HB 133-PAYMENT OF CONTRACTS  3:19:55 PM CHAIR CARRICK announced that the first order of business would be HOUSE BILL NO. 133, "An Act establishing a 30-day deadline for the payment of contracts under the State Procurement Code; establishing deadlines for the payment of grants, contracts, and reimbursement agreements to nonprofit organizations, municipalities, and Alaska Native organizations; relating to payment of grants to named recipients that are not municipalities; and providing for an effective date." [Before the committee, adopted as a working document on 1/22/26, was the proposed committee substitute (CS) for HB 133, Version 34- LS0114\L, Dunmire, 1/20/26 ("Version L").] 3:20:20 PM CHAIR CARRICK moved to adopt Amendment 1 to HB 133, Version L, labelled 34-LS0114\l.1, Dunmire, 1/26/26, which read: Page 1, line 4, following "organizations;": Insert "relating to technology upgrades at the  Department of Health;" Page 4, following line 20: Insert a new bill section to read: "* Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to read: TRANSITION: FUNDING OF TECHNOLOGY UPGRADES. It is the intent of the legislature that technology upgrades the Department of Health needs to implement this Act will be funded using funds received under sec. 71401, P.L. 119-21 (Rural Health Transformation Program)." Renumber the following bill section accordingly. CHAIR CARRICK objected for discussion. 3:20:36 PM The committee took an at-ease at 3:20. 3:20:51 PM CHAIR CARRICK said she seeks to address the main cost driver for this bill which is Department of Health grants administration. One cost identified in the Department of Health was necessary technology upgrades. Amendment 1 identifies the Rural Health Transformation Program as one possible funding source for technology upgrades. This amendment is just intent language. She hopes as the finance committee considers this bill that the finance committee might consider the Rural Health Transformation Program to address these cost drivers. REPRESENTATIVE VANCE asked if technology upgrades are an acceptable use of the Rural Health Transformation Program funds. CHAIR CARRICK replied that funds can't be used for capital improvements like building costs or hardware. She said the fund could be used for software costs. She stated that the technology upgrades would be within the parameters of the Rural Health Transformation Program funds. She just wants to make it clear that this could be a potential fund source to make prompt payments in the future. 3:23:40 PM CHAIR CARRICK ascertained there was no further discussion on Amendment 1. CHAIR CARRICK removed her objection to Amendment 1. There being no further objection, Amendment 1 was adopted. 3:24:00 PM REPRESENTATIVE MCCABE said he would not be offering Amendment 2. 3:24:10 PM REPRESENTATIVE MCCABE moved to adopt Amendment 3 to HB 133, Version L, as amended, labeled 34-LS0114\L.3, Dunmire, 1/29/26, which read: Page 1, line 3: Delete "nonprofit organizations, municipalities," Insert "municipalities" Page 2, line 23: Delete "nonprofit organizations, municipalities," Insert "municipalities" Page 2, lines 24 - 25: Delete "nonprofit organization, municipality," Insert "municipality" Page 2, line 27: Delete "nonprofit organization, municipality," Insert "municipality" Page 3, line 2: Delete "nonprofit organization, municipality," Insert "municipality" Page 3, lines 14 - 15: Delete "nonprofit organization, municipality," Insert "municipality" Page 3, lines 16 - 17: Delete "nonprofit organization, municipality," Insert "municipality" Page 3, lines 23 - 24: Delete "nonprofit organization, municipality," Insert "municipality" Page 4, line 18: Delete ";" Insert "." Page 4, lines 19 - 20: Delete all material. CHAIR CARRICK objected for discussion. REPRESENTATIVE MCCABE stated that Amendment 3 addresses an unintended consequence to HB 133. As written, the bill applies prompt payment penalties not only to private venders and municipalities but also to nonprofit organizations ("nonprofits"). He stated that the state always should be paying bills on time. However, Alaska has 6,300 nonprofits, many of which already receive state funding. He stated unlike businesses, non-profit often requires reimbursement, reporting requirements, and compliance review. He said this may delay the payment due to no fault of the state. This amendment removes nonprofits from the penalties. Prompt payment laws are designed for private commerce, not nonprofits as partners of the state. Alaska has 6,300 nonprofits and will create a significant fiscal problem and administrative backlog. By exempting nonprofits from the penalty provisions, it strengthens the proposed legislation. REPRESENTATIVE HOLLAND said he is speaking in opposition to Amendment 3. He has spent nearly 40 years in nonprofits as a volunteer, board member, and executive director. Nonprofits are essential to Alaska's communities getting work done in the community that wouldn't otherwise be done. Nonprofits operate as a business with vendors that need to be paid on time. He said nonprofits have greater challenges in trying to find the working capital. He asked how nonprofits are going to be able to pay employees on time. Alaska's nonprofits absolutely need to be treated as well as municipalities. The compliance side is difficult, but the hard part is at the front-end of contracts. The day-to-day work of getting paid should be done on time. REPRESENTATIVE HIMSCHOOT said she hopes that nonprofits are spending their money on their mission. She named many nonprofits as examples. This bill is for tribes, non-profits, and municipalities who tend to not have a margin - organizations doing work for the state that the state cannot do. She stated the 6,300 nonprofit organizations do not represent the number receiving funding. She is opposed to this Amendment 3. REPRESENTATIVE ST. CLAIR stated that he supports Amendment 3. There are so many unknowns to this bill. He asked when the 30 days start. He stated that nonprofits need to be exempt from this bill. REPRESENTATIVE MCCABE stated that nonprofits are many different sizes, not all are small. Providence Hospital is a nonprofit. He stated that the state absolutely needs to pay bills on time. This bill would be the status quo for the nonprofits. The bills to the state are probably small. He stated that there is a difference between business and nonprofits. 3:33:45 PM CHAIR CARRICK says she recognizes the intent of Amendment 3. All the nonprofits heard from were smaller. She asked if Representative McCabe could work with the sponsor to narrow the nonprofits. REPRESENTATIVE MCCABE stated this amendment simply removes the nonprofits. 3:35:33 PM A roll call vote was taken. Representatives Vance, McCabe, and St. Clair voted in favor of Amendment 3. Representatives Himschoot, Holland, Story, and Carrick voted against it. Therefore, Amendment 3 failed to be adopted by a vote of 3-4. CHAIR CARRICK asked for any final discussion on HB 133, Version L, as amended. REPRESENTATIVE HOLLAND stated that he is in support of moving the bill out of committee. The fiscal impacts will be important for the House Finance Committee to work on. The fiscal notes have a great deal of disparity. The paying of bills on time should not take a fiscal note. The staff in the agencies should support paying bills on time. If there is a problem paying the bills on time, then look at the workflow and technologies needed. REPRESENTATIVE ST. CLAIR agreed with his counterpart. The fiscal notes are indeterminate. The number of late payments was very different from the agencies. He stated that the committee doesn't have all the information needed right now. As it stands, he can't support this bill. REPRESENTATIVE MCCABE stated he has a huge problem with automatic penalties. This is a poor way to do government, and there is a better way to meet the state's fiduciary responsibilities to pay bills on time. He said automatic penalties on the state could cost the state a whole lot of money. He stated that he can't support running government this way. REPRESENTATIVE VANCE said everyone has highlighted the truth about this bill. It is noted that agencies are struggling. On the fiscal notes, look at the number of position control numbers (PCNs) that are there. She further stated how many are not filled and the funding is there. The agencies still need the staff to keep the workflow going. Some agencies have implemented newer technologies, programs, and artificial intelligence (AI) to address some of the issues. She appreciates the sponsor bringing this forward. She agrees with Representative McCabe that having a penalty may not be the best avenue. Her recommendation is to seek out available PCNs and update fiscal notes. REPRESENTATIVE STORY said she wanted to highlight an earlier discussion about finding out how many penalties the state is paying. REPRESENTATIVE ST. CLAIR state there are seven PCNs requested. The question is whether the agencies need additional people or think that payments are not going to go out on time. CHAIR CARRICK stated that she appreciated the work by this committee. She agrees that the state should pay its bills on time. She has heard in her office from municipalities, nonprofits, and tribal organizations that it wasn't working for them. This legislation tries a different approach to address the issue. REPRESENTATIVE HIMSCHOOT echoed what Chair Carrick said. It is important that agencies have the staffing necessary. She said if the legislature wants government to run more like business, then the state needs to pay on time. 3:47:00 PM REPRESENTATIVE STORY moved to report HB 133, Version L, as amended, out of committee with individual recommendations and the accompanying fiscal notes and to authorize Legislative Legal Services to make any necessary or conforming changes. REPRESENTATIVE MCCABE objected. 3:47:28 PM A roll call vote was taken. Representatives Story, Himschoot, Holland, and Carrick voted in favor of the motion to report HB 133, Version L, as amended, out of committee with individual recommendations and the accompanying fiscal notes. Representatives Vance, McCabe, and St. Clair voted against it. Therefore, CSHB 133(STA) was reported out of the House State Affairs Standing Committee by a vote of 4-3.