HOUSE BILL NO. 53 "An Act making appropriations for the operating and loan program expenses of state government and for certain programs; capitalizing funds; amending appropriations; making supplemental appropriations; making reappropriations; making appropriations under art. IX, sec. 17(c), Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date." HOUSE BILL NO. 55 "An Act making appropriations for the operating and capital expenses of the state's integrated comprehensive mental health program; and providing for an effective date." ^AMENDMENTS Co-Chair Josephson noted that the committee would continue hearing amendments for the operating and mental health budgets. 4:03:44 PM AT EASE 4:05:17 PM RECONVENED Co-Chair Josephson MOVED to ADOPT Amendment N 64 (copy on file): Agency: Health Appropriation: Public Assistance Allocation: General Relief Assistance Transaction Details Title: Add Funding for Alaskan Food Banks and Pantries to Promote Food Security Section: Section 1 Type: IncOTI Line Items (Amounts are in thousands) Personal Services: 0.0 Travel: 0.0 Services: 0.0 Commodities: 0.0 Capital Outlay: 0.0 Grants: 1,000.0 Miscellaneous: 0.0 1,000.0 Positions Permanent Full-Time: 0 Permanent Part-Time: 0 Temporary: 0 Funding (Amounts are in thousands) 1004 Gen Fund 1,000.0 Explanation Representative Stapp OBJECTED. Co-Chair Josephson explained that Amendment 64 proposed adding $1 million for the Food Bank of Alaska (FBA). He understood that the committee was nearing the end of the amendments process, but he believed the amendment was important. Excluding statewide functions such as the Alaska Marine Highway System (AMHS) backstop and other additions made by the Senate totaling $10 million, as well as the $5 million restoration of the Community Assistance Program (CAP) for one year, the committee had reduced state spending by approximately $744,000 due to adopted decrements to the budget through amendments. He clarified that the figure excluded the unallocated cut. He explained that although Amendment 64 proposed an additional $1 million in spending, his rough calculation showed that, excluding those statewide functions, adoption of the amendment would result in a net increase of approximately $300,000. Co-Chair Josephson explained that FBA had expressed strong support for Amendment 64. He stated that he had received written correspondence three days earlier from Chief of Advocacy at FBA, Ms. Rachel Miller, who noted that one in eight Alaskans and one in six Alaskan children experienced hunger. He relayed that Ms. Miller described ongoing backlogs caused by administrative challenges at the Department of Health (DOH), SNAP, and Medicaid. He stated that the backlogs had led to increased demand at food pantries across the state. Food banks and pantries were often the only available option for individuals who were uncertain where their next meal would come from. Co-Chair Josephson stated that Ms. Miller referenced national policy discussions, including proposals that would require states to absorb a greater share of SNAP costs or significantly reduce SNAP benefits. She indicated that potential reductions in SNAP, Medicaid, or other assistance programs could result in increased demand at food banks and pantries. He referenced a recent article by Iris Samuels titled, "Alaska Receives Federal Warning at Risk of Losing Funding Over Food Stamp Backlog." He explained that the article described a federal penalty related to SNAP administration. He noted that the penalty was in addition to a separate unfunded penalty adopted earlier that day on the House floor by a vote of 21 to 19. Co-Chair Josephson explained that while SNAP benefits were still being distributed, the program was not functioning effectively due to federal concerns regarding compliance and administration. He added that Ms. Miller shared that FBA and its partners had previously received $1.68 million and more recently, $1,011,500. Co-Chair Josephson stated that he had provided the committee with a spreadsheet (copy on file) listing communities with participating food banks that received food primarily from larger distribution centers such as Anchorage, Juneau, and Fairbanks. He explained that funds appropriated for the current fiscal year would not arrive until January. Despite receipt of those funds, FBA expressed concern about a growing gap in the hunger response network as more Alaskans experienced financial and food insecurity. 4:10:53 PM Co-Chair Josephson reiterated that one in eight Alaskans and one in six Alaskan children were affected by food insecurity, according to FBA's State of Hunger in Alaska report. He explained that the numbers equated to nearly 100,000 individuals, including approximately 30,000 children. In 2024, FBA distributed more than 7.9 million pounds of food, equivalent to 6.7 million meals, to Alaskans in need. He stated that the organization delivered approximately 583,000 meals to children in rural school districts. He also noted that food was distributed to older Alaskans through the Commodity Supplemental Food Program (CSFP). He asserted that the need for food assistance was clearly established. While he supported UA sports programs and appreciated prior committee action to fund the programs, he believed it placed the legislature in an inconsistent position to fund athletics while not providing funding for food banks. Representative Stapp stated that when food bank appropriations began approximately three years earlier, the funding had been described as temporary assistance to address the SNAP backlog. He referenced the SNAP penalty and noted that earlier committee discussion had established that the penalty resulted from over-issuance of benefits intended to reduce backlog delays. He asked whether the appropriation was becoming an ongoing commitment rather than a temporary measure. He also asked why it took nine to 11 months for the department to distribute funds that were approved to address what was described as an immediate need, noting that the prior year's funds had not been scheduled for distribution until March. Co-Chair Josephson responded that DPA was experiencing significant administrative challenges. He stated that he was glad the funds were distributed when they were, but he expressed concern that the current grants would expire in January of 2026. He stated that FBA had reported prior distributions of funds, including approximately $420,000 to the Fairbanks Community Food Bank (FCFB), $100,000 to the Kenai Peninsula Food Bank (KPFB), and $150,000 to the Southeast Alaska Food Bank (SAFB). He explained that these figures illustrated how funding was distributed statewide rather than concentrated in a single community. 4:14:41 PM Representative Tomaszewski asked where the remaining funds had been distributed beyond the examples provided. Co-Chair Josephson responded that the figures referenced were from calendar year 2024, when $4.5 million had been included in the governor's proposed FY 24 budget. He clarified that the $1.68 million distributed that year was allocated across multiple regions and he had used the examples to demonstrate the statewide distribution model. He emphasized that the funding was not limited to Anchorage. Representative Tomaszewski asked how much funding remained or whether all funds had been expended. Co-Chair Josephson responded that he did not have the information available. He suggested that LFD or DOH may have the information. Representative Tomaszewski asked to follow up on Representative Stapp's question. He stated that the food bank funding appeared to have originated during the COVID- 19 pandemic and had initially been described as temporary. He was uncertain whether the original justification still applied, but he understood that Co-Chair Josephson appeared to have researched the issue already. He would like more information on the remaining funds and he thought that the committee should consider the matter further. Representative Galvin stated that she had reviewed her notes related to FBA after meeting with representatives from the organization multiple times during the year. She wanted to share several observations. She expressed appreciation for Lutheran Social Services of Alaska (LSSA) for visiting her office and she thought the information presented to her was deeply concerning. In Midtown Anchorage alone, approximately 600 seniors received a food box once per month through LSSA. She explained that eligibility was limited to individuals aged 60 years or older with monthly income of $2,000 or less. She stated that the 30-pound food box was insufficient and seniors continued to experience food insecurity. She emphasized that older Alaskans were going hungry. Government grants and contracts declined from $6.22 million in 2023 to $4.24 million in 2024, representing a 31.8 percent decrease year over year. She stated that while federal funding had previously provided support, demand continued to increase and more individuals than ever continued to access pantries and meal programs even after the pandemic. Representative Galvin stated that while food bank funding had initially been framed as a temporary response to the pandemic, ongoing conditions demonstrated sustained need. She relayed that despite declining funding, rising operational costs, and inflationary pressures, food banks distributed approximately 7.9 million pounds of food and nearly 6.7 million meals in 2024. She asserted that the food was being utilized and not wasted, and that demand remained high, particularly in rural Alaska. Representative Galvin shared that families were reportedly waiting up to three months or longer to receive SNAP benefits. She argued that food pantries were not an ideal substitute for SNAP because they did not always provide culturally or nutritionally preferred foods, but the food pantries were necessary under current circumstances. She expressed support for Amendment 64 because food insecurity persisted. 4:20:05 PM Representative Johnson asked whether the committee could request that LFD Director Alexei Painter address the issue. She suggested that language could be added to reappropriate FY 25 funds into FY 26 or extend FY 25 funding into FY 26 to account for any unspent balances. ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION, responded that when the matter was discussed in December of 2024, DPA indicated it planned to begin disbursing the funds in February of 2025. He stated that the department assumed the full amount would be disbursed, but any unspent funds would lapse back to the general fund. If an unspent amount remained, the legislature could choose to extend the appropriation. He explained that the department issued requests for proposals in November of 2024 and likely had full grant agreements in place at that time. A second appropriation that was made in 2024 through the Department of Commerce, Community and Economic Development (DCCED) for food banks had also been fully expended. Representative Bynum stated that the budget listed $605,400 under the public assistance line [page 20, line 20]. He asked whether the proposed funding would be added to the existing line item or whether it constituted a new addition to the budget. Mr. Painter responded that the funding was comparable to a one-time appropriation of $1.5 million made in the same line item during the previous year. He stated that the current budget proposal would place a smaller amount in the same budget line. Co-Chair Foster expressed his support for Amendment 64. He stated that he appreciated that the food bank distributed food to 75 communities and organizations. He noted that Alaska had more than 200 villages and he encouraged FBA to expand distribution to additional communities, if possible, particularly given SNAP-related challenges. He shared that that the SNAP backlog represented the most frequent category of constituent calls received by his office during the legislative session. He relayed that constituents experienced long wait times, delays of weeks or months, and disconnections while seeking assistance. He expressed concern for affected individuals and stated that food banks provided an important means of support. Co-Chair Foster noted that while food banks were not present in every village, hub communities such as Nome sometimes assisted surrounding areas. He stated that increased support would improve outreach. While he generally favored limited government, he viewed food assistance for individuals and families unable to meet basic nutritional needs as an appropriate government responsibility, along with public safety, roads, and sanitation. He noted that it was particularly important when children were involved. 4:24:32 PM Representative Hannan indicated that she also supported Amendment 64. If SNAP was not functioning as intended, the state needed to assist through alternative means. She asked Mr. Painter whether funds retained by the state from SNAP- related penalties could be used for direct food assistance. She noted that Alaska was required to pay a $12 million fine due to having insufficient eligibility technicians for SNAP, with $6 million repaid to the federal government and $6 million retained by the state. She asked whether retained funds could be used to support food banks. Mr. Painter responded that he did not know the details of the settlement and advised that DOL would need to be consulted. He stated that the language submitted to the legislature specified that retained funds were designated for new SNAP investment projects. He explained that the designation did not include direct food assistance such as funding food banks. He could not speak to whether the limitation resulted from negotiation decisions by DOL. Representative Hannan commented that the legislature would not be able to achieve such changes before addressing the FY 26 budget. There was concern that the state could again face additional federal penalties due to the ongoing SNAP backlog. She thought the committee should consider whether future negotiations conducted by DOL regarding public assistance penalties might allow funds to be directed toward providing food assistance to individuals who experienced food insecurity, including through food banks. She reiterated that such changes were not achievable within the FY 26 budget process. Representative Bynum commented that he continued to hear discussion regarding SNAP and whether the program was effectively administered. He stated that speculation regarding the future operation of SNAP appeared to be influencing support for the amendment. He did not believe he had sufficient information to determine whether SNAP services would continue as expected. He had limited time to research the program and was speaking only to the information available to him. When considering food security, particularly in remote communities, he believed support should be narrowly focused on low-income, hard-to- reach, and highly vulnerable areas. He thought there should be less emphasis on communities such as Ketchikan, Anchorage, and Fairbanks, where additional resources and services were available. He would prefer to see funding directed toward communities such as Kake, Hoonah, and Yakutat, which were more vulnerable to food shortages and supply disruptions. He did not yet understand how the program ensured assistance reached the most vulnerable communities. He requested that Co-Chair Josephson provide an additional explanation regarding how the program was intended to protect those communities. 4:28:58 PM Representative Allard stated that she found the discussion informative. She stated that she recognized several Anchorage-based organizations listed in the handout provided by Co-Chair Josephson (copy on file), including Beans Café and the Chugiak Eagle River Food Pantry. She stated that the Municipality of Anchorage provided significant funding to these organizations through grants, bond authorizations, and actions exceeding the tax cap. She did not believe Anchorage qualified as one of the most vulnerable communities, given the level of municipal support available. She emphasized the need to target funding toward the most vulnerable areas of the state. She did not support approving the funding in the current budget cycle because she believed nonprofits were capable of raising funds independently and that continued reliance on government funding was not appropriate. She stated that if funding were provided, it should be narrowly targeted, which she did not believe was occurring under the amendment. Representative Tomaszewski noted that he could not speak to conditions in Anchorage, Kenai, Southeast Alaska, or other communities that had received funding under the appropriation; however, he could speak to conditions within the Fairbanks community. He explained that FCFB performed extensive food distribution work and that he had volunteered and worked with the organization for many years. He stated that the organization not only raised funds for its own projects but also worked with the state on food distribution, including distributing fish to villages when fish availability was limited. He explained that FCFB served as a distribution hub and sent food throughout the interior region of Alaska. The organization partnered with local grocery stores to donate food weekly, such as Costco and Fred Meyer. He described the work as a coordinated effort to distribute food to people in need and noted the significant contribution of volunteers over many years. He stated that he believed it was a reasonable appropriation to help those in need. 4:32:57 PM Representative Stapp expressed appreciation for the comments from Representative Tomaszewski. He noted that the committee had discussed the issue the previous year in relation to separate legislation. He offered a warning that the department would not be able to clear the SNAP backlog. He had cautioned that increasing eligibility conditions would create an additional backlog. As of the current month, the backlog remained unresolved and additional individuals would be added to the program in July of 2025, which he believed would likely worsen the backlog. He stated that he supported the amendment because he believed the department would continue to face challenges processing applications. He clarified that his comments were not intended to criticize departmental staff, but that his concern was structural rather than personal. Without addressing capacity issues, additional funding for food banks might be required in future years. Representative Bynum shared that he sought a clearer understanding of how the program functioned in terms of distributing food to communities. He wanted additional information before the committee voted on the amendment regarding how food was transported and allocated. He stated that while the program appeared beneficial, he believed further discussion would be necessary in the future to ensure that the most vulnerable communities were prioritized. Co-Chair Josephson responded that he was not an expert on food distribution operations, but he had provided the committee with a list showing the number of pallets and pounds distributed to villages (copy on file). He indicated that he believed the information addressed some of the concerns raised. He referenced a September 2023 press release in which the administration reallocated $1.7 million to support food distribution statewide in response to difficulties processing SNAP applications. He explained that the press release originated from DOH Commissioner Heidi Hedberg and noted that the organization distributed 567,000 pounds of food to 82 partners statewide, from Ketchikan to Bethel and Gambell, in response to food insecurity. He relayed that FBA had a number of testimonials from partner organizations across the state, including Southeast Alaska, the Kenai Peninsula, Bethel Community Services, the Matanuska-Susitna Food Bank, the Bristol Bay Native Association, the Nome Community Center, and the Upper Susitna Food Pantry. Co-Chair Josephson advised that he could not provide a precise operational breakdown but emphasized that the article he had mentioned earlier by Iris Samuels was concerning. According to federal data cited in the article, the state met required SNAP application processing deadlines only 36 percent of the time, compared to the federal performance standard of 95 percent. He explained that the data helped explain the federal penalty assessed against the state. He reported that more than 2,700 Alaskans had waited longer than three months for SNAP applications to be processed, despite a federal requirement that applications be completed within 30 days. He added that the article referenced a vacancy rate of 30 percent within the department as of March of 2025 and reported that only three employees were hired between January and March to address the backlog. He characterized the amendment as a reduction rather than an expansion, acknowledging the $1 million cost and the fiscal challenges facing the state. He stated that the need for food assistance remained evident. 4:37:47 PM A roll call vote was taken on the motion. IN FAVOR: Jimmie, Johnson, Hannan, Tomaszewski, Stapp, Galvin, Bynum, Foster, Josephson OPPOSED: Allard, Schrage The MOTION PASSED (9/2). There being NO further OBJECTION, Amendment 64 was ADOPTED. 4:38:37 PM AT EASE 4:41:53 PM RECONVENED Co-Chair Josephson MOVED to ADOPT Amendment N 95 (copy on file): Agency: Permanent Fund Appropriation: Permanent Fund Dividends Allocation: Dividend Fund 1050 Transaction Details Title: POMV Draw with $1000 Dividend Section: Language Type: IncOTI Line Items (Amounts are in thousands) Personal Services: 0.0 Travel: 0.0 Services: 0.0 Commodities: 0.0 Capital Outlay: 0.0 Grants: 0.0 Miscellaneous: 681,700.0 681,700.0 Positions Permanent Full-Time: 0 Permanent Part-Time: 0 Temporary: 0 Funding (Amounts are in thousands) 1041 PF ERA 681,700.0 Explanation Page 57, lines 14 - 17: Delete all material and insert: "(1) the amount necessary, estimated to be $681,700,000, to the dividend fund (AS 43.23.045(a)) for the payment of a permanent fund dividend of $1,000 and for administrative and associated costs for the fiscal year ending June 30, 2026;" Page 57, line 18: Delete "$1,294,439,328" Insert "$3,117,188,398" Representative Stapp OBJECTED. Co-Chair Josephson explained that Amendment 95 proposed changing the amount of the 2025 Permanent Fund Dividend (PFD) from the $3,000 amount proposed by the governor to $1,000. He wanted to place several points on the record regarding the Permanent Fund and the dividend. He explained that between 1982 and 2015, the legislature appropriated a PFD each year based on the statutory formula. During his initial legislative terms in 2013 and 2014, the legislature did not regularly debate the dividend. He reported that over the 34-year period, the average dividend was $1,150. He emphasized that during that time, the dividend had no impact on the operating budget and functioned separately from it. He explained that a portion of earnings was distributed as dividends while the remainder stayed in the fund to support growth. During that period, the Permanent Fund grew from approximately $3 billion to nearly $53 billion, which materially affected the formula used to calculate dividends. Co-Chair Josephson relayed that in 2016, Governor Bill Walker introduced legislation to use the fund as an endowment to support state government through a percent of market value (POMV) mechanism. He stated that the approach was enacted in 2018 through SB 26. Following enactment, the POMV framework created a zero-sum dynamic in which each dollar allocated to the dividend reduced the amount available for other general fund needs, and vice versa. He stated that the dynamic was especially pronounced in a fiscal environment where the state did not raise broad- based revenue and did not tax its residents to fund government operations. Co-Chair Josephson stated that in 2016, the governor vetoed a portion of the dividend appropriation, and that in each year since then, the legislature appropriated a dividend amount smaller than what would have been paid under the historic statutory formula. He stated that the cumulative reduction in dividend payments over the nine-year period totaled $9.3 billion. He added that when interest was included, the amount exceeded $12 billion. By comparison, the Permanent Fund currently held just over $5 billion in uncommitted earnings reserve funds, excluding the $3.8 billion already committed to the upcoming fiscal year budget. He stated that excluding those funds was necessary because the funds were required to support the budget and included an inflation-proofing transfer scheduled for June of 2025. He stated that without those funds, the state would face serious fiscal risk. He asserted that the state currently lacked the financial capacity to pay historic dividend amounts. Co-Chair Josephson relayed that in prior years, proposals were offered to pay full dividends or pay back dividends. He stated that such proposals were no longer feasible. He explained that the limitation was not solely due to insufficient funds, nor solely due to the version of the budget under consideration, which allocated approximately 66 percent of the annual draw to the dividend. He stated that the underlying issue was that the historic dividend formula no longer aligned with the structure of the Permanent Fund under the POMV framework. When the legislature was considering SB 26, both the House and the Senate passed versions of the bill that included new dividend formulas tied to POMV. He stated that the Senate version included a dividend allocation equal to 25 percent of the POMV draw. He explained that under a 25 percent draw, the dividend for the current year payable in October would have been approximately $1,440. The House version included a 33 percent dividend, which would have resulted in a higher amount than $1,440. He explained that the conference committee was unable to reach consensus on a new dividend formula, and as a result, the final bill was silent on the issue. Co-Chair Josephson explained that because no new formula was adopted, the historic dividend formula remained in statute despite being unaffordable. The outcome resulted in an annual debate over the dividend. He wanted to change the dividend formula to an amount the state could realistically afford. If the legislature enacted a new formula, it would be honored and paid. He argued that adoption of a sustainable formula would help frame future budget discussions regarding affordability, but the legislature had not yet reached agreement on a new dividend formula. He relayed that the absence of a realistic formula delayed resolution of essential budget issues until late in the legislative process. The state faced a deficit exceeding $1.5 billion under a full dividend scenario. Co-Chair Josephson noted that the committee had spent the prior two months developing the operating budget through subcommittees and full committee work. The range of remaining budget options was limited to tens of millions of dollars. He clarified that the limitation applied to the operating budget itself and not to the dividend. The committee had completed less work on the capital budget but he could reasonably estimate its size. He noted that the legislature was also considering substantial increases to K-12 education funding. The state faced a projected deficit of approximately $2 billion if the operating budget as proposed was adopted. Co-Chair Josephson explained that Amendment 95 would provide a $1,000 dividend to all eligible Alaskans. He stated that adoption of the amendment would increase funds available to the general fund and reduce the deficit by approximately $1.8 billion. He stated that $1,000 was within the range the state could afford and he characterized the proposal as realistic and fair. 4:48:06 PM Co-Chair Josephson understood that it was widely believed that the dividend would ultimately fall near the $1,000 range. He stated that few discussions involved amounts lower than the $1,000 level. He explained that under a residual dividend approach, assuming growth in K-12 funding, the dividend could be approximately $700. He stated that further discussion was expected. The dividend amount would be changed through the legislative process, including in committee, conference committee, and on the House floor. He stated that he was open to conceptual amendments. Representative Jimmie stated that the PFD was critically important to her district. She shared that statewide per capita income was approximately $41,000, but annual income in her district was approximately $21,000 or less. During recent travel to villages in her district, she encountered a family heating their home with an oven because they could not afford stove oil. She stated that the dividend helped keep approximately 40 percent of her constituents out of poverty. Representative Tomaszewski believed the PFD should be paid as written in statute. He stated that he would vote against Amendment 95. He viewed reductions to the dividend as regressive and harmful to individuals with the lowest incomes in the state. He argued that a reduction of $2,000 to the dividend could represent 10 percent or 15 percent of an individual's annual income. The dividend provided significant assistance to retirees, individuals on fixed incomes, and individuals living in poverty. Reducing the dividend disproportionately affected lower-income individuals compared to higher-income earners. He noted that a $2,000 reduction represented approximately 1 percent of income for someone earning $200,000 annually but a substantially larger share of income for individuals with lower earnings. He stated that he could not support the reduction. Representative Allard noted that the legislature frequently emphasized the importance of following the law and adhering to statute. She stated that her opposition to the amendment was because she wanted to represent her community as well as support her colleagues who represented rural communities. She stated that she did not want rural communities to suffer. Regardless of whether an individual was a single parent in Eagle River, Bethel, or Nome, she wanted to ensure that families could afford medical care, orthodontic care, and education expenses for their children. 4:52:32 PM Representative Johnson expressed her opposition to the amendment. She thought that the legislature had an insatiable appetite for spending and that accountability and restraint were lacking. She stated that the dividend allowed individuals to decide how to best meet their needs without government direction. Recipients might choose to spend the dividend on fuel, food, or other necessities rather than government-selected programs. She asserted that the dividend represented the only effective spending cap on government and that public attention to the dividend helped restrain government spending. She expressed concern that support for a larger dividend was sometimes portrayed negatively. She relayed that the dividend helped working families save money, support education, and improve their quality of life. She stated that she could not support the amendment. Co-Chair Foster shared that he opposed Amendment 95 because he supported paying the full statutory PFD. He shared that his district ranked either the lowest or second lowest in per capita income statewide. He stated that residents in his district relied on the dividend to pay for necessities such as heating oil, food, and medicine. He noted that a reduction of $1,000 or $2,000 might not significantly affect some Alaskans, but it had a substantial impact on many of his constituents. He explained that a $2,000 reduction affected families disproportionately. For a family of five, the reduction equated to $10,000. He stated that evaluating the reduction as a percentage of income further illustrated the disparity. For example, a $2,000 reduction represented 2 percent of income for a household earning $100,000 annually. For a family in a village receiving approximately $10,000 in cash income supplemented by subsistence, the same reduction equated to a 20 percent loss of total income. Co-Chair Foster stated that he had visited all of the villages in his district and he had personally observed the high cost of living and economic hardship in those areas. He stated that residents were barely managing financially, especially considering the current challenges related to SNAP. He asserted that his constituents needed a robust dividend. He supported a larger PFD particularly for rural Alaska and he was in opposition to the amendment. 4:58:47 PM Co-Chair Schrage expressed his full support for Amendment 95. He acknowledged that the full statutory dividend was established in law. The committee had made efforts to limit spending but even with reductions, the budget had to balance against available revenues. He asserted that the constitution required passage of a funded budget and that the state could not meet all obligations simultaneously. He noted that members of the committee had supported various budget increments, including funding for dementia awareness, a deaf navigator, fisheries research, and reimbursement for required air quality studies. He stated that these expenditures reduced the funds available for the dividend. He recognized the importance of the dividend, particularly for low-income and rural families, but the committee faced a mathematical constraint that required tradeoffs. He relayed that maintaining essential state functions required acknowledging revenue limitations and reallocating funds accordingly. Co-Chair Schrage stated that if the committee did not address the imbalance, the responsibility would fall to others, and he did not want to abdicate the responsibility. He wanted the committee to take ownership of the budget, which required acknowledging that the dividend needed to be reduced. The alternatives included drawing large amounts from the Constitutional Budget Reserve (CBR), overdraws from the Permanent Fund that could eliminate the dividend entirely, or instituting taxes. He stated that he had not observed sufficient will within the committee to pursue the other options. He noted that there was unwillingness among members to draw from the CBR. He stated that the public needed honesty regarding where funding would come from. If the state was unwilling to use savings, overdraw the fund, or impose taxes, the dividend would have to be reduced. He stated that although the vote was difficult, he was willing to take responsibility because the financial reality required it. He thought that the committee needed to accept ownership of the process and be honest about what was required to fund the budget priorities members had supported. 5:02:57 PM Representative Galvin expressed hesitant support for Amendment 95. She explained that her hesitation stemmed from the regressive nature of reducing the dividend and she thought that her colleagues from rural Alaska were correct in raising concerns. There were mixed feelings about reducing the PFD in her district, but as a whole, her district understood that the state faced a $1.6 billion deficit and that action was required. She reiterated that reducing the dividend was regressive, but the state lacked other revenue mechanisms. She relayed that Alaska was the only state without a statewide sales tax or income tax and that the state had previously relied on oil revenue, which had declined significantly. The state currently faced a severe fiscal challenge and could not rely upon oil increasing again in the future. Representative Galvin suggested that additional revenue options should be considered, including sales taxes, income taxes, modernization of tax systems, and mining revenue. She stated that a $1.6 billion deficit could not be resolved through cuts alone, regardless of fiscal conservatism. She thought that the committee had prioritized essential services such as food assistance, health care, and legally required obligations and had avoided unnecessary spending. She explained that her votes were cast with statewide interests in mind rather than district-specific benefits. The state needed to remain a place where people wanted to live, with safe communities, strong schools, and opportunities for children. The state was at a difficult juncture that required deciding how it would invest in itself amid fiscal constraints. She wanted to ensure that the legislature was doing what was necessary for rural Alaskans, particularly in regions facing severe hardship. She stated that the PFD issue posed a difficult question for her. She was actively working on ideas to improve the distribution of wealth statewide. She stated that her constituents expected the legislature to balance the budget and adjourn on time. She would vote in favor of the amendment, though reluctantly. Representative Tomaszewski commented that there had been significant discussions about potential solutions. He noted that Representative Mike Prax had introduced legislation during the past three legislative sessions allowing individuals to voluntarily relinquish their PFD. He explained that the legislation allowed applicants to check a box to donate their dividend to the general fund. He noted that he was a co-sponsor of the bill. He stated that individuals who did not need the dividend should have the option to return it to the state to reduce the need for difficult budget decisions. He expressed hope that the committee would support the bill. 5:07:50 PM A roll call vote was taken on the motion. IN FAVOR: Galvin, Hannan, Schrage, Josephson OPPOSED: Johnson, Stapp, Allard, Bynum, Tomaszewski, Jimmie, Foster The MOTION to adopt Amendment N 95 FAILED (4/7). 5:08:36 PM Co-Chair Schrage MOVED to REPORT CSHB 53(FIN) out of committee with individual recommendations and with authorization to the Legislative Finance Division and Legislative Legal Services to make any necessary technical and conforming changes. Representative Johnson OBJECTED. 5:09:23 PM AT EASE 5:10:04 PM RECONVENED Co-Chair Josephson asked if the objection was maintained. Representative Johnson MAINTAINED the OBJECTION. 5:10:14 PM A roll call vote was taken on the motion. IN FAVOR: Hannan, Jimmie, Galvin, Foster, Schrage, Josephson OPPOSED: Johnson, Allard, Bynum, Tomaszewski, Stapp The MOTION PASSED (6/5). There being NO further OBJECTION, CSHB 53(FIN) was REPORTED out of committee with one "do pass" recommendation, two "no recommendation" recommendations, and eight "amend" recommendations. [Note: action on reporting the bill from committee was rescinded on 4/10/25 at approximately 6:30 p.m. The bill was then reported out of committee with no additional changes. See separate minutes dated 4/10/25 1:30 p.m. for detail.] 5:11:20 PM Co-Chair Schrage MOVED to REPORT CSHB 55(FIN) out of committee with individual recommendations and with authorization to the Legislative Finance Division and Legislative Legal Services to make any necessary technical and conforming changes. There being NO OBJECTION, CSHB 55(FIN) was REPORTED out of committee with six "do pass" recommendations, three "no recommendation" recommendations, and two "amend" recommendations. Co-Chair Josephson noted that the bills would be sent to the House Rules Committee for calendaring. Co-Chair Josephson reviewed the schedule for the following day.