
Senator Olson asked what hope could be given to medical
students.
Mr. Painter replied that there was currently a surplus, so
with a simple majority the legislature could fund those
items.
Senator Olson queried the likelihood of that occurrence.
Mr. Painter replied that the legislative session was
limited to the items on the call. He remarked that the
legislature could not address the items in the current
special session.
Co-Chair Stedman remarked that, in the event of having that
ability, there would need to be an agreement by the two
bodies and the governor for enactment.
Co-Chair Stedman surmised that there was $536 million in
appropriate-able cash.
Mr. Painter replied in the affirmative, based on the spring
forecast. He noted that recent oil prices had been higher
than the spring forecast.
Co-Chair Stedman wondered whether there would be a
presentation of the enacted budget in the event that the
funds were swept and not swept.
Mr. Painter replied that the upcoming two slides would
address fund balances.
9:16:07 AM
Mr. Painter highlighted slide 3, "Projected FY 22 Fund
Balances - With Reverse Sweep." He noted that there was an
anticipation that with the reverse sweep, FY 21 would end
with $415.7 million in the CBR. He noted the post-transfer
surplus of $1 billion at the end of the year. He remarked
that the CBR balance may seem low, because of the structure
of the budget that drew an estimate of $410 million into
the Statutory Budget Reserve (SBR). He remarked that the
amount would fund $80.7 million appropriations because the
governor vetoed $330 million of SBR appropriations.
Co-Chair Stedman remarked that, under the current
structure, the beginning balance will be zero. He explained
that he would address the balances.
Senator Olson queried the reason for the reverse sweep.
Co-Chair Stedman asked for constitutional implications of
owing a debt to the CBR.
Mr. Painter replied that in the constitutional amendment
that created the CBR, there was a section stating that when
funds were drawn from reserves that created a debt.
Co-Chair Stedman shared that the legislature, and more
specifically, the Senate Finance Committee examines all the
state's accounts and attempt to keep those fund balances at
a high level.
9:20:50 AM
Senator Wilson queried the impact of the recent court case.
Mr. Painter replied that he could not provide a legal
interpretation, but stated that the community assistance
fund was not sweepable because it went out without further
appropriation. He explained that the remaining funds were
typically considered sweepable, although PCE was no longer
sweepable. He shared that any other funds could be
reclassified based on the court decision, but was up to the
administration to make that determination. He stated that
it could impact the SBR and the Alaska Housing Capital
Corporation.
Co-Chair Stedman explained that there had been reviews over
the years about the sweepable funds, OMB had worked with
the legislature to determine an agreed list of sweepable
funds.
Senator Wilson wondered whether LFD had worked with OMB or
with the administration to examine the funds and the
determinations of the sweepable funds.
Mr. Painter replied that he had not discussed it with OMB,
but LFD had discussions with Legislative Legal.
Mr. Painter looked at slide 4, "Projected FY 22 Fund
Balances - Without Reverse Sweep."
9:25:37 AM
Co-Chair Stedman queried the mechanics of moving the funds
around in order to not have a negative balance.
Mr. Painter replied that, generally, the administration
restricted funds.
Co-Chair Stedman surmised that there would either be a
supplemental request or an appropriation bill to fix the
negative balance.
Mr. Painter replied in the affirmative.
Senator von Imhof remarked that the governor had the
reverse sweep in the original budget, and it was carried
through session. She recalled that the administration had
advocated for funding of the programs. She felt that it was
an odd change.
Co-Chair Stedman agreed.
Mr. Painter addressed slide 5, "Summary of Governor's
Vetoes." He outlined the details of the governor's vetoes
reflected within the slide.
Senator von Imhof queried the mechanics of vetoing federal
funds, and wondered whether they were treated as general
funds.
9:30:11 AM
Co-Chair Stedman replied that it meant the state would not
receive the federal funds.
Senator von Imhof noted that there was $220 million in
federal funds under the capital projects, which the state
could use to enhance the economy.
Mr. Painter replied that there was a slide related to that
query. He noted that there were allocations specifically
for federal highway funding that was vetoed for
contingency, but there was still enough federal authority
for the projects with reduced flexibility from the
departments in applying the funding.
Senator von Imhof pointed out the issue of reducing
flexibility in an already stressed economy.
Co-Chair Bishop asked for more detail on the third bullet
of the slide.
Mr. Painter replied that they were items where the governor
had proposed a budget reduction below the year prior. He
stated that the legislation did not reach that reduction,
so the governor vetoed items in order to match the amount
in his original budget.
Co-Chair Bishop wondered whether it included the
legislature's rejection of use of bond money to replace
UGF.
Mr. Painter replied that most of the governor's vetoes
within UGF were different.
Co-Chair Bishop stressed that the legislature was
attempting to not use bonds to fund the budget.
Co-Chair Stedman agreed.
Senator Olson wondered whether the state could still
receive federal funds within a supplemental budget passed
the deadline.
Mr. Painter replied that there was still some use of the
funds through the Legislative Budget and Audit (LB and A)
process, but should not see an overall reduction.
9:36:22 AM
Senator Olson asked how the airports were impacted by the
federal fund veto.
Mr. Painter replied that the airports were not affected by
the veto.
Co-Chair Bishop stressed that the roads to the airports
were affected by the veto.
9:36:57 AM
Mr. Painter addressed slide 6, which showed the vetoes of
legislative additions, which were funded as an increase
over something in a previous year's budget.
Co-Chair Stedman explained that there was the submitted
budget and the enacted budget. He wondered whether the
change was in the submitted budget or the enacted budget.
Mr. Painter replied that the slide was based on the enacted
budget from the previous year. He further explained the
changes in the slide.
9:40:05 AM
Senator von Imhof wondered whether the administration fully
grasped the issue of access to behavioral and mental health
support in the state. She felt that the shortsightedness of
the administration was disappointing.
Mr. Painter looked at slide 7, "Partial Vetoes of
Legislative Additions." He addressed each issue.
Senator Wilson wondered what happened to the $3 million
funding after the end of the year.
Mr. Painter replied that the state had until the end of
either 2023 or 2024 to expend those funds.
Co-Chair Stedman explained that there would be a breakdown
of funds from Covid-related federal programs in the
upcoming regular session.
9:45:58 AM
Mr. Painter looked at slide 8, "Vetoes to Match Governor's
Proposed Reductions." He explained that the reductions were
compared to the FY 21, or compared to the statutory amount.
Senator von Imhof wondered whether the $10 million veto to
tourism was reflected in the slide.
Mr. Painter replied that it was a capital item, so it would
be addressed in an upcoming slide.
Co-Chair Stedman recalled that the subcommittee recommended
the number for Medicaid because there was no belief in the
reduction materializing, in order to avoid a supplemental
budget.
Senator von Imhof agreed, and remarked that there were
constant federal changes to the Medicaid funding.
Senator Olson asked for more explanation of the Regional
Educational Attendance Area (REAA) school fund.
Co-Chair Stedman asked for an explanation of REAA and its
link to the Base Student Allocation (BSA).
9:50:03 AM
Mr. Painter replied that the REAA fund was intended to use
in the unorganized boroughs that were without local tax
bases. He stated that the Department of Education and Early
Development (DEED) ranked projects from those communities,
and then applied the funds to the top scoring projects. He
stated that the statutory amount was determined as a
percentage of the amount of school debt reimbursement that
went to urban districts.
Senator Olson commented that he was concerned that the
governor had vetoed those funds for rural schools.
Mr. Painter addressed slide 9, "Other Operating Vetoes." He
explained the vetoes outlined in the slide.
Co-Chair Stedman explained that the items may be addressed
in the supplemental budget in the upcoming regular session.
Senator Olson wondered whether the other two branches of
government affected by the per diem veto.
Mr. Painter replied that they were not.
Senator von Imhof stressed that the executive branch did
receive per diem.
Mr. Painter agreed, but remarked that there was a slightly
different system than the legislature.
Senator von Imhof stressed that there was not a veto of the
executive branch per diem funds.
Mr. Painter agreed.
9:55:09 AM
Co-Chair Stedman stressed that the governor also received
per diem, and stated that there would be an outline of the
flow of funds.
Co-Chair Bishop wondered whether there had ever been a veto
of the legislature's per diem.
Mr. Painter replied that he did not recall that ever
happening.
Co-Chair Bishop wondered whether the legislature had cut
the administration's per diem.
Mr. Painter replied that he did not recall that ever
happening.
Co-Chair Bishop reiterated that the administration staff
did receive per diem, and there were separate rates
dependent on residency.
Co-Chair Stedman stressed that the veto was punitive,
because the governor was not receiving political support
from the legislature for his agenda.
10:02:35 AM
Senator Wilson queried the year and time that the veto took
effect.
Mr. Painter replied that the amount was roughly what was
needed for the 120-day legislature. The effect would be
dependent on the management for the current fiscal year.
Co-Chair Stedman stressed that the committee had the
ability to address that budget before the 120 days.
10:05:40 AM
Senator Wilson queried the timeframe to determine an amount
based on historic PFD payment deadlines.
Mr. Painter replied that DOR needed about one month for a
payout, so there needed an amount determined by the
beginning of September.
Mr. Painter addressed slide 10, "Capital Project Vetoes."
10:11:09 AM
Co-Chair Bishop stressed that no flexibility would result
in stalling of projects and less of a benefit to the growth
of Alaska's economy.
Senator von Imhof stressed that vetoing $10 million dollars
was a "big deal." She understood that the governor had a
press conference promoting tourism, and used Covid relief
funds for tourism marketing. She remarked that the $10
million was for the upcoming year, so Alaska Travel
Industry Association (ATIA) had no money for the first
time. She felt that it was counter to what the governor was
promoting about Alaska's economy.
Co-Chair Stedman wondered whether the funds were sourced
from the American Recovery Plan.
Mr. Painter replied that the fund source was the SBR.
Co-Chair Stedman remarked that the SBR should be swept.
10:16:14 AM
Senator Wielechowski wondered what happened to the funds
when a designated fund received a veto.
Mr. Painter stated that it depended on the fund. Sometimes
an actual fund source stayed in the fund, others were
lapsed to the general fund.
Mr. Painter covered the final projects outlined in the
slide.
Co-Chair Bishop stressed that the items were from the
University's ranking list.
Co-Chair Stedman explained that the legislature used many
different lists to determine the funding of the projects.
Co-Chair Stedman discussed housekeeping.
ADJOURNMENT
10:20:47 AM
The meeting was adjourned at 10:20 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 081721 SFIN Fiscal Summary and Vetoes.pdf |
SFIN 8/17/2021 9:00:00 AM |