Legislature(2023 - 2024)SENATE FINANCE 532
03/14/2024 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Spring Revenue Forecast – Department of Revenue | |
| Governor's Budget Amendments – Office of Management and Budget | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
March 14, 2024
9:04 a.m.
9:04:07 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:04 a.m.
MEMBERS PRESENT
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
Senator Lyman Hoffman, Co-Chair
ALSO PRESENT
Senator Cathy Giessel; Adam Crum, Commissioner, Department
of Revenue; Dan Stickel, Chief Economist, Department of
Revenue; Lacey Sanders, Director, Office of Management and
Budget, Office of the Governor.
SUMMARY
SPRING REVENUE FORECAST DEPARTMENT OF REVENUE
GOVERNOR'S BUDGET AMENDMENTS OFFICE OF MANAGEMENT and
BUDGET
^SPRING REVENUE FORECAST DEPARTMENT OF REVENUE
9:10:06 AM
ADAM CRUM, COMMISSIONER, DEPARTMENT OF REVENUE, introduced
himself.
9:10:39 AM
DAN STICKEL, CHIEF ECONOMIST, DEPARTMENT OF REVENUE,
discussed a presentation entitled "Spring 2024 Forecast
Presentation - Senate Finance Committee" (copy on file). He
turned to slide 2, "Agenda":
1. Forecast Background and Key Assumptions
2. Spring 2024 Revenue Forecast
• Total State Revenue
• Unrestricted Revenue
3. Petroleum Forecast Assumptions Detail
• Oil Price
• Oil Production
• Oil and Gas Lease Expenditures
• Oil and Gas Transportation Costs
• Oil and Gas Credits
Mr. Stickel showed slide 3, "Forecast Background and Key
Assumptions."
Mr. Stickel referenced slide 4, "Background: Spring Revenue
Forecast":
• Released March 13, 2024
• Historical, current, and estimated future state
revenue
• Updates key data from Fall Revenue
Sources Book
• Official revenue forecast used for final budget
process
• Located at tax.alaska.gov
Mr. Stickel turned to slide 5, "Spring Forecast
Assumptions":
• The economic impacts of financial and geopolitical
events are uncertain; DOR has developed a plausible
scenario to forecast these impacts
• Key Assumptions:
o Investments: Stable growth in investment markets,
7.40% annualized rate for remainder of FY 2024 and
7.60% for FY 2025+
o Federal: The forecast incorporates known funding as
of March 1, 2024, includes updated estimates of
potential Infrastructure Investment and Jobs Act
funding
o Petroleum: Alaska North Slope oil price of $84.08
per barrel for FY 2024 and $78.00 per barrel for FY
2025
o Non-Petroleum: Continued economic growth. 1.6
million cruise passengers yearly, three-year recovery
for fishing industry, minerals prices based on futures
markets
Mr. Stickel considered slide 6, "Relative Contributions to
Total State Revenue: FY 2023," which showed the assumption
of total state revenue for FY 23.
9:15:09 AM
Mr. Stickel displayed slide 7, "Relative Contributions to
Total State Revenue: FY 2024." He cited a projection of
$15.5 billion in total state revenue in FY 24.
Mr. Stickel showed slide 8, "Spring 2024 Revenue Forecast,"
Mr. Stickel looked at slide 9, "Unrestricted Revenue
Forecast: FY 2023 and Changes to Two-Year Outlook,"
Mr. Stickel addressed slide 10, "Total Revenue Forecast: FY
2023 to FY 2025 Totals," which showed a table dividing the
state revenue streams into pie sections.
Mr. Stickel discussed other restricted revenues, which were
limited in use. He used the example of a share of royalty
revenue, which was dedicated to the Permanent Fund.
9:19:12 AM
Mr. Stickel advanced to slide 11, "Unrestricted Revenue
Forecast: FY 2023 to FY 2025 Totals."
Mr. Stickel looked at slide 12, "Unrestricted Investment
Revenue: FY 2023 to FY 2025 Totals."
9:20:41 AM
Mr. Stickel showed slide 13, "Unrestricted Investment
Revenue: Percent of Market Value (POMV) Transfer Forecast,"
Mr. Stickel referenced slide 14, "Unrestricted Petroleum
Revenue: FY 2023 to FY 2025 Totals."
Mr. Stickel turned to slide 15, "Unrestricted Non-Petroleum
Revenue: FY 2023 to FY 2025 Totals," which showed a table.
He noted that the largest share of the non-petroleum
revenue was taxes.
9:25:36 AM
Mr. Stickel viewed slide 16, "Petroleum Forecast
Assumptions Detail."
Mr. Stickel displayed slide 17, " Petroleum Detail: Changes
to Long-Term Price Forecast."
Mr. Stickel highlighted slide 18, "Petroleum Detail:
Nominal Brent Forecasts Comparison as of March 12, 2024,"
which showed a line graph depicting how the forecasts
compared with each other.
Mr. Stickel looked at slide 19, " Petroleum Detail: UGF
Relative to Price per Barrel (without POMV): FY 2025,"
which showed a graph of how the oil price translated to
revenue. The graph showed a sensitivity.
Mr. Stickel addressed slide 20, "Petroleum Detail: North
Slope Petroleum Production Forecast," and noted that any
nuanced questions about the production forecast should be
deferred to DNR.
Mr. Stickel advanced to slide 21, "Petroleum Detail:
Changes to North Slope Petroleum Production Forecast,"
which showed a graph comparing the production forecast to
the forecast issued in the fall.
9:30:35 AM
Mr. Stickel looked at slide 22, "Petroleum Detail: North
Slope Allowable Lease Expenditures," which showed a graph
depicting how lease expenditures had changed over the
previous four years.
Mr. Stickel spoke to slide 23, "Petroleum Detail: North
Slope Transportation Costs."
Mr. Stickel referenced slide 24, "Petroleum Detail: Tax
Credits for Purchase Detail," which showed a bar graph of
tax credits.
Co-Chair Stedman recommended that the commissioner address
the issue of tax credits.
9:35:07 AM
AT EASE
9:44:17 AM
RECONVENED
^GOVERNOR'S BUDGET AMENDMENTS OFFICE OF MANAGEMENT and
BUDGET
9:44:48 AM
LACEY SANDERS, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, relayed that she // She discussed a
presentation entitled "FY2025 Governor's Amended Budget -
Senate Finance Committee - March 14, 2024" (copy on file).
Ms. Sanders showed slide 2, "FY2025 Updated Fiscal
Summary."
Ms. Sanders spoke to slide 3, "Updated 10-Year Fiscal
Outlook," which showed a table as requested by the
committee.
Ms. Sanders referenced slide 4, "Operating Governor Amend
Requests," which showed a table outlining the governor's
amendments.
Ms. Sanders continued that within the Department of
Commerce, Community and Economic Development, there was an
item that she would reference multiple times and that was
addressed by a forthcoming slide.
9:51:44 AM
Ms. Sanders continued to address slide 4. In the Department
of Military and Veterans Affairs there was a request for
$400,000 to transition the department from the Office of
Information Technology (OIT) to an internal oversight of
the IT functions.
Senator Kiehl asked about the DMVA move from OIT, and asked
if the amendment would move the DTO to OIT.
Ms. Sanders agreed to follow up on that question.
9:55:14 AM
Ms. Sanders turned to slide 5, "Capital Governor Amend
Requests," which provided a summary of capital amendments
for FY 25.
Ms. Sanders continued to address slide 5 and identified a
joint use facility in Juneau. The federal receipts // There
had been a misunderstanding within the University of Alaska
Southeast.
Ms. Sanders considered slide 6, "Operating Supplemental
Requests," which showed a table of additional operating
supplemental requests that had been submitted.
10:02:00 AM
Ms. Sanders identified an amendment in the Department of
Public Safety, which showed that the conclusion was that
the workload could not be performed by a single position,
and an additional position was a requirement.
Ms. Sanders identified two additional judgements and claims
identified by the Department of Law. She spoke to a line
for fund transfers.
10:07:44 AM
Senator Bishop asked for the balance between the
allocations for AVTEC.
Ms. Sanders thought she may have misspoken, and stated that
the total need was $629,500 to complete the year.
Senator Bishop recalled that Ms. Sanders had indicated that
AVTEC needed 85 percent enrollment to balance the budget.
Ms. Sanders agreed.
10:09:01 AM
Ms. Sanders displayed slide 7, "Capital Supplemental
Requests," which showed a table. She reiterated that there
were three pieces that constituted the AEA.
Ms. Sanders highlighted slide 8, "Grid Resilience and
Innovation Partnership (GRIP)," which detailed pieces of
the GRIP project.
Senator Merrick asked about the $12.7 million in GRIP
matching funds, and asked if there was any concern.
Ms. Sanders relayed that AEA Director Curtis Thayer had
confirmed with the federal government.
Senator Merrick thought there had been discussion of using
a General Obligation (GO) Bond for the project.
Ms. Sanders explained that OMB was still having discussions
to determine if a bond package was the best course of
action.
10:15:33 AM
AT EASE
10:16:20 AM
RECONVENED
Co-Chair Olson referenced the GRIP project, and asked if
there were any concerns being voiced about the energy
prices in other areas.
Ms. Sanders affirmed that there were conversations
occurring that .
Co-Chair Stedman asked for additional discussion on
judgment and claims.
Ms. Sanders shared that first item was $400,000 and was
titled "Lacano Investment, LLC and Nowell Avenue
Development vs. State of Alaska, Department of Natural
Resources."
Ms. Sanders explained that the spreadsheets summarized the
items she had addressed in her presentation.
Co-Chair Stedman noted that the capital budget chairman Co-
Chair Hoffman was not present.
10:20:32 AM
Co-Chair Stedman asked about a summary of reductions.
Ms. Sanders acknowledged that there was a $19 million
reduction for DNR's duplication of expenses.
Senator Bishop noted that the decrement that came out of a
conversation in subcommittee.
Co-Chair Stedman anticipated a $94 million, so the $19
million decrement was good news.
Co-Chair Stedman discussed the agenda for the afternoon
meeting.
ADJOURNMENT
10:24:18 AM
The meeting was adjourned at 10:24 a.m.