HOUSE BILL NO. 54 "An Act making supplemental appropriations, reappropriations, and other appropriations; amending appropriations; capitalizing funds; and providing for an effective date." 2:53:45 PM LACEY SANDERS, BUDGET DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, addressed the supplemental request legislation that fell outside of the disaster need. The bills were separate in anticipation of needing to move the disaster legislation more quickly. She provided a PowerPoint presentation titled "HB 54 - FY2019 Capital and Operating Supplemental Overview" dated March 8, 2019 (copy on file). She began on slide 3 and reviewed items covered by the bill including reductions in spending, formula program adjustments, salary adjustments related to the classification of trooper positions, operating adjustments, capital projects, and several transfers back to the General Fund. The total bill was $110.4 million, made up of $92 million in federal funding, $17.7 million in other funds, and $51,800 in general funds. Ms. Sanders provided a historical comparison of supplemental appropriations (excluding disasters) from FY 14 to FY 19. She noted that supplemental requests varied from year-to-year and explained that costs could be unpredictable. 2:55:51 PM Ms. Sanders referenced a spreadsheet outlining FY 19 supplemental requests ["HB 54 - FY2019 Supplemental Requests" released January 28, 2019 (copy on file)]. She noted she had briefly reviewed the items during a House informational meeting in the past. She offered to review the items or take questions. Vice-Chair Johnston looked at item 16 related to Medicaid funding. She remarked that in the past, large supplementals could be driven by underfunding Medicaid. She asked if the proposed amount would be sufficient. Ms. Sanders replied that OMB had worked frequently over the past several months with the Department of Health and Social Services (DHSS) to identify what the need was and should be. She reported that OMB believed the funding was sufficient to meet Medicaid claims through the remainder of the fiscal year. Vice-Chair Ortiz asked how the majority of the $15 million [in Medicaid funds] was dispersed. He wondered who benefitted from the funds. Ms. Sanders answered that she was not a Medicaid expert, but it was her understanding the funds went towards payments due to Medicaid providers. She clarified the funding was to get through the end of the fiscal year to reimburse providers for costs incurred in the current fiscal year and not to end payments and shift them into the next fiscal year. 2:58:00 PM Representative Josephson looked at item 18 [related to Village Public Safety Officer (VPSO) program] and asked if the reduction was due to the inability to hire [VPSOs] and spend the money. Ms. Sanders clarified the reduction would align VPSO program funding. It was the administration's understanding that grantees receiving the funding were not able to fully use the funds on an annual basis due in some part to the inability to fully fill the VPSO positions. Co-Chair Foster stated that the prior year the legislature had included language in the operating budget that specified any excess funds would go towards recruitment and retention of VPSOs. He asked if any efforts had been made to increase recruitment and retention of VPSOs. Ms. Sanders recalled through conversations with the Department of Public Safety that the department was working on the issue. She would follow up with the department to learn what efforts had been made. Representative Carpenter asked about a $5 million reduction from the Alaska Gasline Development Corporation (AGDC) [item 27, page 2]. Ms. Sanders responded that when OMB was working on supplementals it had asked each agency to review the funding they had been allocated for the current year and the funding they had available in funds. She detailed that AGDC contributed $5 million back to the General Fund; the funds were in excess of what AGDC needed to get through the end of the fiscal year. The agency was working on what its plan moving forward would be. She clarified that the reduction did not mean the agency would not come back to the legislature for funding in the future once it had a developed plan. Representative Knopp stated that the [administration's] request had come in before the Federal Energy Regulatory Commission (FERC) had moved the process back by four months for the environmental impact statement (EIS), which would extend AGDC's timeframe. He asked if the administration believed AGDC could get through with the remaining funds. Ms. Sanders responded that it was her understanding that AGDC's remaining funds were sufficient to get the agency through the end of the fiscal year. Representative Carpenter asked when the money had been identified and when the administration had been notified to include it on the spreadsheet. Ms. Sanders answered that supplementals had been put forward on January 28. She shared that if there was a concern, AGDC would reach out to OMB; she had not heard anything from the agency. 3:01:53 PM Vice-Chair Ortiz pointed to item 12 - a $20 million reduction to DEED [for the repeal of one-time state aid to school districts for FY 19]. He referenced discussion in an informational hearing about the distribution of funds to the district. He recalled hearing the distribution would be made as soon as some type of action was taken by the legislature. Ms. Sanders replied in the affirmative. She detailed that the funding would be distributed if the legislature took action and the requested repeal proposal was not moved forward. Vice-Chair Ortiz stated it was his understanding that the previous legislature had already taken the necessary action for the $20 million to be distributed to districts. He thought the scenario presented was a catch-22. He believed action was only necessary if the legislature decided not to distribute the money. He asked if the legislature could issue an intent statement indicating its desire to follow the action taken in 2018. Co-Chair Foster replied that the item could be left out of the supplemental that would ultimately be passed by the House. Additionally, the House could issue a sense of the House or the House and Senate could issue a joint resolution to send a message of the legislature's intent. Vice-Chair Ortiz remarked that action on the supplemental would be necessary [to provide clarity on the issue]. He remarked that districts were in limbo until action was taken on the bill. He asked if there was action the legislature could take outside the supplemental to allow the distribution of the funds. Co-Chair Foster responded that he did not envision taking months to pass the supplemental. He estimated it may be one month. He noted that if there were issues in the meantime, the committee could talk about the options. He did not believe the supplemental process would be drawn out. HB 54 was HEARD and HELD in committee for further consideration. Co-Chair Foster canceled the 9:00 a.m. meeting for the following Monday. He reviewed the schedule for the following week.