Legislature(2021 - 2022)SENATE FINANCE 532
04/13/2022 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Alaska Employment Wages and Population Trends | |
| SB241 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 241 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SENATE FINANCE COMMITTEE
April 13, 2022
9:03 a.m.
9:03:09 AM
CALL TO ORDER
Co-Chair Bishop 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
Dan Robinson, Chief Researcher, Department of Labor and
Workforce Development; Briel Glanville, Student, Palmer;
Jack Cain, Student, Palmer; Miles Baker, Infrastructure
Investment Coordinator, Office of the Governor; Neil
Steininger, Director, Office of Management and Budget,
Office of the Governor.
PRESENT VIA TELECONFERENCE
Curtis Thayer, Executive Director, Alaska Energy Authority,
Anchorage; Stacy Barnes, Alaska Housing Finance
Corporation, Anchorage; James Wiedle, Alaska Housing
Finance Corporation, Anchorage.
SUMMARY
SB 241 APPROP: SUPPLEMENTAL; CAPITAL
SB 241 was HEARD and HELD in committee for
further consideration.
PRESENTATION: ALASKA EMPLOYMENT WAGES AND POPULATION TRENDS
Co-Chair Bishop reviewed the meeting agenda.
^ALASKA EMPLOYMENT WAGES AND POPULATION TRENDS
9:04:16 AM
DAN ROBINSON, CHIEF RESEARCHER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, discussed the presentation, "Alaska
Economic Update" (copy on file). He looked at slide 2,
"What We'll Cover Today":
1. Job numbers and what they tell us about how Alaska
is recovering from COVID (and other shocks) so far.
2. Brief look at GDP and personal income data (because
job numbers can't tell us everything about an
economy).
3. A few special topics: update on actuarial health of
unemployment insurance trust fund, housing market, and
population/migration trends.
9:06:57 AM
Mr. Robinson addressed slide 3, "Job Picture Before and
After COVID." The slide showed a graph depicting sharp job
losses in May of 2020. He noted that the jobs were
seasonally adjusted and most jobs in the state were year-
round.
Mr. Robinson pointed to slide 4, "How Much Resemblance to
U.S.?" He relayed that the slide indexed the numbers
comparing Alaska's economy with the nationwide economy. He
stated that Alaska's economy was better overall than the
U.S. economy during the 1980s, 1990s, and 2000s, but it had
fallen behind over the last twenty years.
9:09:59 AM
Co-Chair Bishop recalled that there had been a time when
the state had averaged a 1 percent growth rate.
Mr. Robinson replied that there had been an extended period
of time when the state experienced no job losses from
after the recession in the 1980s until the Great Recession,
which had not hit the state very hard. He said that the
state had faired well through the two nationwide
recessions.
Co-Chair Bishop remarked that during that time the state
had enjoyed robust capital budgets.
Mr. Robinson replied that it would be complicated to
deconstruct the factors. He noted that at the time, oil was
relatively stable, and the state savings accounts were
flush, which was no longer the case.
Co-Chair Stedman remembered the time of the Great Recession
and discussions at the table that had led to taking
effective action to insulate the state from economic
downfall. He stressed the importance of building up savings
to shield the state from future downturns.
9:13:24 AM
Mr. Robinson replied that the debate surrounding how much
the government should spend when the economy was weak had
been happening for a long time. He added that the numbers
on the slides reflected policy choices, which made it hard
to isolate individual factors.
Co-Chair Stedman remarked that there had been substantial
disagreements with the administration at the time of the
Great Recession but that the committee at that time had
taken effective action to deal with the state's financial
security. He stressed that the state had the strength to
manage its assets to prepare for future financial crisis.
Mr. Robinson turned to slide 5, "Which States Have Fared
Best?" The slide showed the percentages of COVID-19 related
job losses that states had recovered as of July 2021. He
noted that Alaska had recovered less than other states, at
less than 50 percent. He shared that Utah, Idaho, Arizona,
and Montana had recovered well. Alaska and Hawaii had
suffered due to loss of tourism and the price of oil.
9:17:43 AM
Co-Chair Bishop asked why Montana, Idaho, Utah, Arizona,
and North Carolina had recovered so quickly.
Mr. Robinson replied that all states took a big initial
loss from COVID-19. He said that Utah and Idaho went into
the pandemic with a lower cost of living than other states,
as well as strong tech and university centers.
Co-Chair Bishop asked whether there were any lessons
learned from the more successful states that could be
applicable to Alaska.
Mr. Robinson replied that the data had been gathered and
studied to find solutions.
Co-Chair Stedman asked how Alaska would look relative to
the other states if tourism were not a factor.
Mr. Robinson replied that Alaska would be roughly in the
bottom third, due to the oil factor.
9:20:29 AM
Co-Chair Bishop asked if there had been any conversations
about what the secretary of state may be seeking for J-1
visas in the current year. He recalled in the past the
department had signed waivers because there were not enough
seasonal workers. He wondered if it would be allowed in the
current year.
Mr. Robinson replied, "The short answer is no." He
explained the department had always had a difficult time
getting detailed data from the federal agency. He detailed
there was a process where an employer made a request and
DLWD had a request validation process. He relayed that
seafood processing companies that had been able to hire
Alaskans or Americans could not in the current summer. The
demand for the [J-1] visa had increased distinctly. He
stated the labor shortage issue was real and would
continue.
Mr. Robinson looked at slide 7, "How Are We Doing With
GDP?" He defined gross domestic product (GDP) as the value
of all goods and services produced in Alaska. The value did
not necessarily stay in Alaska. He highlighted oil as an
example. He noted the Bureau of Economic Analysis produced
the data, which was adjusted for inflation. The slide
showed the loss of $10 billion to $15 billion of oil
production. He elaborated that in 2013, oil accounted for
about one-third of the state's GDP; the number had
decreased to about 10 percent at present. He noted oil was
being reduced as a share of the state's overall economy. He
added that Russia and Ukraine had raised some new
questions. He relayed that without oil, the state's GDP had
been flat over the period shown on the slide [between 2010
and 2021].
9:23:23 AM
Co-Chair Bishop remarked that oil was the state's most
valuable export commodity.
Mr. Robinson agreed and stated it had been true for a long
time. He remarked there could be a future where
alternatives, mining, and other things began to rival oil;
however, it was still in the future.
Co-Chair Stedman asked for an explanation of the term
"chained dollars" on slide 7.
Mr. Robinson answered it was a Bureau of Economic Analysis
term that meant adjusted for inflation.
Co-Chair Bishop surmised it was the method of adjusting
real dollar amounts for inflation over time.
Co-Chair Stedman suggested adding several states to the
chart on slide 7 for comparison. He was interested in
seeing the compounded effects of the GDP growth. He had
seen other recent charts showing other states slowly moving
forward, while Alaska was going sideways or down slightly.
He remarked that over several years the gap was
substantial. He requested the information from the
department.
Mr. Robinson replied affirmatively. He suggested including
some oil states and non-oil states in the comparison. He
shared he had initially shown the data compared to the U.S.
to show there was a different pattern for the U.S. economy
compared to the Alaskan economy.
Co-Chair Stedman agreed and asked for a compounded rate
with states starting off at the same point. He remarked
that the scale was hugely different between Alaska, Idaho,
and California.
Mr. Robinson replied that the information would be indexed
to make it comparable.
9:26:16 AM
Co-Chair Stedman did not want to lose sight of the fact
that many states were slowly moving ahead of Alaska in
terms of GDP, but over a longer timeframe the difference
was substantial. He did not want Alaska getting way behind
while thinking it was treading water.
Co-Chair Bishop asked if there would be merit in isolating
the information in two different categories with one
showing energy producing states and the other showing all
other states.
Mr. Robinson agreed and noted the U.S. would also be a good
comparison. He thought it was especially important to
compare Alaska to small resource based states such as North
Dakota, Wyoming, and New Mexico. He added that Texas would
also be an interesting comparison because of its important
oil industry in addition to enough other revenue sources to
absorb shock. He added that it was a hugely different
population base.
Mr. Robinson highlighted slide 8, "How About Personal
Income?" He explained the chart reflected the amount of
income Alaskans receive. The chart included payments from
three primary sources, the largest of which was work,
accounting for approximately two-thirds of the personal
income typically coming into a state. The second source was
from dividends, interest, and rent (e.g., income from rent
or day trading). The third source was called personal
current transfer receipts, which were payments from
government for which a recipient did no current work (e.g.,
social security, unemployment insurance, and the Permanent
Fund Dividend). He pointed out that a massive economic
shock had occurred, yet personal income substantially
increased [in 2021], which was not how it normally worked.
9:30:08 AM
Mr. Robinson continued to address slide 8. He explained
that typically personal income went down during a recession
due to lost wages. He elaborated that the federal
government had made the policy call to spend a lot of money
to avoid making things worse. He highlighted foreclosures,
evictions, student loan default, job loss, and population
displacement as examples. He noted the slide reflected the
total and not the per capita. He added that the data was
annualized reflecting a quarter of personal income. He
would further explain the origin of the large increases on
a subsequent slide.
Senator Wielechowski asked what sort of jobs would grow and
need filling over the next 20 to 30 years.
Mr. Robinson replied, "In the short-term, all of them." He
explained there was a labor shortage issue. The department
did occupational and industry projections every two years,
with the next round coming out in the fall. He noted that
occupations were evolving quickly, but occupations tended
to stick around but with modifications. For example,
lawyers would continue to do legal work, but it was
different legal work in terms of technology. He stated the
fundamentals did not tend to change rapidly. He added that
technology had sped up some existing changes such as
alternative energy technologies.
Senator Wielechowski mentioned incoming federal dollars and
wondered where Alaskans should focus on looking in terms of
good paying jobs with benefits for the next 10 to 30 years.
9:33:41 AM
Mr. Robinson responded that the wages, required education,
and projected growth were all important; however, he stated
that people should follow their passions. He stated that
someone who was very good at almost anything could make
good money. He referenced the current labor shortage and
underscored that employers would need to do a better job
making employees feel valued. He stressed that people
wanted to do work they cared about.
Co-Chair Bishop invited visiting students to approach the
table to testify on what they wanted to do when they were
older.
BRIEL GLANVILLE, STUDENT, PALMER, testified that she wanted
to go to college and get her art degree. She wanted to
become a college art teacher.
JACK CAIN, STUDENT, PALMER, testified that he wanted to go
to trade school and learn to become a welder.
9:37:53 AM
Co-Chair Bishop remarked that many adults falsely believed
that kids did not know what they wanted to do. He stressed
that the two students who had testified already knew what
they wanted to do when they graduated.
Mr. Robinson shared that he had attended a recent
infrastructure event in Anchorage. He relayed the labor
shortage was real. He suggested starting to talk to kids in
elementary school about what they wanted to do and
providing some exposure to work places when they were a
little older. He stated that most of what people chose for
careers was based on what they were familiar with or who
they knew. He highlighted the idea of helping kids and
adults see there were always more possibilities than we
know.
Co-Chair Bishop remarked that the current presentation
would dovetail nicely with the afternoon presentation on
workforce development.
Mr. Robinson discussed slide 9, "The Driver of Personal
Income Change." The chart showed the extent that mostly
federal funding flowed to Alaskans during the COVID-19
pandemic. He underscored that $5 billion had come in the
form of payroll protection, childcare credit, unemployment
insurance benefits, social security, and other in order to
keep the economy from spinning downwards. He added that
Alaskans received more money in income during COVID-19 and
were still receiving more money than they did pre-COVID. He
stated it was odd and important to understand in terms of
how much Alaskans in aggregate had lost. He stressed they
had gained, not lost during the specified period.
9:40:43 AM
Mr. Robinson discussed the actuarial health of the
unemployment trust fund on slide 10. He stated that the
unemployment trust fund system had been used heavily during
the pandemic and in some new ways including getting
unemployment insurance benefits to gig workers and related
things. He stated that work search requirements had been
temporarily suspended. He explained that in order to get
unemployment insurance a person had to be actively seeking
work, but during the pandemic the work searches had been
suspended. He clarified the department was not involved in
the important policy questions about unemployment insurance
related to who received it, how much they received, and for
how long. He shared that the department was responsible for
performing the actuarial function. He relayed all states
performed the work a bit differently. He shared that Alaska
could be very proud of how actuarily sound the system was
and had been since the 1980s. He expounded that most states
went bankrupt during the Great Recession and had to borrow
money from the federal government, whereas Alaska had not
been anywhere near bankrupt. He stated that similarly there
had been a big deduction from the system during this
period. He pointed to the green lines representing the
solvency target range. He noted it did not matter that the
unemployment insurance fund balance moved outside of the
target range occasionally, especially on the low side; the
system was designed that way. He stated that the system was
actuarially very healthy.
Co-Chair Bishop referenced an article published by Mr.
Robinson. He highlighted that approximately 75,000 people
had exited the Alaska workforce during COVID-19. He thought
approximately one-third of the individuals did not draw
unemployment insurance benefits during that time.
Mr. Robinson answered affirmatively. He characterized the
situation as one of the red herrings. He referenced the
idea that people could not hire was because there were many
people staying home collecting unemployment insurance. He
stated it had not been an irrational idea when the federal
government was adding $600 to the weekly benefit amount. He
elaborated that plenty of people had been making more
briefly ($970 plus some supplemental options per week) than
they had at work. He relayed that normally Alaska's maximum
weekly benefit amount was $370. He addressed the study
conducted by DLWD referenced by Co-Chair Bishop. The study
had found that of the 75,000 workers who were not working
in the third quarter of 2021, only about one-third filed
for unemployment insurance ever. The results indicated it
was not the major factor in missing workers.
9:44:31 AM
Mr. Robinson displayed slide 11, "Housing Market is in
Flux":
Prices are way up, inventories are down, interest
rates are still low, but likely headed up.
A few examples from work we do for AHFC:
Average loan for single family home in Juneau
2019 Q4: $345K
2021 Q4: $414K
Mr. Robinson shared that the housing market in the state
was not sustainable. He continued that at some point people
could no longer afford houses; as interest rates increase,
housing becomes less affordable. He referenced an
affordability index that compared wages and average
mortgage prices. He noted that Alaska housing remained
fairly affordable.
AT EASE
9:46:08 AM
RECONVENED
9:46:52 AM
Mr. Robinson looked at slide 12, "Housing Market is in
Flux":
Prices are way up, inventories are down, interest
rates are still low, but likely headed up.
A few examples from work we do for AHFC:
Average loan for single family home in Anchorage
2019 Q4: $328K
2021 Q4: $374K
Mr. Robinson discussed slide 13, "Housing Market is in
Flux":
Prices are way up, inventories are down, interest
rates are still low, but likely headed up.
A few examples from work we do for AHFC:
Average loan for single family home Mat-Su
2019 Q4: $255K
2021 Q4: $321K
9:47:47 AM
Senator Wilson asked how working from home affected the
housing market.
Mr. Robinson answered that the answer was not yet known. He
relayed that in some cities there were issues with
commercial real estate because people were working from
home. He stated that people were now seeing that some of
that expectation of change was overblown. There had been a
surge of many people working from home and a return to work
of many people. He noted that some people would continue to
work from home. He did not believe the situation would be a
major disruptive factor [to the housing market].
Co-Chair Stedman looked at slides 11 and 13 related to the
housing market in Juneau and Mat-Su. He observed that
housing in Juneau was about $100,000 more than Mat-Su and
even though prices grew 26 percent in Mat-Su, the cost
difference continued to be about $100,000. He highlighted
that Mat-Su was the growth area of the state. He stated
there was a lack of housing across the entire state. He
stated the legislature would likely be grappling with ways
to implement strategies to alleviate the problem. He
highlighted a $350 million hospital expansion in the small
town of Sitka. He believed there would be 80 to 100 housing
units added to keep the pressure off housing price
increases. He asked if Mr. Robinson could provide housing
data for Ketchikan, Sitka, and a few other communities
around the state to look at the housing affordability index
in association with the homelessness issue in Alaska. He
expected fewer people could afford a home based on the
price movements [shown on slides 11 through 13]. He had
noticed in his district there seemed to be more people
doubling up in housing over the past decade.
9:51:36 AM
Co-Chair Bishop asked Mr. Robinson to pick a hub community
from census areas throughout the state for Co-Chair
Stedman's request.
Mr. Robinson responded that the department had recently
finished its spring rental survey. He stated that rental
costs were increasing, and vacancy rates were decreasing.
He relayed that at some point it was not possible to buy a
house or rent. He elaborated that the housing shortage was
a real problem. He referenced the hospital example provided
by Co-Chair Stedman and highlighted the military expansion
in Fairbanks as another example. He detailed the expansions
reflected an economic boon for the state; however, workers
could not find places to live. He noted it had long been a
problem in rural Alaska, specifically for teachers. He
explained that it was not possible to bring workers to a
place where they could not afford to buy or rent a house.
The reasons were complicated and not entirely known. He
highlighted supply chain issues as a new factor and
inflation would get worse before improving.
Co-Chair Stedman believed the rental issue was as
significant as the housing shortage. He had met with
numerous employers over the past nine months who were
trying to expand their business or service their workload
around the coast and other areas. Those employers had a
challenging time finding housing for their workers. He
explained that some companies had actually bought housing
in communities to house employees. He noted the problem was
occurring across the state, particularly along the coastal
regions.
Mr. Robinson added that Alaska had some additional
challenges associated with the seasonality of workers;
housing was needed temporarily for workers. Additionally,
there were areas where housing prices were increasing
because people from out of state or elsewhere in Alaska
were buying up the existing housing.
9:54:38 AM
Co-Chair Bishop stated that housing and rental issues were
real. He looked at the 2021 average loan for a single
family home in Juneau of $414,000. He asked for the amount
of the associated mortgage payment. He asked who was making
$2,500 a week to make the first payment. He stated his
father's rule had been to buy a house with what a person
could afford with their first paycheck out of the month. He
stressed there were many state workers at a salary range 14
and 15 who were working at least two jobs in Juneau to make
ends meet.
Senator Hoffman highlighted the underlying problem of
availability of land. He used Anchorage as an example and
noted there was very little land available for development,
which increased the cost [of housing]. He suggested that
DLWD should look at the availability of developable land in
areas with housing shortages.
Mr. Robinson replied that the reason Mat-Su had grown as
much as it had was due to inexpensive housing and land
availability in addition to Anchorages lack of land
availability and Mat-Su's proximity to Anchorage where the
jobs were located. No other major location in Alaska had
more affordable housing than the Mat-Su worker with an
Anchorage job. He stated it would generate growth for
decades in Mat-Su primarily because of housing.
9:57:13 AM
Mr. Robinson briefly highlighted slide 14, "Lots of
Demographics Action Too":
? 2020 Census completed, but it was unusually
challenging
? 733,391 AK population (710,231 in 2010 Census)
? Population projections out to 2050 will be released
in the next few weeks
? Overall, state's population trend is flat/stable
(Mat-Su remains a distinct standout, but growth has
slowed there, too)
Mr. Robinson shared that for nine years in a row more
people had left Alaska than had moved to Alaska. He stated
that natural increase (the number of people born less the
number of people who died) had generally compensated for
the migration losses; therefore, Alaska's population had
been generally flat to stable during the period. He noted
that Mat-Su was the distinct outlier. He elaborated that
growth had slowed over the period where the state's economy
had not done terribly well and over the past decade.
Senator Wilson wondered whether the state should put
additional resources and development into the recent growth
in Mat-Su.
Mr. Robinson replied it was entirely the legislature's call
and had little to do with the work done by DLWD.
9:58:47 AM
Co-Chair Bishop remarked that in his past work at the
department they had used a hands-off approach when it came
to politics and policy.
Mr. Robinson believed it was part of the department's
value. He remarked that [the department's magazine Alaska
Economic] Trends did not change from administration to
administration and neither did the numbers. The department
did not talk about things that were not theirs to talk
about.
Mr. Robinson discussed slide 15 titled "Migration Trends,
2000-2021." When considering whether Alaska was a desirable
place to live compared to other states, the chart indicated
Alaska was not doing very well based on migration trends.
He elaborated that for nine consecutive years, more people
had left Alaska than had come to Alaska. He noted it was
primarily because fewer people were coming. He added the
issue was associated with oil and other instability
challenges addressed by the committee (e.g., capital
budget).
Co-Chair Bishop stated the analogy he had made earlier
about housing affordability got back to workers' wages. He
remarked that Alaska was no longer the premier state in the
nation for wages. He believed people were moving because
they could go as close as Washington to make $10 more per
hour in his trade. He pointed out that electricity was much
cheaper in Washington than Fairbanks. He thanked Mr.
Robinson for the presentation.
10:01:16 AM
AT EASE
10:07:35 AM
RECONVENED
SENATE BILL NO. 241
"An Act making appropriations for the operating
expenses of state government and certain programs;
making capital appropriations and supplemental
appropriations; capitalizing funds; and providing for
an effective date."
10:08:32 AM
MILES BAKER, INFRASTRUCTURE INVESTMENT COORDINATOR, OFFICE
OF THE GOVERNOR, introduced himself.
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, introduced himself.
Mr. Baker discussed the presentation, "State of Alaska,
Office of the Governor, Infrastructure Appropriation Bill
SB241, Senate Finance Committee, April 6, 2022" (copy on
file). He started with slide 7 titled "SB 241
Infrastructure Overview by Category" [see Senate Finance
Committee meeting dated April 6, 1:00 p.m. for slides 1
through 6]. The slide showed a table depicting spending
categories ranging from the least discretionary to most
discretionary. The bulk of the bill spending was $950
million in federal funds and undesignated general fund
(UGF) match (70 percent) for reauthorized and new federal
programs. The second spending category was UGF funding for
additional state support of federal programs. He cited
critical minerals mapping as an example. The third category
was Congressional earmarks. He elaborated there had been a
number for Alaska and only two required additional
authority. The governor wanted to match the public safety
housing program operated by Alaska Housing Finance
Corporation (AHFC) dollar for dollar.
Mr. Baker addressed the fourth category on slide 7:
infrastructure coordination and implementation. He relayed
it was an ongoing effort coordinating with local
governments and tribes. The category included money for the
governor's office, a grant for the Alaska Federation of
Natives (AFN) navigator program, and a grant to the Alaska
Municipal League (AML). He characterized the last spending
category as the most policy subjective. The administration
had identified four large areas in the Department of Energy
where Alaska should be competitive that were worth putting
some UGF into exploring and pursuing.
10:12:01 AM
Co-Chair Bishop reminded committee members there were
numerous agencies available online for questions.
Mr. Baker displayed slide 8 titled "Federal Programs and
Match":
Commerce, Community and Economic Development
• Alaska Broadband Office $6,513.0 ($6,000.0 Fed,
$513.0 CIP); 3 PFT
• Rural Utility Business Advisor (RUBA) $666.7
($500 Fed, $166.7 GF Match); 2 PFT
Alaska Oil and Gas Conservation Commission (AOGCC)
• Orphaned Well Plugging, Remediation and
Restoration $32,341.0 Fed
Mr. Baker elaborated that broadband was one of the biggest
game changing new investments in the infrastructure bill
and all states would be required to have a broadband office
to coordinate the planning effort. He reported that every
state would receive a minimum of $100 million and 5 percent
of the funding received could be used on administration.
The state expected to receive another $1 million in federal
planning money for a second program [under the Department
of Commerce, Community and Economic Development (DCCED)].
The broadband increment also included capital improvement
project (CIP) funding for three proposed positions to staff
the broadband office. There was also a tremendous amount of
money coming in through the Environmental Protection Agency
(EPA) water programs. He noted the Rural Utility Business
Advisor (RUBA) program provided outreach to support the
water programs.
Mr. Baker highlighted a large new initiative for the
plugging of oil and gas wells through the Department of
Interior. There were three different programs for state and
private land, federal land, and tribal land. The bulk of
the federal funding was for the state and private land
program. He detailed that AOGCC was the required lead; all
of the national equivalents of AOGCC had been working on
the topic for quite some time. The administration had put
in the request for information (RFI) and had received the
notice. He relayed there were 12 known oil and gas wells on
state land and the funding was the first tranche of funding
the administration expected to receive. He expounded that
AOGCC would contract the work out and would work with the
Department of Environmental Conservation (DEC, Department
of Natural Resources (DNR), RSA, and private contractors.
10:15:10 AM
Co-Chair Bishop asked Mr. Baker to specify the operating
and capital funding in the requests as he continued the
presentation. He looked at the federal funding of
$32,341,000 for AOGCC. He asked if it was funding for one
year, five years, or other. He asked for the information
going forward.
Senator Wielechowski asked if companies responsible for
drilling wells were required to plug, remediate, and
restore wells they had abandoned.
Mr. Baker answered there were requirements for companies
and requirements had changed to become more rigid over the
years. He stated that wells were from various time periods;
therefore, some had been plugged, but not to the current
standard. Some of the wells were plugged long enough ago
that some of the adjacent lands were not properly
remediated. He stated it was all over the map.
Senator Wielechowski requested a list of wells that were
proposed to be plugged, remediated, and restored. He
wondered why the state was assuming the responsibility with
the federal dollars instead of the group that drilled the
wells.
Co-Chair Bishop asked if the funds would "clear the deck"
on the abandoned wells. He asked if it would bring closure
to all of the abandoned wells.
Mr. Baker replied that when the notice came out for the
funding, AOGCC put in a response including the estimated
cost to plug the wells on state land. The cost was $32
million. He clarified the funding reflected the first
tranche; if the costs increased the state could potentially
receive additional money to fill the work. The allocation
was based on the administration's best cost estimate. He
noted the funding was an FY 22 supplemental because the
well sites needed to be looked at in the spring before
alders came up in order to get the best cost estimate.
10:19:05 AM
Senator Wielechowski asked if the work would be bid out via
a competitive bid process.
Mr. Baker replied in the affirmative. He elaborated that
AOGCC was the official receipt entity for the state. The
national organization working on the issue was comprised of
all of the AOGCC equivalents. He explained that AOGCC would
be contracting out and working with DNR and DEC on their
portions of the work.
Senator Wielechowski referenced the $6.5 million and three
permanent full-time employees for the broadband office. He
assumed the positions accounted for several hundred
thousand dollars. He asked where the remaining money would
go.
Mr. Baker replied that the administration was asking for
federal receipt authority of what it expected to get in the
first tranche of available planning funding. The $513,000
was the CIP to pay for the positions. He explained that a
tremendous amount of work would be required. In order to
receive the initial planning funding, the state had to file
a notice of intent to participate in the program. He
furthered that the document was fairly technical and would
include the type of plan and work required. Once the state
received the initial planning funding, which should be
fairly quick after filing the NOI, the administration would
develop a five-year plan that would include setting up
regional advisory groups, getting public input and working
with national agencies. The money would be used for funding
positions, possibly bringing in technical expertise,
holding planning events, and putting together the needed
information.
Senator Wielechowski relayed it would be helpful if Mr.
Baker could reference the page number of the appropriation
request.
Mr. Baker offered to provide the project numbers and would
do his best to provide the requested information.
Co-Chair Bishop stated that no one from DCCED was available
online to answer any questions. He wanted to know the
current number of RUBA employees. He referenced the request
for two additional positions. He wanted to ensure RUBA was
connecting with the United States Department of Agriculture
(USDA). He highlighted another $2 billion pot of funding
for rural utility electrification, water, and broadband. He
wanted to ensure the state accessed every federal dollar
possible to get running water in rural Alaska.
10:24:04 AM
Mr. Baker continued with slide 8, reading as follows:
Alaska Energy Authority (AEA)
• Alternative Energy and Energy Efficiency Programs
$3,655.6 Fed
o Energy Efficiency Conservation Block Grants
o State Energy Program (SEP)
o Energy Efficiency Revolving Loan Fund
Capitalization Program (New)
o Energy Auditor Training Program (New) Alaska
Housing Finance Corporation (AHFC)
• Weatherization Assistance Program $35,000.0 Fed
• Energy Efficiency Research and Training $2,000.0
Fed
Senator Hoffman commented that $3.6 million was not a large
sum of money. He recalled that the weatherization program
was initiated the last time there was a spike in oil
prices. He had learned from AHFC that there were thousands
of homes in the state that still needed weatherization. He
was aware that there was a $1,300 energy rebate proposed by
the other body and the governor had said he was supportive
of the rebate; however, there was no way to ensure that
individuals would actually spend the rebate money on energy
costs, particularly in rural areas. A significant benefit
of the weatherization program was that it saved individuals
from $200 to $500 per month on energy costs, which equated
to millions of dollars saved on energy over the lifetime of
a home.
Senator Hoffman wondered if the administration had looked
into offering financial assistance to Alaskans for home
weatherization. He thought that of all the programs in the
state, the weatherization program made the most significant
strides for Alaskans in reducing energy costs. He noted
that there had been out-migration in the state for the last
eight years, and he believed that the high cost of living
was one of the most significant contributing factors. He
thought that the notion that the proposed sum of $3.6
million was large was laughable. He asked what the
administration thought about the weatherization program and
the benefits it could offer.
10:29:05 AM
Mr. Baker agreed that the term "large" was an inappropriate
descriptor for the sum and apologized if he gave the wrong
impression. He believed that the weatherization program to
which Senator Hoffman was referring was managed by AHFC and
supported by general funds (GF). The federal bill
[Infrastructure Investment and Jobs Act (IIJA)] had around
a $3.5 billion supplemental for weatherization and it was
previously estimated that Alaska's portion would be $35
million, but the estimate was reduced to $18 million in the
prior week. He relayed that the governor wanted to keep the
spending of GF down and limit the amount of discretionary
GF spending. The only exception was a $2 million federal
earmark for AHFC's rural housing program for teachers'
health and public safety. The governor wanted to match the
amount with $2 million of UGF for public safety housing.
Senator Hoffman stated that he had a comment on the topic.
Mr. Baker wondered if representatives from AHFC were
available to comment.
Senator Hoffman asked if the legislature should use the
additional revenue to try to make Alaska a more affordable
place to live. He understood the reasoning behind wanting
to keep GF spending to a minimum but wondered how it would
impact Alaskans. He asked if it would be wiser to help
Alaskans reduce their energy costs directly or to give
Alaskans a check for $1,300 and hope that individuals use
the money for energy costs. He thought the question should
be debated by policymakers. He indicated that Alaskans were
struggling due to the high cost of fuel, and he did not
think a one-time check would be enough to make a change.
After the check was spent, the needs would still be
pressing because the root cause was not addressed.
Co-Chair Bishop asked Mr. Curtis Thayer to comment. He
referred to the last bullet under the AEA section on slide
8 regarding the Energy Auditor Training Program. He asked
how many more auditors Mr. Thayer was hoping to hire.
10:34:49 AM
CURTIS THAYER, EXECUTIVE DIRECTOR, ALASKA ENERGY AUTHORITY,
ANCHORAGE, (via teleconference) replied that the initial
request was $63,000 for a partial auditor and he
anticipated that additional funding for commercial auditors
would come in later years.
Co-Chair Bishop asked if Mr. Thayer was referring to
commercial property.
Mr. Thayer agreed.
Co-Chair Bishop wondered whether AEA had interfaced with
the Cold Climate Housing Research Center (CCHRC) in
Fairbanks.
Mr. Thayer replied in the affirmative. He furthered that
AEA had a working relationship with AHFC and some of the
auditor training would be shared between the two agencies.
Co-Chair Bishop thought it would be helpful if AEA could
leverage its assets.
Mr. Baker replied to Senator Hoffman's earlier comments. He
explained that the new estimate was $18.4 million for the
weatherization program, which had been reduced from $35
million. He added that there were some other opportunities
in the bill that AHFC wanted to pursue in the area of
energy efficiency research, which was a $2 million federal
receipt authority.
10:36:43 AM
STACY BARNES, ALASKA HOUSING FINANCE CORPORATION,
ANCHORAGE, (via teleconference) introduced herself.
Co-Chair Bishop noted that the estimate had been reduced
from $35 million to $18.4 million over the course of a
week. He asked if the $18.4 million estimate was for the
current fiscal year and whether AHFC expected similar
funding to continue in the future.
JAMES WIEDLE, ALASKA HOUSING FINANCE CORPORATION,
ANCHORAGE, (via teleconference) responded that the money
was expected to be available for the next five years.
Co-Chair Bishop asked if Mr. Wiedle meant $18 million per
year or $35 million per year.
Mr. Wiedle replied $18 million in total.
Co-Chair Bishop asked for more information on the way the
money would be used for the energy efficiency research and
training program.
Mr. Wiedle responded that he did not yet have specific
details about what the program would look like; however, he
would follow up with the information when it came out.
Co-Chair Bishop asked if Mr. Wiedle meant he did not yet
have guidance from the federal government.
Mr. Wiedle answered in the affirmative.
10:38:14 AM
Mr. Baker looked at slide 9, "Federal Programs and Match":
Fish and Game
• Wildlife Restoration (Pittman-Robertson)
$24,000.0 ($18,000.0 Fed, $6,000.0 F and G Fund)
Mr. Baker indicated that the Pittman-Robertson funds had
increased substantially, and the $18 million federal funds
required a match that would come out of the Department of
Fish and Game fund.
Senator Hoffman remarked that restoration of Chinook salmon
in the Yukon-Kuskokwim Delta (YKD) was of great importance
to him. He added that devastation of Chinook salmon was
happening throughout the state, and it was important for
the legislature to try to reverse the trends as Alaskans
living in the YKD area were already experiencing
significant lifestyle changes due to the devastation. He
asked if it was possible to look into restoring Chinook
salmon in YKD and throughout the state. He did not mean to
suggest that salmon populations should be restored to
commercial levels, but simply that salmon should be
available for personal use and food security purposes. He
asked if the administration could help Alaskans achieve
food security in other ways if the funds could not be used
to help restore Chinook populations.
Mr. Baker replied that he believed the money was intended
to be used for game and was therefore non-fish related. He
referred to pages 24 through 26 of the capital backup,
reference number 60594, which showed a list of the types of
projects that qualified. He thought there were other
programs that might have more flexibility and would follow
up with more information on whether salmon restoration
would qualify.
Senator Hoffman remarked that he was not only interested in
learning if salmon restoration would qualify, but if the
legislature was interested in recognizing the problem and
taking steps to reverse the trends to ensure that the
lifestyle of Alaskans on the YKD would not vanish.
10:43:37 AM
Mr. Steininger responded to Senator Bishop's earlier
question regarding the difference between operating and
capital in the presentation. He explained that on slide 8,
the RUBA program and the broadband programs were both
operating items and the rest of the items were part of the
capital budget. On slide 9, the Low Income Home Energy
Assistance Program (LIHEAP) was within the Department of
Health and Social Services (DHSS) operating budget and all
other items were part of the capital budget.
Mr. Baker continued with slide 9:
Health and Social Services
• Low Income Home Energy Assistance Program
(LIHEAP) $314.0 Fed
Mr. Baker commented that the money was a small supplemental
compared to current funding for LIHEAP, which was around
$10 million. There were also some significant tribal awards
for the same purpose that did not come through the state.
Senator Hoffman asked if Mr. Baker had done any analysis on
what energy costs would be in rural Alaska through LIHEAP.
He wondered if the funding would be enough to help Alaskans
facing increased energy costs.
Mr. Baker replied that he would follow up with the
information.
Senator Hoffman was looking forward to it.
10:45:50 AM
Mr. Baker continued with slide 9:
Military and Veterans' Affairs
• State and Local Cybersecurity Grants $2,404.4
($2,164.0 Fed, 240.4 UGF)
Natural Resources
• National Geological and Geophysical Data
Preservation Program (NGGDPP) $3,290.0
($2,290.0 Fed, $1,000.0 UGF)
• Critical Minerals Mapping - Earth Mapping
Resources Initiative (MRI) $7,500.0 Fed
• Abandoned Mine Lands Reclamation Program $1,333.0
Fed
• Community Wildfire Defense Grants (NEW) $3,000.0
Fed
Mr. Baker added that the cybersecurity grant was a four-
year program, and that 80 percent of the funds would be
sub-granted out to local and tribal governments. He
highlighted that the program was one of the few four-year
programs in the bill and that most of the programs were
five-year programs. The match requirement changed from year
to year, beginning with a 10 percent match and increasing
by 10 percent each year.
Co-Chair Stedman recalled that slide 8 indicated there
would be $24 million of Pittman-Robertson funds coming into
the state. There were three major shooting ranges around
the state that were subsidized in the budget every year,
and the increase in Pittman-Robertson funding was due to
the volume of ammunition being sold around the country. He
thought the legislature should consider dedicating more
funds to shooting ranges outside of the three major ranges
in the state. He thought it was beneficial for youth to
learn how to handle firearms. He did not think the funding
was sufficient and suggested implementing a match.
10:49:09 AM
AT EASE
10:53:22 AM
RECONVENED
Senator Wielechowski wondered whether there were any
federal funds that were available that the state did not
accept.
Mr. Baker replied in the negative.
Senator Wilson wondered why there was not more federal
funds for railroad related infrastructure projects. He
asked how many full-time equivalents (FTE) would be needed
and whether the positions would be permanent. He guessed
the number would be around 25.
Mr. Steininger replied that there were 27 full-time
positions and five non-permanent positions represented in
the bill. He stated that the full-time positions would
exist within DEC to help manage the significant increase in
DEC programs. He noted that many of the programs would
experience a five-year increase, however some of the
programs could continue for a decade which was why the
decision was made to add permanent positions. Additionally,
the bill represented the federal dollars that the state was
certain would be incoming. There may be other opportunities
in the future to address other areas such as the railroad.
Mr. Baker furthered that generally, there was no federal
money for the purpose of building new rail, particularly
not freight rail. There was money for Amtrak and inner-city
passenger rails, but there was no new money for capacity
building of rails. The Federal Transit Administration's
(FTA) transit formula programs could elicit an increase in
money for railroads in the state based on passenger
traffic. There were some existing grant programs for which
the Alaska railroad was eligible and regularly applied for,
but there were no new funding sources for the railroad.
Senator Wilson asked if the administration had considered a
passenger rail from the Mat-Su area to Anchorage.
Mr. Baker responded that the administration had not
considered a passenger rail.
10:57:54 AM
Senator Wielechowski asked if there were federal commuter
dollars that the state could utilize.
Mr. Baker responded that there were competitive grant
programs. The largest driver of whether a rail received an
award was based on whether the rail would assist in moving
passenger traffic off roads and onto centralized transit.
He thought a new capacity rail such as a passenger rail
from Mat-Su to Anchorage would be challenged in the
opportunities in the bill. However, it might be worth
looking into if the municipalities and the rail were
interested.
Mr. Steininger furthered that if there was money that was
coming into the state for the railroad that did not pass
through the Department of Transportation and Public
Facilities, it would not be included in the bill because
the railroad was not subject to the Alaska Budget Act. He
explained that if the Alaska railroad received a direct
grant, it would not be included in an appropriation bill
coming from OMB because the railroad was exempt from the
process.
Co-Chair Bishop noted that the committee would discuss the
bill again in the future. He wanted to ensure that the
appropriate agencies would be present at future meetings to
answer questions.
SB 241 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
11:00:51 AM
The meeting was adjourned at 11:00 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 041322 Senate Finance.April 13 2022.Robinson.pdf |
SFIN 4/13/2022 9:00:00 AM |
|
| SB 241 22.04.06 GOV Infrastructure Bill SFIN FINAL.pdf |
SFIN 4/13/2022 9:00:00 AM SFIN 4/19/2022 9:00:00 AM |
SB 241 |