SENATE BILL NO. 25 "An Act relating to inactive state accounts and funds; relating to the curriculum improvement and best practices fund; relating to the fuel emergency fund and fuel emergency grants; relating to the special Alaska Historical Commission receipts account; relating to the rural electrification revolving loan fund and loans from the fund; relating to the Southeast energy fund and grants from the fund; and relating to the Exxon Valdez oil spill unincorporated rural community grant fund and grants from the fund." 2:21:55 PM Co-Chair Foster requested a brief recap of the bill. SENATOR JAMES KAUFMAN, SPONSOR, introduced himself and provided a brief overview of the bill. He explained that SB 25 was a "simple improvement bill, which reduced administrative costs and complexity associated with the maintenance and tracking of accounts that were no longer needed but were still open. The legislature had a history of creating accounts that eventually sat dormant or the original purpose of the account is no longer necessary. The bill establishes a bi-annual review of funds to identify funds that are no longer needed. The legislature would ultimately decide which funds could be closed. He summarized the bill as an elegant little bill or performance improvement bill that reduced unneeded accounts and funds. Co-Chair Foster asked Senator Kaufman if he wanted to discuss some of the accounts that could potentially be eliminated. Senator Kaufman answered that many of the accounts had names that sounded compelling but were intensively vetted. He mentioned a handout (copy on file) included in the bill packet that contains a sample of the funds for potential elimination. 2:24:32 PM Alexei Painter, Director, Legislative Finance Division, explained the zero fiscal note (FN1 (LEG). He indicated that the Legislative Finance Division (LFD) prepared the fiscal note and determined that LFD would be able to absorb the additional duties described in the amending language of the legislation within its current resources. He added that the bill required the division to create a report by the session beginning in 2025. 2:25:24 PM Representative Galvin cited a list of inactive funds included in the sponsor statement. She reported that the sponsor statement mentioned analyzing 39 funds. She wondered why only five were listed. 2:26:18 PM MATTHEW HARVEY, STAFF, SENATOR JAMES KAUFMAN, confirmed that there was a larger list of inactive or unused funds. He offered that he had received a memo listing which funds could be repealed under the single subject rule and which would require specific bills because they affected more than one section of Alaska Statutes. They began the process by looking at funds on the single subject rule list and through the vetting process found stakeholders of various funds that had contractual obligations or outstanding loans that were tied to some of the funds, which reduced the list from 9 funds to 5 funds that were compiled under the single subject rule. He exemplified that the Rural Electrification Revolving Loan Fund was duplicative with the Electrical Service Extension Fund that was currently in use for the same purpose. 2:27:43 PM Representative Tomaszewski asked how funds were managed that were just sitting there. He questioned why there was no active management and whether the state was spending General Funds (GF) to manage the inactive funds. Mr. Painter replied that the funds proposed for repeal all had a zero balance and did not have a cost associated for management of the funds. He added that after the failure of the reverse sweep for a few years, the accounts had a zero balance. Treasury did not charge basis points to manage many of the small accounts, it would be impractical to charge pennies for their management. 2:28:53 PM Representative Hannan asked about the Fuel Emergency Fund listed on the sponsor statement. She noted that the reason for repealing the fund was because the Disaster Relief Fund statute was amended in 2000 to add fuel shortages as an allowable use. She determined that the governing statute for the Disaster Relief Fund appeared to require that a disaster had to be declared. She discovered that the Fuel Emergency Fund did not need a disaster declaration to disperse funds. She wanted to ensure that another inefficient step was not being created unnecessarily, like the need to declare an emergency, through elimination of the fund. Mr. Painter responded that the legislature had not put money into the fund since 1994. He deduced that while there were theoretical instances in which the fund had a purpose, it was left unfunded for decades and could not serve the purpose. He supposed that the legislature could begin using the fund again. Representative Hannan asked if the Disaster Relief Fund statute required that there be a declared disaster to expend the funds. Mr. Painter responded in the affirmative. Representative Hannan expressed concern about eliminating an emergency fund. She had heard of communities running out of fuel. In circumstances where a disaster was not declared, she was apprehensive to eliminate the fund and was interested in recapitalizing the fund. Senator Kaufman responded that the Disaster Relief Fund Statute was amended to add fuel shortages as an allowable use, making the fund unnecessary. Co-Chair Foster asked if a disaster would need to be declared in order to use the Disaster Relief Fund. Senator Kaufman answered in the affirmative. Co-Chair Foster was also concerned that there might be uses for the fund. 2:32:58 PM Representative Josephson assumed that each of the funds were established under a bill. He asked if there would be placeholder or hollow statutes without an accompanying fund. He deduced that under the title of cleanup there would be laws with no purpose. He asked whether he was correct. Senator Kaufman found the inverse to Representative Josephsons scenario and discovered that the statute had moved on, but the fund still existed. He felt that the most important aspect of the bill was not the list but establishing the mechanism to cleanup unused funds. Co-Chair Edgmon commented that the amount of funds in the state statutes were expansive. He understood the need to rid the books of dormant funds. He favored the elimination of the Fuel Emergency Fund being removed as long as the Disaster Relief Fund remained. He mentioned that the Bulk Fuel Loan Upgrade Program in the Capital Budget dealt with the issue. He questioned how the Fuel Emergency Fund would be allocated on a programmatic basis acknowledging the fact that if one community was in need many others would be in need. Co-Chair Foster noted his opinion had been swayed by Co- Chair Edgmon. He voiced that the current process was working. 2:36:06 PM Co-Chair Foster OPENED Public Testimony on SB 25. 2:36:36 PM Co-Chair Foster CLOSED Public Testimony. 2:37:13 PM Co-Chair Johnson moved to was REPORT CSSB 25(FIN) out of committee with individual recommendations recommendation and the accompanying fiscal note. 2:37:32 PM Representative Ortiz OBJECTED for discussion. Representative Ortiz guessed that prior to the bill, there was no one looking at the accounts. He wondered why the accounts were not being scrutinized prior to the bill and why was a bill necessary to close the accounts. Senator Kaufman answered that the opportunity was there, but the focus and the process was not there. The bill provided the statutory framework. He believed that the bill created a routine process that benefitted the state. Representative Ortiz WITHDREW his OBJECTION. 2:39:27 PM There being NO OBJECTION, it was so ordered. CSSB 25 (FIN) was REPORTED out of committee with nine "DO PASS" recommendations, and one amend recommendation and with one previously published zero fiscal note: FN1 (LEG).