HOUSE BILL NO. 283 "An Act making appropriations, including capital appropriations, reappropriations, and other appropriations; making supplemental appropriations; and providing for an effective date." 3:54:52 PM Co-Chair Merrick relayed that the bill was heard during the morning meeting [050322 9:03 A.M.]. Representative Rasmussen referenced page 9, lines 25 through line 26, that appropriated $30 million for state funded road and bridge completion for House districts 1 through 40 and wondered whether there was a list of projects. DOM PANNONE, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR (via teleconference), replied that the funding was for any existing state projects that needed additional funding for completion and would be determined by the department. Representative Rasmussen wanted to know where the funding would be spent. Mr. Pannone responded that the department could provide a list of targeted projects to the committee, but currently there were not any intended or named projects associated with the funding. JOHN BINDER, DEPUTY COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES (via teleconference), did not have any additional information to offer. He would provide a potential list of projects, but nothing was currently designated. Representative Rasmussen asked if the department requested the funds. She wondered how the funding came to be included in the budget. Mr. Binder deferred to Mr. Pannone. Mr. Pannone answered that he did not believe it was a governor's requested item. He believed it had been added by the legislature. 3:59:30 PM AT EASE 4:08:26 PM RECONVENED Representative Rasmussen referenced the $30 million addition for road and bridge completion that was added by the legislature. She wondered how and when it had been added. MICHAEL PARTLOW, FISCAL ANALYST, LEGISLATIVE FINANCE DIVISION, replied that it had been added by the Senate. Representative Rasmussen asked for the total number of funding added to the capital budget by the Senate. Mr. Partlow would follow up with the information. 4:09:54 PM Representative Wool noted that there had been prior discussion about the Port of Alaska located in Anchorage. He asked if there was any state relationship to the port. Mr. Pannone deferred to a colleague. ANDY MILLS, LEGISLATIVE LIAISON, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES (via teleconference), answered that as part of the department's long range freight plan the Department of Transportation and Public Facilities (DOT) was developing a holistic statewide approach to freight and cargo and had a department member on the team of coordinators for the Port of Anchorage involved in the planning effort. He indicated that DOT had no specific planning or directional efforts for the port since it was a municipal port. 4:12:30 PM Representative Wool stated his understanding of the answer. He was interested to hear more about the departments holistic freight plan. He determined that Alaska had freight entering the state by many different means and entry points and DOT likely had the data on all the freight entering the state. He recalled testimony stating that 50 percent of all freight came through the port in Anchorage and was distributed to 90 percent of its communities. He wondered how DOTs developing long range freight plan would mesh with the Port of Anchorages plan and how the department would solve any problems with the port. Mr. Mills replied that the department would provide the prior copy of the freight plan and some of the efforts taken. He explained that the freight plan was a document like the long range transportation plan that accounted for future capacity needs. The department anticipated the future capacity needs of multimodal and intermodal transportation systems statewide. The department collected information from stakeholders but beyond that it currently lacked specific data regarding the port but had an estimate of the future potential of the port. The information gave DOT a picture of what infrastructure was necessary to accommodate the port. Representative Wool assumed that most of the freight entered Alaska by ship. He asked what percentage of the state's freight came via ship. He assumed the number was significant. Mr. Mills recalled that it was around 80 percent, but he did not know for certain. He understood the Ted Stevens International Airport received a substantial amount of cargo, but he lacked the data in comparison to the port. 4:16:48 PM Representative LeBon referenced the Alaska Marine Highway System (AMHS) funding including $30 million in federal funds. He asked for verification that the federal money had been secured by the state's congressional delegation. Mr. Partlow answered in the affirmative. He added that the funding was part of the $200 million for rural ferry service as part of the federal Infrastructure Investment and Jobs Act (IIJA). Representative LeBon looked at the $20 million for AMHS and asked if it had been included in the governor's original budget. Mr. Partlow replied in the affirmative. He detailed the funding was a typical yearly expense for maintenance and repair of vessels whereas the $30 million was specifically for the design of a mainline vessel. Representative Carpenter cited section 14, page 57 of the bill and read, the expended and unobligated balances of the following appropriations are reappropriated to the Department of Health reappropriated from the Department of Health and Social Services. He pointed to the first reappropriation from the 2007 budget for DHSS for the Medicaid Management Information System (MMIS) completion in the amount of roughly $12 million for MMIS completion. He asked for the status of the MMIS completion from 2007 and questioned why there was still remaining funding to be reappropriated after 15 years. 4:20:08 PM Mr. Partlow agreed that it was a very old capital appropriation. He informed Representative Carpenter that as long as there was activity on an old appropriation it could go on in perpetuity. The money would lapse after several years without any expenditure or continuance of work on the project. The lapsed funding would be considered for the legislature to reappropriate it for a different purpose. Typically, funding for capital projects lasted for 5 years but it could last longer if it had ongoing activity. Representative Carpenter asked for a definition of ongoing activity as it pertained to the MMIS. In 2007 they had used the word completion. He asked what a continued effort to complete the system may be. Mr. Partlow suggested that the department could speak more precisely about the activity. He was aware that it was an ongoing project, and they were not at completion. Representative Carpenter turned to line 2 of the reappropriation for the Department of Health in the amount of $24 million for the Statewide Electronic Health Information Exchange System reappropriated to the Statewide Electronic Health Information Exchange System. He inquired whether it was a similar situation where there was ongoing activity for 13 years. 4:22:34 PM Mr. Partlow answered in the affirmative. He received information that the two projects had a significant amount of federal funding authority, so it was not state funding sitting in a bank account; it represented the authority to expend federal funding for the projects. Representative Carpenter stated that it would be helpful to know whether the DHSS funding was federal or state. Mr. Partlow would follow up. Representative Carpenter pointed out that there were many reappropriations he had questions on that were over 10 years old in the millions of dollars. 4:23:36 PM Co-Chair Foster referenced the earlier question by Representative Rasmussen regarding the governors original requested amount and how much the Senate added. He pointed to a document titled Capital Budget Agency Summary House Structure, dated April 28, 2022, (copy on file), which was prior to the adoption of the current Committee Substitute (CS). He relayed that the governor had a total of nearly $311 million in Unrestricted General (UGF). When the committee adopted the Senate version the UGF amount increased to approximately $707 million. He surmised that the governor requested $311 million, and the Senate added roughly $400 million. Representative Rasmussen hoped someone was online to answer Representative Wools prior question regarding how much freight entered the Port of Alaska. DAVID KARP, SENIOR VICE-PRESIDENT, MANAGING DIRECTOR, SALTCHUK, ANCHORAGE (via teleconference), answered that he did not know the specific amount of the volume of freight that entered the Port of Alaska. He thought that the broader question was what the alternatives to the port were for bringing significant volumes into the state. He remarked that the other ports on the road system were viable, but it was necessary to consider the types of infrastructure required to accommodate different types of vessels. He viewed viability from a business continuity perspective and believed that Seward was the most viable port. However, proximity to market was a key consideration when considering the impacts on surface transportation. He noted that Saltchuks ships unloaded over 400 containers twice a week, but the company called the Port of Anchorage home. Representative Rasmussen asked if the volume at the Port of Seward increased whether it would cost consumers more when transporting the goods to the Interior via road or railroad. Mr. Karp responded that it was a difficult question to answer due to the number of variables associated with the transportation infrastructure from Seward to the Interior. He deemed that it was a reasonable conclusion to draw that being closer to the market increased efficiency. 4:28:34 PM Representative Rasmussen asked if Mr. Karp was aware of any road access to the interior from Seward if something caused the Seward Highway to shut down. Mr. Karp replied in the negative. He pointed out that one of the things that made Seward unique was that it offered both rail and highway access. Vice-Chair Ortiz asked whether Whittier was a viable option to become a major port for the state. Mr. Karp related that after the 2018 earthquake Saltchuck thoroughly analyzed relocating short-term and long-term operations and discovered that the Port of Seward was the preferred alternative. He elucidated that considering water depth, docking capacity, and shore side infrastructure Seward was the best alternative. He noted that from a business perspective the Port of Alaska in Anchorage made the most sense due to its proximity to market. 4:31:18 PM Representative Carpenter restated his prior questions regarding reappropriations. He asked why a 13 year old item was still being carried forward for what was originally a system completion project. NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, answered that the appropriations were still ongoing and needed to be sorted into the two new DHSS departments. He delineated that the MMIS had been an ongoing IT project for quite some time with several appropriations over the years. He reported that much of the funding was federal in addition to the state General Fund (GF) listed in the bill. As the projects progressed and changes were made the projects remained active in the state's accounting system and any ongoing projects were split into the two new departments. He deferred to a colleague for additional detail. 4:33:29 PM SYLVAN ROBB, ASSISTANT COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES (via teleconference), responded that she concurred with Director Steiningers remarks. She explained that the MMIS was a complex system that took many years to develop, and the department was still using the funding. She was also ensuring that all expenditures in older capital projects were properly accounted for before they closed the projects as they divided into two departments. She anticipated that they may find several of the projects may be able to be closed but they wanted to proceed with caution. Representative Carpenter asked how complete the MMIS was in percentages. Ms. Robb was uncertain and offered to provide the answer. Representative Carpenter opined that 15 years was a long time to drag out a project and it failed the common sense test. 4:35:39 PM AT EASE 4:35:47 PM RECONVENED Representative Carpenter referenced the second project in his earlier question. He asked if the original appropriation was creating an information exchange system and whether the system was still ongoing 13 years later. Ms. Robb answered that the Health Information Exchange (HIE) was an ongoing project. She indicated that the exchange was a tool that allowed healthcare providers to connect their electronic health records systems. The HIE was mandated in state statute and was required by the Centers for Medicare and Medicaid Services. Alaska was not the only state that had a long runway for setting up the information exchange and it was something all states were working on. It had been a lengthy process for almost all states. She added that as technology changed the project had morphed over time. Representative Carpenter wanted to know how much of the $25 million appropriation was state funds versus federal funds. He pointed to the item 5 reappropriation for Electronic Health Record Incentive Payments on page 57, Section 14 of the bill in the amount of $36.5 million from FY 2011 and asked why the funding was carried forward since 2011 and what was the split between federal and state funding. 4:38:28 PM Ms. Robb answered that the state was no longer making the incentive payments for participation in HIS. She mentioned that the department was in the middle of an active effort to ensure capital appropriations were cleaned up and they were reluctant to close out a few projects before the cleanup process was completed. She reiterated that the administration was in the process of splitting DHSS into the Department of Health and the Department of Family and Community Services. She commented that DHSS had many capital projects and she had hoped the process would have been completed sooner. Representative Carpenter reasoned that there was a benefit to splitting the department. He discerned that before the funds were reappropriated it was logical to know whether the funds were needed and if not, the state portion could be reappropriated somewhere else or federal money could be returned. He reiterated that in Section 14 there were a number of reappropriations that were a decade or older and he had the same question for each item. He asked for a blanket request to understand each item and whether they were necessary. Mr. Steininger answered in the affirmative. He noted that the department could quickly provide a list through its annual report, Capital Appropriation Status Report. He furthered that there was a significant amount of administrative work to divide the department and much more time was spent on that. When the reappropriations were requested, DHSS decided where the funding belonged and wanted to work to decide what reappropriations were still active or could be closed out in the next fiscal year. The task was sidelined in the hierarchy of tasks that prioritized what other administrative functions were valuable to ensure an effective and successful transition. He agreed that keeping outdated capital projects ongoing created an unnecessary administrative burden. However, the focus of the transition was to clear up administrative issues first. 4:42:50 PM Representative Carpenter understood Mr. Steiningers logic behind the decision. He asserted that the Capital Budget for the current year needed immediate action. He wanted to consider the reappropriations in the current capital budget and make decisions. He stated that the items were on his agenda. He requested more information regarding the $100 million to determine what needed to be reappropriated in the FY 23 budget and what could immediately be made available for other priority items. Mr. Steininger would follow up with the information. Vice-Chair Ortiz appreciated Representative Carpenters line of questioning. He wondered whether the $100 million was appropriated each year since the initial appropriation and whether the funds were expended each year. Mr. Steininger replied that the initial appropriation year was listed and was expended over time as the project progressed. He elaborated that part of the annual review included looking at capital projects to determine whether there were annual meaningful expenditures or ongoing obligations to decide if they should be administratively terminated and trigger an effective lapse date. He furthered that many of the funds remaining on older projects tended to be federal authority so there was less incentive to reappropriate the funding. He reiterated that the capital appropriation report produced by OMB showed the detail of the unobligated amounts of both GF and federal authority. He would provide a summary showing all the projects to show which had either general funds or federal authority. Vice-Chair Ortiz exemplified line 23 and noted appropriations for $36 million and $518 thousand for the Electronic Health Record Incentive Payments in 2011. He wondered if since 2011, the department was in the process of expending the $36 million. Mr. Steininger answered in the affirmative. He added that the incentives were sent to practitioners for establishing electronic health records. He deferred to Ms. Robb for details. Ms. Robb replied that the department would provide the status report to the committee. She agreed that most of the projects listed had primarily federal funding without GF match and could not be reappropriated for other projects. 4:48:01 PM Representative Carpenter asked if the dollar figures reflected the year the appropriation had been made or the remaining dollar figure. Mr. Steininger asked for a copy of the bill. He replied that the numbers listed in the bill were the original appropriation amounts. Representative Carpenter asked OMB to provide the actual remaining amounts to be reappropriated in the follow up information. 4:49:48 PM Representative Carpenter assumed that whatever remaining amount of federal funds there were funds sitting in the General Fund and Other Non-Segregated Investments (GeFONSI) or other accounts. He wondered whether the federal funds were accruing interest, were usable for other purposes, or just sat in an account. Mr. Steininger answered that the federal funding was receipt authority and was not cash on hand. He clarified that most federal programs operated on a reimbursable basis. The state sent monthly or quarterly bills to the federal government for reimbursement. Co-Chair Merrick noted there would be public testimony for HB 283 the following day and would be limited to two minutes. HB 283 was HEARD and HELD in committee for further consideration. Co-Chair Merrick reviewed the schedule for the following morning.