Legislature(2023 - 2024)SENATE FINANCE 532
01/26/2023 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB41 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 41 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
January 26, 2023
9:00 a.m.
9:00:41 AM
CALL TO ORDER
Co-Chair Hoffman called the Senate Finance Committee
meeting to order at 9:00 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
Senator Bert Stedman, Co-Chair
ALSO PRESENT
Neil Steininger, Director, Office of Management and Budget,
Office of the Governor; Senator Cathy Giessel.
PRESENT VIA TELECONFERENCE
Theresa Cross, Administrative Service Director, Department
of Natural Resources, Office of Management and Budget,
Office of the Governor.
SUMMARY
SB 41 APPROP: CAPITAL/SUPPLEMENTAL
SB 41 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 41
"An Act making appropriations, including capital
appropriations and other appropriations; making
supplemental appropriations; making appropriations to
capitalize funds; and providing for an effective
date."
9:01:08 AM
Co-Chair Hoffman explained that the committee would do a
high-level overview of SB 41 and would get into further
detail at a later stage.
9:01:43 AM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, addressed a presentation entitled
"Capital Budget SB 41 and SB42, Senate Finance Committee,
January 26, 2023" (copy on file). He thanked the committee
and noted that there were capital projects in the mental
health budget as well (SB 42).
Mr. Steininger looked at slide 2, "FY 2024 Capital Budget
Overview":
• Funds match for core federal programs
Includes federal infrastructure bill match
• Note: House districts listed in bill have not been
updated for redistricting
Mr. Steininger addressed the table on slide 2, which showed
the breakdown in capital appropriations between SB 41 and
SB 42. There was about $10 million in Unrestricted General
Funds (UGF) in the mental health budget and $266.3 million
in the traditional capital budget (SB 41), for a total of
$276 million. Between the roughly $1.7 billion in federal
funds and $100 million in other funds, there was about $2.1
billion in overall proposed capital spending between the
two bills. He noted that the capital budget included
matching funds for core federal programs as well as match
for some new programs from the Infrastructure Investment
and Jobs Act (IIJA). He included traditional recurring
capital projects and a handful of discretionary priority
projects for investment in the state.
Mr. Steininger noted that the House districts listed on the
Office of Management and Budget (OMB) report still
reflected the information before re-districting had taken
place. The office had not received an official file from
the Division of Elections to update its system.
9:03:36 AM
Mr. Steininger spoke to slide 3, "Capital Budget Five Year
History," which showed a bar graph depicting a five-year
history of the capital budget. He pointed out constrained
budgets in FY 20 and FY 21, with fairly small amounts of
UGF in only the amount necessary to match incoming federal
funds. He noted that in FY 22 and FY 23 the federal and
Unrestricted General Fund bars were growing. He explained
that the state had received a fairly large influx of
federal funds in the capital budget through the
infrastructure bill as well as some of the other Covid-19
relief bills, which had required additional match. There
were also much higher-than-projected revenues in FY 23 as
well as at the close-out of FY 22, which resulted in a lot
more capital spending in those two years.
Mr. Steininger continued that in the FY 24 budget there was
a return back down to a more constrained capital budget,
however it was a bit larger than FY 21 and FY 20 capital
budgets. He relayed he would go into more detail on another
slide as to why there was a larger amount of required
General Funds (GF) in order to match federal programs.
Mr. Steininger referenced slide 4, "UGF Capital Minimum
Match":
Baseline/Minimum match projects include:
• Community Block Grants
• Alaska Energy Authority Energy Projects
• Village Safe Water and Wastewater
• AHFC Housing Programs
• Surface Transportation and Aviation State Match
Leverages $1.5 billion of Federal Revenue
Mr. Steininger explained that the slide and bar graph was
intended to illustrate the concept of the minimum amount of
GF that was necessary for the states capital budget to
match to core federal programs. He listed the core federal
programs listed on the slide. The blue bars for years FY 20
through FY 24 on the graph represented the UGF
appropriations required to match the $1.5 billion in
federal revenue. The yellow bars represented more
discretionary capital spending, some of which did match to
federal dollars but not to the core recurring projects. He
pointed out that the blue bar had grown over time, with two
factors that impacted the increased need for GF match for
federal programs. He mentioned that under the IIJA, the
federal appropriations to programs had increased
significantly, which required more GF to match.
Additionally, in FY 21 the state had been cleaning up some
older capital projects and were able to do reappropriations
to satisfy match requirements rather than a GF
appropriation.
9:06:58 AM
Co-Chair Hoffman had heard from the congressional
delegation that in the immediate and near future there
would be much more construction in areas of water and
sewer, in an amount close to $1 billion. He asked if some
of the increase was reflected in the FY 24 matching funds.
Mr. Steininger answered "yes" and noted that the blue bar
with the $167 million including matching funds for the
sewer programs for Village Safe Water.
Mr. Steininger turned to slide 5, "Capital UGF Unobligated
Appropriations," which showed a bar graph illustrating
current outstanding unobligated GF appropriations to
capital projects, including how much remained unspent from
capital projects appropriated by the legislature in prior
years. The data for the slide came from the Capital
Appropriations Status Report, which OMB produced every
year. The report showed every ongoing current capital
project, how much money had been spent to date, and how
much money was unspent. He observed there was a fairly
large amount of money unspent from FY 23 and FY 22
projects. The primary reason for the unspent funds was that
the appropriations had just been made effective July 1,
2022. Additionally, supplemental appropriations from the
previous year had only been on the books for a few months.
Mr. Steininger continued to address slide 5. He observed
that there were outstanding appropriations from FY 21, FY
22, and FY 19, which departments were still working on.
There were some appropriations older than five years that
had some unobligated funds, with reasons that varied on a
case by case basis. He mentioned obstacles during the
construction or planning phase of a project which resulted
in delays in the expenditures. Some of the projects might
have been identified in the aforementioned status report as
having been completed, and any remaining funds would be
available to lapse into the General Fund or reused to fund
a new project or matching fund need.
9:09:50 AM
Mr. Steininger considered slide 6, "FY2024 Capital
Highlights":
Commerce, Community, and Economic Development
• Alaska Gasline Development Corporation - Hydrogen
Hub: $10,000.0 Federal (pg. 14)
• Alaska Energy Authority - Statewide Grid Resilience
and Reliability - IIJA Formula: $12,110.5 Federal /
• $1,816.6 GF Match (pg. 23)
• Public Engagement and Customer Relationship
Management System: $2,500.0 Other - Bus. Lic. & Corp
Filing Fees/Taxes (pg. 25)
• Three-Phase Power Extensions and Upgrades to Delta
Farm Region and Co-Op: $3,000.0 UGF (pg. 27)
• Statewide Marketing and Economic Development
Initiative: $5,000.0 GFPR (pg. 28)
Corrections
• Point Mackenzie Correctional Farm Produce Processing
Plant: $3,080.0 UGF (pg. 29)
Mr. Steininger noted that the list of projects was not
comprehensive. He referenced a project review list document
(copy on file) that was provided to members and detailed
all projects. The slide listed non-recurring projects, new
projects, or projects with changes the administration
wanted to highlight. He discussed the hydrogen hub project
by the Alaska Gasline Development Corporation (AGDC). He
highlighted that AGDC was in a competitive process to try
and make Alaska one of six to ten hydrogen hubs in the
country. The federal receipts would allow AGDC to continue
in the competitive application process.
Mr. Steininger continued and discussed an infrastructure
formula program from the federal infrastructure bill called
the Statewide Grid Resiliency and Reliability Program,
which brought in about $12 million in federal funds and
required just under $2 million in matching funds. He noted
that the project from the Division of Corporations,
Business, and Professional Licensing would use the receipts
from business license fees and corporate license fees to
cover the cost. The modernization project would help
streamline operations in the division. He discussed the
power upgrades in the Delta farm region, which should help
bolster some of the food security initiatives the governor
had been working on and help provide for more sustainable
farming in the region.
Mr. Steininger discussed the proposed statewide marketing
initiative, which was to market Alaska-produced goods and
services, as well as to try and attract businesses to the
state. He discussed the item listed under the Department of
Corrections (DOC), which would establish a produce
processing plant at the Point Mackenzie Correctional Farm
to provide for the ability to distribute produce throughout
the correctional system.
9:13:33 AM
Senator Kiehl thought the state had a history of
correctional system purchases that had degraded over time.
He asked if there was a corresponding effort in the
operating budget to ensure that there was not a similar
problem with the proposed project.
Mr. Steininger relayed that the administration had been
working with DOC on its overall strategy of maintenance. He
recounted that the previous year the department had
received several large appropriations for maintenance for
DOC facilities. He mentioned tools to address maintenance
and explained that the administration had been working with
the department to ensure its operating budget was capable
of funding routine maintenance. He explained that DOC
ranked high on the list for the deferred maintenance funds
that went through the office of the governor and were
awarded based on a priority. He summarized that while there
was not a specific plan directly related to the capital
budget, there was a broader strategy to ensure that there
was adequate maintenance funding.
Senator Kiehl sensed that if GF and annual appropriations
were only considered, the state would only maintain the
security parts of the Department of Transportation and
Public Facilities (DOT), which was essential. He reiterated
that there had been past problems with items degrading. He
thought there could be an opportunity to work with the
operating budget chairman to find a way to separate the
project in order to generate revenue separate from security
components in DOC.
9:16:05 AM
Mr. Steininger displayed slide 7, "FY2024 Capital
Highlights":
Environmental Conservation
• Ambient Air Monitoring Shelters: $100.0 UGF (pg. 53)
Fish and Game
• Arctic Fisheries: $2,000.0 Federal / $1,000.0 UGF
(pg. 66)
Office of the Governor
• Legal, Expertise, and Consultation Services to
Support Statehood Defense: $10,000.0 UGF (pg. 68)
Labor and Workforce Development
• Business Enterprise Program: Facility Development
and Equipment Replacement: $1,339.8 UGF (pg. 78)
• Business Enterprise Program: Child Care Facility:
$620.4 UGF (pg. 79)
Mr. Steininger expanded that the ambient air monitoring
shelters item was associated with an operating budget
increment with a plan to establish better monitoring to
determine which air pollutants were coming from outside the
state. He discussed funding for Arctic fisheries research
to examine the possibility of potential new viable
fisheries associated with regions of waterways experiencing
changes in ice melt. The funds for the statehood defense
were previously appropriated to the Department of Law, but
other aspects of statehood defense (such as research) were
proposed to be managed in the office of the governor. He
discussed the items for the Business Enterprise Program,
which was usually funded with payments from recipients of
the program. The payments had been swept into the
Constitutional Budget Reserve (CBR), and the proposed
appropriation would make the program whole.
Co-Chair Hoffman asked if there was someone online that
could address the need for childcare facilities.
Mr. Steininger thought there was someone to speak to the
Business Enterprise Program. He thought there might be an
individual from the Department of Health that could speak
to childcare needs but was not sure that a direct subject
matter expert available.
Co-Chair Hoffman pondered that the committee could get a
report pertaining to the other needs for childcare
facilities throughout the state.
9:19:57 AM
Co-Chair Olson considered the Statehood Defense Fund, and
asked if there would be new positions hired or if there
were existing personnel.
Mr. Steininger relayed that in the past the Department of
Law had attorneys in its civil division that charged to
different agencies depending upon the type of statehood
defense case. Most of the cases did not have a specific
agency to charge to, and the proposed appropriation would
provide for a pot of money to charge time to. In addition,
the state was utilizing outside counsel and other outside
expertise when there was not an attorney on staff that had
the expertise needed.
Co-Chair Olson commented that he had been the chair for the
budget subcommittee and had been less than impressed with
some of the litigation that the state had been involved
with. He thought the state had a history of failing to
prevail in cases where there were hundreds of thousands of
dollars being lost.
Senator Kiehl spoke to items on the slide relating to
research, including the legal fund and the increment for
Arctic fisheries. He asked if the state was maintaining its
research capacity through the governors proposed budget.
He wondered if the state would have the same number of
biologists, fish and game vessels, airplanes, and the
things needed to do research consistently.
Mr. Steininger answered "yes." He reiterated that the
slides showed only highlights, and here were a number of
annually recurring Department of Fish and Game (ADFG)
projects related to research as well as significant
investments in ADFGs operating budget. He continued that
there was no plan within the budget that reduce the number
of biologists or reduce the amount of research being done.
Senator Kiehl thought the funding for major maintenance of
aircraft and vessels had not changed much and understood
some of the things the department had were on the edge of
needing maintenance.
9:22:58 AM
Mr. Steininger highlighted slide 8, "FY2024 Capital
Highlights":
Military and Veterans' Affairs
• Construction of a Certified Veterans Cemetery in
Fairbanks area: $6,000.0 Federal / $1,100.0 UGF (pg.
83)
Natural Resources
• Unlocking Alaska Parks: Construction of New Public
Use Cabins: $2,400.0 UGF (pg. 109)
• Sanitation Upgrades to Parks: $2,000.0 UGF (pg. 113)
• Bison Range Restoration: $2,000.0 UGF (pg. 116)
Mr. Steininger detailed that there was an area identified
for construction of the veterans cemetery in Fairbanks,
and matching funds were needed to access federal dollars
and complete the project. He discussed items under the
Department of Natural Resources (DNR), which would include
upgrades to restrooms and cabins. He explained that the
bison range restoration was a partnership with ADFG to try
and establish a region to provide for a bison range that
could be used for a food and stock source.
Senator Merrick asked about the veteran's cemetery in
Fairbanks, and whether funds for ongoing maintenance and
operations would be the responsibility of the state or
federal government.
Mr. Steininger affirmed that there would be operating costs
associated with the cemetery once it was operational, and
the costs should be shared between the state and federal
government.
Senator Bishop believed that restoration for the bison herd
would also be administered by the SalchaDelta Water Soil
and Conservation District and the Community of Delta.
Mr. Steininger believed there was someone from the DNR
Division of Agriculture that could speak to the execution
of the funds in more detail.
9:25:51 AM
THERESA CROSS, ADMINISTRATIVE SERVICE DIRECTOR, DEPARTMENT
OF NATURAL RESOURCES, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR (via teleconference), directed the
question to an agronomist.
Senator Bishop wanted to add that the funding would pass
through to the SalchaDelta Water Soil and Conservation
District.
Mr. Steininger looked at slide 9, "FY2024 Capital
Highlights":
Public Safety
• Training Academy Maintenance and Updates: $750.0 UGF
(pg. 122)
• Classroom and Offices in the Department of Public
Safety Bethel Hangar: $750.0 UGF (pg. 124)
• Investigative and Forensic Electronic Equipment
Refresh: $678.8 UGF (pg. 125)
• Fairbanks Post Remodel and Expansion: $5,650.0 UGF
(pg. 127)
• Criminal Justice Information Systems (CJIS)
Modernization: $4,383.2 UGF (pg. 129)
Revenue
• AHFC Rural Professional Housing: $3,250.0 UGF /
$500.0 SDPR / $1,750.0 AHFC Dividend (pg. 150)
Mr. Steininger spoke to the Alaska Housing Finance
Corporation (AHFC) Rural Professional Housing Program and
noted that the proposed funding was to expand the scope of
the program to include all rural public professionals and
not just those in public safety, health, or teaching.
Co-Chair Hoffman asked if the AHFC expansion would go out
to bid and if agencies would not be responsible for the
housing with management by private industry.
Mr. Steininger knew that AHFC could provide more detail. He
relayed that the program applications had been generally
from communities to build housing. He thought there was an
option that a department could potentially apply to build
housing themselves or by some other entity within the
community, after which the department could focus on its
own mission.
Co-Chair Hoffman recalled that about ten years previously
there was a project to construct a facility for Alaska
State Troopers in Bethel. The project went out to bid, and
the awardee was responsible for maintenance of the facility
and the Department of Public Safety was not involved. He
relayed he would address the matter with AHFC at a later
time.
9:29:47 AM
Mr. Steininger addressed slide 10, "FY2024 Capital
Highlights":
Transportation and Public Facilities
• Alaska Land Mobile Radio (ALMR) In Vehicle Radio
Replacements: $1,700.0 UGF (pg. 202)
• Dalton Highway Delineators Improvements: $2,143.4
UGF (pg. 203)
University of Alaska
• UAA Health Workforce Diversity Expansion Project
Phase 2 (WWAMI): $2,000.0 UGF (pg. 207)
• UA Drones: $10,000.0 UGF (pg. 212)
Judiciary
• Justice Technology Upgrades and Courtroom
Modernization: $2,378.3 UGF (pg. 214)
• Court Security Projects: $3,125.0 UGF (pg. 216)
Mr. Steininger explained that the vehicle replacements for
DOT were due to the Alaska Land Mobile Radio System (ALMR)
transitioning to a new transmission system. The $1.7
million signified about a third of the replacement cost. He
continued that the delineator improvements required state
funds for colored reflectors which were not eligible for
federal reimbursement. He addressed the proposed expansion
of the Washington, Wyoming, Alaska, Montana, and Idaho
(WWAMI) Program, which would provide for an additional 10
spaces in the program. He explained that the proposed
funding for the UA drone program would continue the program
in its research on commercial and other application of
drones in the state.
Senator Merrick asked Mr. Steininger to address the topic
of deferred maintenance, and knew the state had a
significant backlog, particularly at the University of
Alaska.
Mr. Steininger explained that there was about $30 million
from the Alaska Capital Income Fund in the capital budget
for deferred maintenance. He had chosen not to highlight
the deferred maintenance on the slides as he was scheduled
to present on the topic in more depth the following day.
9:32:53 AM
Mr. Steininger noted that remaining slides were high-level
tables. He advanced to slide 11, "FY2024 Capital Budget
Snapshot," which showed a table illustrating a distribution
of the capital budget by department. He highlighted that it
was possible to see that there was a few departments with
large amounts of General Fund: Department of Transportation
and Public Facilities, that leveraged a significant amount
of federal funds; Department of Environmental Conservation,
also leveraging a large amount of federal funds; and the
Department of Commerce, Community and Economic Development,
which was where all the AEA energy programs were housed and
where the bulk of the GF dollars went. The other agencies
had smaller amounts distributed between them.
Mr. Steininger looked at slide 12, "FY2024 Capital Budget
by House District," which showed a table. He reiterated
that the table showed old House districts and was not
updated to the recent redistricting. He relayed that much
of the capital budget fit into the statewide category. He
mentioned that in the budget proposed on December 15, the
surface transportation program in DOT was a single line
item. After working through the amendment process for DOT
and working through the Statewide Transportation
Improvement Program (STIP) proposal with the federal
government, the administration would be able to break down
where the surface transportation dollars were going by
district and region.
Mr. Steininger showed slide 13, "Capital Budget History
FY2014 FY2024," which showed a bar graph illustrating
capital budgets for the previous ten years. He commented
that the slide highlighted the constrained capital budgets
in the period between FY 16 to FY 21, which were limited
mostly just to matching the federal dollars coming into the
state.
Senator Bishop referenced potential funds for the Alaska
Marine Highway announced the previous day by United States
Senator Lisa Murkowski. He wondered if the administration
anticipated any UGF matching funds yet to be announced.
Mr. Steininger relayed that he had received brief
information on the matter earlier in the morning and knew
that there were a couple of projects that the state had
appropriated for already, including the Tustumena
replacement vessel.
Co-Chair Hoffman discussed the agenda for the following
day.
SB 41 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
9:36:26 AM
The meeting was adjourned at 9:36 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 41 FY2024 Capital Project Review Listing 1160.pdf |
SFIN 1/26/2023 9:00:00 AM |
SB 41 |
| SB 41 23.01.26 OMB Capital Budget Overview SFIN.pdf |
SFIN 1/26/2023 9:00:00 AM |
SB 41 |
| 020223 OMB Response Attachment 3 - The-Economics-of-Childcare-Supply-09-14-final.pdf |
SFIN 1/26/2023 9:00:00 AM |
|
| 020223 OMB Response Attachment 1 - Alaska-Child-Care-Snapshot.pdf |
SFIN 1/26/2023 9:00:00 AM |
|
| 020223 1.26.23 OMB SFIN Response.pdf |
SFIN 1/26/2023 9:00:00 AM |
|
| 020223 OMB Response Attachment 2 - EarlyEd_ALASKA_2021_DIGITAL.pdf |
SFIN 1/26/2023 9:00:00 AM |