[Contains discussion of HB 281.] 11:22:37 AM CHAIR VON IMHOF announced that the final order of business would be consideration of Revised Programs - Legislative. CHAIR VON IMHOF noted that earlier that day, the Office of Management & Budget (OMB) withdrew four revised programs - legislative (RPLs), numbered 08-2023-0130 through 08-2023-0133 and replaced them with two RPLs, numbered 08-2023-0165 and 08- 2023-0166. The other two RPLs on the schedule, relating to the Department of Natural Resources (DNR) and "the Judiciary Department" are unchanged. 11:23:37 AM The committee took an at-ease from 11:23 a.m. to 11:28 a.m. 11:28:30 AM CHAIR VON IMHOF named those available to speak to the RPLs. 11:29:04 AM NEIL STEININGER, Director, Office of Management & Budget (OMB), Office of the Governor, explained that OMB had submitted four RPLs for the Department of Commerce, Community & Economic Development (DCCED) in order to distribute grants to seafood processors. The breakdown into four RPLs was to accommodate the overall grant amount from the U.S. Government of just over $30 million and ensure this fit under the restrictions provided in HB 281 limiting RPLs to no more than $10 million per RPL. Subsequently, it was determined that this manner of dividing the funds did not align with the standards set under the legislation; therefore, OMB has provided the two aforementioned replacement RPLs: one that falls within the Division of Community and Regional Affairs and one that falls within Serve Alaska, both entities housed within DCCED. He indicated that the two new RPLs would provide for at least $21 million of the approximately $31 million in grant awards to be distributed to seafood processors. He confirmed that the new two RPLs are numbered 08-2023-0165 and 08-2023-0166. MR. STEININGER stated another RPL, [numbered 10-2023-5089], is for DNR, in the Division of Geological and Geophysical Surveys, and is related to an award from the Federal Emergency Management Agency (FEMA); another RPL, [numbered 41-2023-0001], is for the judicial system and is related to a Fairbanks Wellness Court enhancement project. 11:30:56 AM CHAIR VON IMHOF reviewed that the original four RPLs were related to funds from the U.S. Department of Agriculture (USDA) Seafood Processors pandemic response due to COVID-19, and the money has been "trying to get out the door for the last year or so." She expressed her desire to issue the money sooner than later. She said the committee is trying to figure out a way to do this under the parameters of the aforementioned legislation. She asked Mr. Steininger to explain the delay in issuing the funds and how the new RPLs work with the parameters set forth by the legislature "last spring." 11:32:42 AM MR. STEININGER named factors that led to the delay in distribution of funds. First, the federal award was delayed "a month or so" from the anticipated delivery early in the calendar year. Second, in attempting to issue the grant guidance, "we had some delays in our ability to actually set up the grant portal in order to have the grantees apply." Further, during that process some of the grantees requested an extension in time to provide their responses. Those factors resulted in OMB being unable to have the grant applications and determinations by the close of the fiscal year; this meant the appropriation had "turned," and it was no longer possible to issue those grants. He said OMB now has the applications and needs access to the funds in order to spend federal receipt authority to make the payments. MR. STEININGER stated that the first set of RPLs would have exceeded the $10 million restriction set by HB 281, because although they were four RPLs each for less than $10 million, they all addressed the same appropriation item. The two RPLs replacing the original four address two separate items. They are the appropriation allocation and the allocation to Serve Alaska, both within the Division of Community and Regional Affairs. He said both allocations would be provided by the division as grant opportunities to fish processors throughout Alaska. 11:35:25 AM CHAIR VON IMHOF clarified her wish to have the full $35 million distributed to the food processors, and that the two replacement RPLs would get $20 million to them, leaving the distribution of $15 million a conundrum. She requested Megan Wallace discuss this issue as it relates to an Alaska Supreme Court decision in Wielechowski v. State of Alaska and whether the Legislative Budget and Audit Committee can appropriate however it sees fit, regardless of statute. 11:36:50 AM MEGAN WALLACE, Director, Legislative Legal & Research Services, Legislative Affairs Agency, stated that "the legislature remains the appropriating body." She continued: The Legislative Budget and Audit Committee is an interim oversight committee, and under AS 37.07.080(h), which is also known as "the RPL process," the governor can submit an RPL asking for increase of an appropriation item based on additional federal, or other program receipts. And then LB&A has the power to review and approve those RPLs. If the LB&A committee does not approve or does not take action, there's a 45-day wait period before the governor can then proceed with expending the additional federal, or other program receipts requested in the RPL. There are several legal issues with ... the two RPLs that are now before the Legislative Budget and Audit Committee based on my office's quick review of the two RPLs sent over this morning. The issues we have flagged really center on the ... RPL ... that is associated with the appropriation on page 5, line 18, of HB 281, and I believe that is RPL 08-2023-0166. And so, that RPL seeks to increase the appropriation for the Serve Alaska allocation. In HB 281, ... the legal issue with respect to that RPL is that while there are multiple RPLs that were submitted, from the text of the RPLs themselves, it just appears to be a singular program, and separating RPLs into multiple RPLs appears to be an attempt to circumvent that Section 77(e) of HB 281, which is now Chapter 11 SLA 2022, ... taking the limit of an increase, those two in appropriation, items FY 23, to no more than $10 million. And so, what this really looks like is a $20 million increase to this program, which was originally approved as an RPL back in December of 2021 by this committee using the appropriation authority for the [Division of] Community and Regional Affairs allocation, which is the allocation that is used in RPL 0165. The other issue that I see with using the Serve Alaska allocation is that it raises appropriation constitutional issues similar to the CARES Act RPLs that came before this committee back in 2020, in that there is no program for the Serve Alaska allocation that is currently used for this purpose. And the RPL statute, under [AS] 37.07.080(h), are arguably not as tended to be used to create appropriations; it's to be used to increase appropriations for items that the legislature has already appropriated for, and the ... legislature cannot delegate to a singular committee to make appropriations during the Interim. 11:41:36 AM REPRESENTATIVE JOSEPHSON asked whether the opportunity would lapse or whether this matter could be attended to in mid- to late January. 11:42:13 AM HANNAH LAGER, Acting Director, Division of Administrative Services, Department of Commerce, Community & Economic Development, explained that the division's concern with distributing the funding is "the continued function of the seafood processors." She indicated that the division has received a number of inquiries from processors anxious to receive the much needed funding. She added, "From the timing of their inquiries it appears that many of their fiscal years may end in December, and so that would be our largest concern would be with January getting the funding in their current fiscal year." 11:43:11 AM SENATOR STEDMAN spoke about collateral damage in the last budget cycle, "when we put the $10 million [cap] on." He noted that this appropriation was "not even on the radar screen" the previous year, "so we end up with an issue in front of us today." He emphasized it is just a matter of sequence and timing to get the money distributed, and he opined that "we need to ... move this quickly as we can to disburse these funds like we have the other COVID relief funds throughout multiple appropriations, without tripping up litigation or disputes with the administration to slow it down." That said, he also emphasized the need to follow statutory guidelines. He expressed concern about the potential of adding some of these funds into a supplemental bill, which although intended as "a fast-track supplemental" is not guaranteed to be quick. He concurred with Representative Josephson that although it is technically possible that the legislature can take quick action once it convenes as a body on an appropriation bill, it is highly unlikely because of the number of members with varying opinions and ideas for additions that result in "an out-of- control appropriation." He stated that he hopes the committee, collectively with the administration, moves forward today to "move as much money on these RPLs through the street as possible." He recommended addressing the "RPL ending in 166" and talking about how to "deal with the rest of them," and he emphasized that "the legislature thought this would be gone in the previous fiscal year, and here it is November, and it should st have been sent out by July 1." 11:46:51 AM MS. LAGER, in response to Representative Spohnholz, proffered that the difference between the two RPLs is just the appropriation. 11:48:00 AM REPRESENTATIVE SPOHNHOLZ expressed concern about the seafood processor industry facing difficulties because the legislature is failing to get the funds delivered. She expressed further concern that the committee may be circumventing statute by advancing two RPLs that are essentially the same, each with a $10 million legal limit. She stated, "I think we would be getting ahead of ourselves by doing that." 11:49:45 AM MS. LAGER, to a question from Representative Tuck regarding the total requested, said she does not have the total of the demand, but award amounts that have been calculated are 28 percent of each grantee's requested need, so over $90 million has been identified. In response to follow-up questions, she said the largest calculated grant amount at this point is $7.4 million for one grantee, with the smallest being just over $800. She said the original RPL was passed on 12/15/21, after a delay of the application process from May. She informed Representative Tuck that Serve Alaska has a commission responsible for awarding grants through the program, but those are grants that come through specific federal funding streams. REPRESENTATIVE TUCK asked, "Could this be one of those federal funding streams?" MS. LAGER answered no. 11:52:43 AM REPRESENTATIVE TUCK commented that while the legislature has appropriation authority, the Legislative Budget and Audit Committee does not. He said because of "poor past practices of this committee" the legislature has put a limit on how much the Legislative Budget and Audit Committee can approve during the Interim. He said he has no problem with "the first" RPL but that the "second one" is "a bit of a stretch." He spoke further about timing with the legislature. 11:54:46 AM SENATOR STEDMAN commented on the cap and reiterated that the funds did not get out in a timely manner, and indicated that the Legislative Budget and Audit Committee is "on the front lines during the Interim." CHAIR VON IMHOF suggested it would make sense to pass RPL 08- 2023-0165, for $10 million. She said this money has been in limbo for a while. She pointed out that the committee would meet again in December 2022 and could address the remaining $25 million then. She said, "This money that we're talking about was passed ... December 21, 2020, under the Trump Administration and signed into law on 12/27/20." She said HB 281 specifically thth calls out the 117 and 118 Congress in terms of applying the th limitations; however, these funds are from the 116 Congress. For that reason, she suggested the committee may decide it has the wherewithal to put in the other $25 million through the original process. She suggested everyone educate themselves between now and the next meeting in order to make a "timely, thoughtful decision." 11:57:43 AM REPRESENTATIVE TUCK spoke to the function of the Finance Committee in ensuring money goes where needed. He said an RPL process done on the fly does not allow him to do his homework. He emphasized the committee had just received the two replacement RPLs. He indicated that he has a lot of questions, and he further indicated approval of Chair von Imhof's suggested process going forward. CHAIR VON IMHOF remarked that considering the unusual circumstances, it would benefit the committee to extend the discussion "30 more days." 11:59:47 AM REPRESENTATIVE JOSEPHSON agreed with the extension of time but emphasized that he would "strictly construe this law." He said the Legislative Budget and Audit Committee has existed for 60 years and has not been challenged in court, but he agrees with Representative Tuck that its members stand for the other members of the legislature during Interim. Further, the legislature's attorney has given two reasons that the RPLs are problematic. 12:00:49 PM CHAIR VON IMHOF said she thinks it is important to weigh all evidence between now and the next meeting. She said she thinks the committee is looking at "a disaster declaration," and the committee "kicked it forward," and there was some question that that may have been a violation of statute and authority, but the committee "went ahead and did it anyway" and then ratified it. Whether the current situation can have the same circumstances applied to it is up for debate, she stated. 12:01:46 PM MR. STEININGER, at the invitation of Chair von Imhof, addressed the remaining RPLs in the committee packet. He reviewed that RPL 10-2023-5089 is for the Division of Geological Geophysical Surveys, within the Department of Natural Resources. The award is from FEMA for an amount just under $3 million. He further reviewed that RPL 41-2023-0001 is for the Judiciary in the amount of $128,300 to work on the Fairbanks Wellness Court enhancement project. 12:02:56 PM REPRESENTATIVE TUCK moved that the Legislative Budget and Audit Committee approve the following revised programs - legislative: RPL 08-2023-0165, Department of Commerce, Community & Economic Development, USDA Seafood Processors pandemic response and safety block grant program, for $10 million for federal operating receipts; RPL 10-2023-5089, Department of Natural Resources, Division of Geological and Geophysical Surveys, for $2.96 million of federal operating receipts; and RPL 41-2023- 0001, Judiciary, Fairbanks Wellness Court enhancement project, for [$128,300] for federal operating receipts. 12:03:58 PM REPRESENTATIVE KAUFMAN asked for confirmation on the amount of the RPL for Judiciary. REPRESENTATIVE TUCK confirmed it should be for $128,300. 12:04:38 PM CHAIR VON IMHOF announced that there being no objection, the RPLs were approved.