Legislature(2021 - 2022)SENATE FINANCE 532
01/24/2022 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Governor's Fy 23 Budget Proposal | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
January 24, 2022
9:03 a.m.
9:03:54 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:03 a.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman
Senator Donny Olson (via teleconference)
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
Senator Natasha von Imhof
ALSO PRESENT
Neil Steininger, Director, Office of Management and Budget,
Office of the Governor.
SUMMARY
GOVERNOR'S FY 23 BUDGET PROPOSAL
^GOVERNOR'S FY 23 BUDGET PROPOSAL
9:05:48 AM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, began with slide 9 of the
presentation, "State of Alaska; Office of Management and
Budget; FY2023 Governor's Budget; Senate Finance Committee;
January 21, 2022" (copy on file). The slide was titled, "FY
23 Agency Operating Budget Changes."
Senator Hoffman looked at the restoration of funds for the
sweep impacts, and wondered which funds were not restored
in the sweep.
Mr. Steininger replied that the $33.6 million was to ensure
that any programs funded with swept funds had access to
full funding in FY 23. He stated that there were not any
funds that were not chosen for restoration. H
Senator Hoffman queried which funds that were restored
because of the sweep.
Mr. Steininger replied that the budget proposal did not
include a reversal of the sweep. The money for the programs
would be from UGF.
9:10:09 AM
Senator Hoffman queried the funds that were not fully
restored in the proposal.
Mr. Steininger agreed to provide that information.
Co-Chair Stedman remarked that there had been a request for
a legal opinion on the accounting interpretation of the
executive branch.
Senator Wilson wondered how much federal funds would be
used, and for how long those funds would be utilized.
Mr. Steininger replied that there were several places in
the infrastructure bill where the Alaska Marine Highway
System (AMHS) funding would come through, so the portion to
allow the offset was a $200 million per year program for
five years for rural ferry systems on the national level,
but for only two ferry systems in the country. Therefore,
there was an expectation to receive at least half of that
$200 million.
Senator Wilson wondered whether the $65 million would be
for all five years.
Mr. Steininger replied that the funding would be available
as long as the federal program was in place.
Co-Chair Stedman announced that there would be discussions
about the AMHS and its position after the end of the five-
year period.
9:16:13 AM
Mr. Steininger pointed to slide 10, "Formula Cost Drivers":
K-12 Education
? Fully funded to the $5,930 base student allocation
Medicaid
?COVID-related enhanced federal match (FMAP) currently
expires at end of FY2022
?Pent up demand for services increases utilization
?$45m UGF increment restores Medicaid state share to
pre-pandemic levels
Co-Chair Bishop understood that the boarding school formula
was not a part of the Base Student Allocation (BSA). He
wondered whether there were conversations with the boarding
schools related to their deficit spending.
Mr. Steininger replied that he had not conversations with
the boarding schools, but there was an expansion of a
residential school in the budget. He deferred to the
Department of Education and Early Development (DEED) about
the costs of the boarding schools.
Co-Chair Stedman echoed the concern about the boarding
school funding.
Senator Wilson asked about the possible failure in the
disparity funding.
Mr. Steininger replied that DEED was currently working to
discuss with the federal Department of Education about the
disparity test. He noted that there was work on alternative
calculation to meet the disparity test.
9:20:36 AM
Co-Chair Stedman queried the dollar amount related to the
issue.
Mr. Steininger explained that there were school districts
that received federal impact aid, which was approximately
$70 million to $75 million. He stated that, in order to
count the federal impact aid as a portion of K-12 state
funding to the districts, a disparity test must be met.
Co-Chair Stedman queried the concentration of fund location
under the new location.
Mr. Steininger deferred to DEED, but reiterated that he was
confident that the reinterpretation would take into
consideration the unique factors of the state as compared
to the rest of the country.
Co-Chair Stedman felt that DEED could present on the new
disparity test.
Senator Wilson wondered whether there had been discussions
about the Federal Medical Assistance Percentage (FMAP)
continuation in the state.
Mr. Steininger replied that there had been a recent
extension which stated that there would be 60 days warning
before expiration.
9:25:06 AM
Mr. Steininger looked at slide 11, "Public Protection":
Over $30 million operating UGF added for public
protection:
? Fully fund filled positions added in previous fiscal
years for Public Safety and Law: $1.3m
? 15 new Trooper positions
? 10 new Village Public Safety Officers and related
costs: $3.9m
? Add 14 DPS support positions so Troopers can focus
on policing: $1.8m
? Add positions for Rural Fire Investigations and
increase DNR wildland fire fighting capacity: $4.5m
? Add 30 Correctional institution support positions,
mental health treatment resources, and HilandMountain
booking: $4.1m
? Address trial backlogs $1.8m and defense capacity
$428.7k
Senator Hoffman asked for the details of the locations of
fourteen support positions for the troopers and
correctional support positions in order to understand how
these positions were spread throughout the state.
Co-Chair Stedman asked that the request also be sent to the
committee.
9:29:04 AM
Senator Wilson wondered whether the additional Village
Public Safety Officer (VPSO) positions were on top of the
fulfilled positions, and asked why money was not used for
better recruitment and retention efforts.
Mr. Steininger replied that the money was for an addition
of ten new VPSO slots. He stated that, in the past, when
the positions were not filled, there would be lapsed money
in the program. He stressed that the department had renewed
their efforts to support the VPSO program.
Co-Chair Stedman felt that the Department of Law should
present to the committee about public safety in rural
Alaska.
Co-Chair Bishop wondered whether the $428,000 for Defense
Capacity was for the Public Defenders Office.
Mr. Steininger replied in the affirmative.
Senator Olson wondered whether there was specific funding
to assist the places that were hard hit by the lack of
recruitment and retention.
Mr. Steininger replied that the addition of money for VPSOs
was for the overall program.
9:34:45 AM
Senator Hoffman stressed that the department could give
leeway to the contract-ees in the VPSO program to address
recruitment, including additional flexibility for moving
funds to support the VPSOs themselves.
Co-Chair Stedman remarked that there were horrible family
issues across the state, and there needed to be an
examination of possible changes.
Co-Chair Bishop stated that Senator Hoffman had captured
his comments.
Senator Wilson expressed concern about the trial backlog,
and whether there was money assigned for future trials.
Mr. Steininger deferred to the Department of Law.
Senator Wilson noted that with the administration's public
protection and People First Initiative, and wondered
whether the administration anticipated a larger number of
incarcerated people in the state.
9:39:47 AM
Mr. Steininger pointed to slide 12, "Public Protection
continued":
People First Initiative UGF:
? Domestic Violence and Sexual Assault
? $3.5m for victim services provider grants
? $1.5m to reduce turnaround time on DNA
testing and increase forensics lab capacity
? $1.0m for staff to provide victim services
and perpetrator intervention
Missing and Murdered Indigenous Persons
? Tribal liaisons and additional support for the
Missing Persons Clearinghouse $713.9k
Homelessness
? Statewide homelessness coordinator, database,
and data manager $866.3k
Foster Care and Office of Children's Services
? $1.4m for the Tribal Child Welfare Compact
Mr. Steininger looked at slide 13, "Resource Development
and State Primacy":
Invest in state primacy over resource management
? Expand timber resource capacity $460.0k
? $5.7m to assume primacy from the EPA over
resource development permitting
? Resource Conservation and Recovery Act
$830.0k
? Clean Water Act Section 404 $4.9m
? $4m to continue statehood defense efforts
Capital funding to develop mariculture and agriculture
industries to enhance food security and economic
development $50m
Senator Hoffman noted the disasters related to the salmon
industry, and felt that the salmon on the Yukon Kuskokwim
Delta were on the verge of extinction. He stated that the
residents had not been able to fish for salmon. He felt
that there could be an effort to address that critical
issue.
Mr. Steininger replied that there were a number of places
in the capital budget that address that issue.
9:46:11 AM
Senator Hoffman stressed that there needed to be a program
to add more salmon to the stock in the state.
Co-Chair Bishop felt that the money in the capital budget
for the issue barely dealt with the critical issue of
salmon.
Co-Chair Stedman explained that hatcheries in Southeast
Alaska had turned the salmon industry around since the
1970s, so perhaps something similar could occur in the
Yukon Kuskokwim Delta.
9:49:00 AM
Mr. Steininger pointed to slide 14, "Improve State
Government Functions":
Executive Order for new Department of Family and
Community Services and Department of Health
?DFCS for leadership focus to Children's
Services, Juvenile Justice, and 24-hour
facilities
?DOH for leadership focus on public health,
Medicaid, and public assistance
?$434.3k UGF and $1.9m Total for new positions
Public Safety Communication Systems transfer to Public
Safety
?This function is more aligned with DPS' mission
to ensure public safety
?DPS has an existing division that can seamlessly
absorb these services
?Net zero budget impact
Transfer Exxon Valdez Oil Spill Trustee Council from
ADFG to DEC
?Net zero budget impact
Invest in Department of Administration Information
Technology
?"Pandemic Proofing" and avoidance of the next
major cyber-attack $28.9m UGF (capital)
?Restructured how cost of investments in IT and
other central services are reflected in the
budget. Adds additional accountability for DOA
costs. $4.1m UGF
Senator Wilson wondered whether the state had cyber
insurance to help offset the costs from the cyber-attacks.
Mr. Steininger agreed to provide that information.
Senator Hoffman wondered whether the council had weighed in
on the movement of the money.
Mr. Steininger replied that the council was not opposed to
the move, and agreed to provide more information about the
detail of their involvement.
Mr. Steininger looked at slide 15, "FY23 Statewide
Operating Items."
9:55:53 AM
Senator Hoffman recalled the discussion of the Regional
Educational Attendance Area (REAA) Fund which set up to
build schools in rural Alaska. He requested an opinion from
the Attorney General about the outcome of the decision not
to fully fund the Kasayulie Settlement.
Co-Chair Stedman requested follow up information for school
bond reimbursement. He said that there was concern that the
legislature had never been in agreement with the executive
branch on School bond reimbursement. He noted that oil tax
credits were fully funded in the governor's budget.
Co-Chair Stedman continued his statement pertaining to
liability and the payment schedule for PERS and TRS.
10:04:07 AM
Mr. Steininger pointed to slide 16, "SB 55/Retirement
Contributions":
Strong investment performance in FY21 resulted in
significant savings for the public employee retirement
systems
?Investment performance reduced the State's
required contribution to PERS/TRS systems by
$75.4 million UGF
?Avoiding over contribution to PERS/TRS health
trusts saved $71 million UGF
SB55 year two fiscal note reduction of $14.7 million
UGF by shifting to other fund sources
Total FY23 retirement savings: ($161.1 million UGF)
Mr. Steininger spoke of the benefits from SB 55.
Co-Chair Stedman asked how much had shifted to the federal
government.
Mr. Steininger replied approximately 40 percent of the
obligation.
Co-Chair Stedman spoke of the anticipated ARM board
presentation.
Senator Wilson feared that the utilization of health care
funds could increase, but agreed to comment later at the
subject.
Co-Chair Stedman noted Senator Wielechowski had joined the
meeting.
Mr. Steininger looked at slide 17, "Other Statewide Items":
Fully fund municipal school bond debt reimbursement
$79.0m UGF
Fully fund rural school construction contribution
(Regional Educational Attendance Area fund) $32.8m UGF
Full community assistance deposit of $30m from PCE
Full funding for oil and gas tax credits of $199m UGF
Co-Chair Stedman He wondered why the additional revenue was
not being used to fully fund short, funded items when
possible - or why were the extra funds not being put into
savings.
10:11:51 AM
Mr. Steininger agreed that the state had some extra funds.
He said that there was $170 million that would be swept
into the CBR - the revenue outlook was better but was not
enough to meet all fiscal needs.
Co-Chair Stedman thought that the committee would look at
the issue more closely. He spoke of the supplemental budget
and expressed concern that future legislatures and
administrations could be in a position where savings were
depleted. He said $200 million was essentially a "drop in
the bucket"
10:15:14 AM
Senator Hoffman stressed that the legislature was the
appropriating body, and the administration had an
obligation to present the budget first. He stressed that
the committee must give the supplemental budget due
diligence.
Senator Wielechowski wondered whether the oil and gas tax
credits were proposed to be fully funded in recent years by
the governor.
Mr. Steininger replied that, in the year prior, the request
was included in the budget amendments. He furthered that in
other years there was a wait to see the outcome of the
court case related to financing the debt.
Co-Chair Stedman stated that there would be an examination
of the history of those tax credits in recent years.
Senator Wielechowski wondered why the administration felt
it was important to fully fund the oil and gas tax credits,
but not the statutory obligated programs.
Mr. Steininger replied that the two decisions were not
necessarily tied to the other.
10:20:13 AM
Mr. Steininger pointed to slide 18, "Federal COVID Relief":
American Rescue Plan Discretionary Funding
?$375.4m for revenue replacement
?$20m in Fast Track Supplemental for public
health response
?$37.4m FY2023 Operating investments
?$10m for workforce development
?$22.8m to the University of Alaska for
critical economic development
?Drone Research $10m
?Critical Minerals and Rare Earth
Elements $7.8m
?Heavy Oil Recovery Method Research $5m
?$3.5m for Domestic Violence and Sexual
Assault Victim Services
?$1.1m to continue priority DNA collection
activities in Corrections
?$72m in Capital projects
?$64m of Coronavirus Capital Project Funds
Allocated
?$47.9m remaining to allocate
Co-Chair Bishop wondered whether the funds were the $111
million leftover for allocation.
Mr. Steininger replied in the affirmative.
Co-Chair Bishop surmised that the year prior had
highlighted those funds as broadband investment.
Mr. Steininger agreed.
Senator Hoffman stressed that they were discretionary
funds, and remarked that food security was an allowable
expenditure. He wondered whether the administration could
look at the collapse of chinook salmon in the state to
address that issue.
10:25:26 AM
Senator Wilson asked about a score card of the
Coronavirus Aid, Relief, and Economic Security (CARES) Act
funds and the remaining fund source. He wondered whether
the guidance had changed to any of the dedicated funds.
Mr. Steininger agreed to provide that information.
Senator Wilson remarked that there were some other states'
lawsuits, which resulting in some flexibility of the use of
the funds.
Co-Chair Stedman shared that there would be a detailed
examination of the funds during the discussions of the
capital and operating budgets. He stressed that there
should not be a constraint put on future legislators and
administrations. He wondered whether there was a
consideration to backfill some relief money with general
funds.
Mr. Steininger explained that the examination of the $1
billion in relief from the federal government. He stressed
that, with the guidance from the federal government, that
money acted as UGF.
10:32:22 AM
Co-Chair Stedman wondered whether the eligibility of the
funds remained until December 2024.
Mr. Steininger agreed, but there could be an extension if
there was available GF revenue to support some of the
costs.
Co-Chair Stedman recalled the efforts of the legislature to
forward-fund education, and offered that possibility again.
Senator Wielechowski wondered whether there was an
examination of changing tax structure to better receive oil
and gas revenue for the state.
Mr. Steininger deferred to DOR for that concern.
10:38:35 AM
Co-Chair Stedman stated that there would be a conversation
with the commissioner of DOR on the tax issue.
Mr. Steininger pointed to slide 19, "Federal Infrastructure
Investment and Jobs Act":
Infrastructure Investments and Jobs Act
?Enacted November 15, 2021
-year reauthorization of established federal
programs and new programs
?New program details still pending
?Some program funding appropriated in the bill,
others awaiting an FFY22 budget
?Maximizing use in Alaska Marine Highway
System to preserve UGF and transition to a
sustainable system
?Remaining funds to be addressed when further
guidance is received
10:40:40 AM
Co-Chair Stedman queried the amendment deadline.
Mr. Steininger replied that the statutory deadline for
amendments was thirty days from the start of the
legislative session.
Co-Chair Stedman wondered whether there would be a request
to consider amendments beyond the statutory deadline.
Mr. Steininger replied in the affirmative.
Senator Hoffman noted that an important issue that was not
addressed was broadband, and there would be millions of
dollars spent to bring broadband to many places in the
state.
Senator Wilson felt that there was masking of the
backfill with the classifications of federal funds.
Mr. Steininger replied that federal receipts were
historically under a fund code in the budget.
10:45:36 AM
Co-Chair Stedman queried the concepts to fund the cash
box.
Mr. Steininger replied that the Rural Ferry Program, which
was a federal program, would be used to fund that program.
Co-Chair Stedman surmised that there would be revenue that
would be absorbed into the AMHS, and the subsidy would not
be set aside.
Mr. Steininger replied that the $63 million in UGF savings,
went toward reducing the total need for general funds in
the operating budget.
10:51:33 AM
AT EASE
10:53:38 AM
RECONVENED
Co-Chair Stedman discussed committee business.
ADJOURNMENT
10:55:28 AM
The meeting was adjourned at 10:55 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 012422 LFD SFIN Presentation.pdf |
SFIN 1/24/2022 9:00:00 AM |
LFD Governor's Budget Overview |
| 012122 OMB FY23 Budget Overview SFIN.pdf |
SFIN 1/24/2022 9:00:00 AM |
OMB Budget Overview |