Legislature(2025 - 2026)SENATE FINANCE 532
03/17/2025 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Governor's 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
| + | TELECONFERENCED | ||
SENATE FINANCE COMMITTEE
March 17, 2025
9:01 a.m.
9:01:56 AM
CALL TO ORDER
Co-Chair Hoffman called the Senate Finance Committee
meeting to order at 9:01 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Mike Cronk
Senator James Kaufman
Senator Jesse Kiehl
Senator Kelly Merrick
MEMBERS ABSENT
Senator Donny Olson, Co-Chair
ALSO PRESENT
Lacey Sanders, Director, Office of Management and Budget,
Office of the Governor; Dom Pannone, Administrative
Services Director, Department of Transportation and Public
Facilities.
SUMMARY
PRESENTATION: GOVERNOR'S AMENDMENTS OFFICE OF MANAGEMENT
and BUDGET
Co-Chair Hoffman discussed the agenda.
^PRESENTATION: GOVERNOR'S AMENDMENTS OFFICE OF MANAGEMENT
and BUDGET
9:02:47 AM
LACEY SANDERS, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, discussed a presentation entitled
"FY2026 Governor Amended Budget - Senate Finance Committee
- March 17, 2025" (copy on file). She relayed that she
would present an overview of amendments that were
transmitted on March 13 and March 15 the previous week for
the legislature's consideration.
9:03:14 AM
Ms. Sanders reviewed slide 2, "FY2026 Updated Fiscal
Summary," which showed a table with an updated version of
the fiscal summary that reflected the submitted amendments
for both the supplemental budget and the governors
proposed budget. The fiscal summary also incorporated the
changes presented the previous week in the Spring
production forecast by the Department of Revenue. Revenue
at the top had been adjusted for the spring forecast. She
relayed that she would start by describing changes at a
high level and then would addresses individual items and
reasoning in subsequent slides.
Ms. Sanders detailed that for FY 25, there were three sets
of amendments submitted. One set was in the fast-track
supplemental bill for a total of $2.7 million. There was
one amendment submitted to the supplemental operating
normal supplemental budget for $4.5 million. There was one
zero-dollar item in the capital budget for a total of $7.2
million of Unrestricted General Funds (UGF). The amendments
were incorporated into the expenditures portion of the
fiscal summary and brought the overall deficit at the
bottom to $164.7 million In the governor's FY 26 proposed
budget, the primary amendments under the operating budget
had to do with the Executive Order 136 establishing a
Department of Agriculture and salary adjustments for a
grand total of $15 million, $13.9 of which was UGF.
Ms. Sanders continued that in the capital budget, each year
the governors proposed budget submitted in December
included the Statewide Transportation Improvement Program
(STIP) estimates. Later in the amendment process, the
administration brought forward the allocation for STIP and
outlined the federal revenue and other receipts necessary
for the program. There were capital amendments in a lengthy
document (copy on file) that totaled $223 million, zero
dollars of which was UGF. She cited that the total deficit
was $1.648 billion. She noted that as discussed in previous
meetings, the proposed governors budget continued to draw
on the Constitutional Budget Reserve Fund (CBR).
Ms. Sanders advanced to slide 3, "Operating Governor Amend
Requests which showed a table including the amendments
related to salary adjustments. Under March 5, there was a
reduction of $2.7 million for Executive Order 136. In a
previous round of amendments, the administration had
proposed adding 13 new positions. After further discussion
and evaluation, the amendment was pulled back and there was
an alternative proposed that included utilizing existing
vacant positions in the budget and transferring them from
the Department of Natural Resources (DNR) into the
Department of Agriculture. The $2.7 million was then no
longer needed.
Co-Chair Hoffman asked about ongoing obligations for the
proposed new department after the FY 26 fiscal year.
Ms. Sanders relayed that the current established cost was
about $9 million, which would be the cost to continue the
Department of Agriculture. She detailed that the governor
would like the department to go through an evaluation of
all existing programs and functions that were currently
completed by the Division of Agriculture, and outline
priorities and the resources used to meet the priorities.
Co-Chair Hoffman asked about the number of positions.
Ms. Sanders communicated that the number of positions would
remain the same, and the administration would continue to
evaluate whether the existing positions were sufficient to
do the work that was needed. Any new proposals for work or
new tasks would be brought before the legislature.
9:08:52 AM
Ms. Sanders continued to address slide 3, and spoke to the
March 13, 2025, governor's requested amendments. She noted
that the Department of Corrections collective bargaining
agreement for the Alaska Correctional Officers Association
resulted in an interest arbitration award, that issued and
provided for 11 percent increases for members for FY 26
that came to $14.4 million total. Under the Department of
Education and Early Development, the collective bargaining
agreement for the Teachers Education Association Mount
Edgecumbe (TEAM) resulted in an increase of a median 5.46
percent for FY 26, 2.5 percent for FY 27, and a zero to
five percent increase based an CPIU for Anchorage in FY 28.
The change resulted in a $167,000 increase for FY 26, $24.2
million of which was UGF.
Under the University of Alaska the United Academics
collective bargaining agreement was completed and included
a 2.75 percent increase for FY 26, a 3 percent increase for
FY 27, and a 3.25 percent increase for FY 28 for a total of
$3.2 million in FY 26 with $2.3 million in UGF. The state
was continuing to work on the six remaining collective
bargaining units that were outstanding. The University also
had one item outstanding for approval from the Board of
Regents, for the Universitys academic adjuncts.
Ms. Sanders showed slide 4, "Capital Governor Amend
Requests," which showed a table. The total appropriation
allocated for projects associated with the Statewide
Transportation Improvement Program (STIP). This year there
was an addition of advanced construction projects. She
referenced Attachment B (copy on file), which identified
advanced construction projects. The request increased
Statutory Designated Program Receipts for $7.7 million and
an additional $215 million of federal receipt authority to
ensure that the program was fully funded.
9:12:22 AM
Ms. Sanders referenced slide 5, "Operating Supplemental
Requests which showed a table. She identified two
amendments under the Department of Corrections. She noted
that the community residential center contracts were
finalized for the Tundra Center in Bethel and the Seaside
Center in Nome. There was a resultant increase of $2
million for FY 25. As noted, corresponding increases were
submitted earlier for FY 26. In addition, there was an
increase of approximately $2.5 million for physical
healthcare in DOC. Due to the number of individuals
entering the department with significant complex and
fragile medical conditions, the costs associated with 24-
hour booking and having adequate staffing levels has
resulted in a need for additional personal services costs.
The administration was addressing personal services through
overtime and bringing on additional staff to ensure that
inmates were cared for.
Ms. Sanders continued that under the Department of Health,
there was a zero, but the item was a lapse extension for a
prior appropriation for the Homeless Information System.
The amendment was an extension to allow the department to
complete the work. She mentioned that under special
appropriations there was a requested fast-track
supplemental given the urgency around retirement
contributions that had not been made. She recounted that
there had been a security breach which had delayed deposits
of employee contributions and earnings into the retirement
accounts. The Division of Retirement and Benefits had
worked with a contractor to identify the payroll
contributions that needed to be made and to work on getting
the deposits transacted. The state was responsible for
interest earnings associated with the payroll
contributions, which was approximately $2.7 million. She
made note of the urgency and explained that the fast-track
supplemental request was to get the funds into the accounts
as quickly as possible. The goal was to have the deposits
done by the end of the fiscal year.
Senator Kaufman asked Ms. Sanders to describe the process
to arrive at the number on the table, and asked whether it
was reflective of market performance or an arbitrary
calculation.
Ms. Sanders relayed that she would follow up with the
committee with the documents that outlined how the process
was determined. She detailed that a contractor utilized
payroll for preceding payrolls that were supposed to be
deposited, then utilized a model that functioned as a
calculator on the Department of Labor and Workforce
Development website. The model allocated interest earned
and the lost interest earnings would be applied to everyone
using the model. She relayed that she would ensure that
members received a copy of the calculation.
Senator Kaufman thanked Ms. Sanders for the details, as
wanted to be able to explain the issue to his constituents.
Senator Kiehl considered the community residential centers
(also known as halfway houses), and knew that DOC had been
working intensively on re-negotiating lots of contracts. He
thought the proposed amendment was fairly substantial. He
asked Ms. Sanders how many contracts were left. He
referenced increased costs the previous year and asked how
far along the state was in the process.
Ms. Sanders did not have the answer at hand and asked to
follow up at a later time.
9:17:48 AM
Ms. Sanders spoke to slide 6, "Capital Supplemental
Requests which showed a table. She referenced a scope
change related to the Department of Military and Veterans
Affairs Interior Alaska Veterans Cemetery in the Fairbanks
area. There was a prior appropriation of approximately
$95,000 that was specific in the appropriation to ditch
mitigation. The scope change allowed the department to move
forward with design and other costs with establishing the
cemetery. She reiterated that there were substantial
spreadsheets in the back of the packets, with Attachments
A, B, C, and D outlining the proposed changes (copy on
file).
Senator Kiehl went back to the STIP changes proposed, and
referenced Ms. Sanders mentioned of advanced construction
projects. He thought it looked as if the funding would
total $350 million to $400 million. He asked if Ms. Sanders
had a more precise figure.
Ms. Sanders estimated that that the advanced construction
project total was about $315 million.
Senator Kiehl thought in the past the state had tried to
use the advanced construction funds cautiously and some
years had tried to pay down the advanced construction
balance, which effectively was borrowing from a future
years transportation allowance from the federal
government. He asked for detail on the thinking behind
building up the advanced construction balance.
Ms. Sanders stressed that she was not an expert in the
state transportation program nor the STIP. She mentioned
giving DOT flexibility and characterized moving forward
advanced construction as a boost to the economy.
Senator Kiehl asked if the amendment was more about the
projects underway for the summer or having enough projects
on the shelf to get the fall reallocation from the federal
government.
Ms. Sanders asked for DOT staff to assist in answering
Senator Kiehl's question.
9:20:59 AM
DOM PANNONE, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES, relayed that the
additional request was about responding to the industry and
the public as well as reflecting what was in the STIP. The
request was for federal FY 26, which was not the summer
2025 construction season but the following years
construction season. He relayed that the amendment provided
the department flexibility in increasing throughput at the
time. He noted that amendment 2 would address the upcoming
construction season's throughput of projects.
Co-Chair Hoffman discussed the agenda for the following
day.
ADJOURNMENT
9:22:31 AM
The meeting was adjourned at 9:22 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 03.17.25 OMB Senate Finance FY2026 Gov Amend Budget.pdf |
SFIN 3/17/2025 9:00:00 AM |
|
| Attachment A - FY2026 Op Governor Amend 03.13.2025 Bill Spreadsheet.pdf |
SFIN 3/17/2025 9:00:00 AM |
|
| Attachment B - FY2026 Capital Governor Amend Bill Summary Spreadsheet.pdf |
SFIN 3/17/2025 9:00:00 AM |
|
| Attachment C - FY2025 Op Supplemental Bill Spreadsheet 03.13.2025.pdf |
SFIN 3/17/2025 9:00:00 AM |
|
| Attachment D - FY2025 Capital Supplemental Amend Bill Summary Spreadsheet.pdf |
SFIN 3/17/2025 9:00:00 AM |