HB 177-REVISED PROGRAM: APPROPRIATIONS  4:45:05 PM CHAIR KREISS-TOMKINS announced that the final order of business would be HOUSE BILL NO. 177, "An Act relating to an increase of an appropriation due to additional federal or other program receipts; and providing for an effective date." 4:45:14 PM The committee took an at-ease from 4:45 p.m. to 4:47 p.m. 4:47:02 PM CHAIR KREISS-TOMKINS invited Representative Tuck, prime sponsor, to introduce HB 177. 4:47:32 PM REPRESENTATIVE CHRIS TUCK, Alaska State Legislature, as the prime sponsor, introduced HB 177. He said HB 177 attempts to put limitations on the Revised Program Legislative (RPL) process. The RPL process, he said, was originally to allow the governor to receive additional funds from other sources, mostly from the federal government, any time the legislature has previously set up a program and appropriated money for that program. However, he noted, this last year the governor took liberties to set up his own programs from funding sources that the legislature did not first establish, and this was never constitutionally challenged nor challenged in the courts. There was an injunction, but the injunction was to stop the process. It went to the Alaska Superior Court and was never ruled upon, but the court looked for legislative action. So, this last year the legislature ratified what the Legislative Budget & Audit Committee had done. For injunction purposes, Representative Tuck explained, the Alaska Superior Court judge is looking for some sort of legislative action, but it could be argued that that wasn't the appropriate legislative action since at no time during that time can any individual member of the legislature amend that specific RPL, which shows that the legislature did not have full appropriations powers. So, he continued, HB 177 is a cleanup bill allowing the legislature to continue being the appropriators for the legislature. The bill would establish sidebars and limitations so that an RPL introduced by the governor to the Legislative Budget and Audit Committee could not go forward 45 days later if the committee doesn't approve or doesn't take up that RPL. 4:50:29 PM REPRESENTATIVE TUCK presented a sectional analysis of HB 177. He explained that Section 1, page 1, lines 5-7, would amend AS 37.07.080(h) to clarify that the RPL process is only available for additional funds for existing programs or projects that have already been funded by the legislature. He said page 2, lines 3-8, would amend AS 37.07.080(h)(3) to require approval by the full legislature if the Legislative Budget & Audit Committee recommends against the RPL. This would eliminate the governor's ability to act unilaterally on his or her own 45 days later, he explained, so that only by approval from the legislature could the governor move forward. 4:51:26 PM REPRESENTATIVE CLAMAN offered his understanding that under HB 177 the Legislative Budget & Audit Committee could approve a substantial increase in an appropriation and the appropriation would never come back to the legislature. Only if the Legislative Budget and Audit Committee rejected the governor's proposed program, would it get back to the legislature. REPRESENTATIVE TUCK replied correct. He said that, currently, if the Legislative Budget & Audit Committee doesn't take it up or doesn't approve it, the governor can act anyway 45 days later. So, really, the only purpose of the Legislative Budget and Audit Committee to take it up is to speed it up, but not to require the full legislature to take it up. REPRESENTATIVE CLAMAN offered his understanding that the RPL process is a take-it-or-leave-it framework. Regarding HB 177, he asked whether there is room for the Legislative Budget and Audit Committee to negotiate changes with the governor or whether it is still a take-it-or-leave-it structure, or the bill doesn't say. REPRESENTATIVE TUCK responded that the process is that if the Legislative Budget and Audit Committee fails to adopt an RPL, the governor then has two choices. The first choice is to wait the 45 days. [The second choice is] to withdraw that RPL since an RPL cannot be amended, and then introduce a new RPL that is accommodating to the legislature's wishes. 4:53:31 PM REPRESENTATIVE CLAMAN posed a scenario in which the governor presents an RPL to the Legislative Budget and Audit Committee and the committee says it will agree to 50 percent but not 100 percent. He asked whether the Legislative Budget and Audit Committee would need to reject that RPL and then the governor would come back or whether in those negotiations there is some way to negotiate that in the process before it gets officially rejected. REPRESENTATIVE TUCK answered no, it is going back to the take- it-or-leave-it scenario until the governor gets it in such a form that the Legislative Budget and Audit Committee will approve it. He said there is no way to change the language or the amount during a committee hearing because the Legislative Budget and Audit Committee does not have that ability to amend. He explained that it is already a gray area on whether the governor should have this power in the first place. That power is granted to the governor through the RPL process written under AS 37.07.080(h), as well as what the legislature puts in the operating budget. The problem with the Legislative Budget and Audit Committee being able to amend that is that the committee is basically acting on behalf of the full legislature, and that is where it is granting too much power to the committee on behalf of the legislature. So, technically, an RPL cannot be stopped because 45 days later once "we grant those permissions" to the governor he can act anyway. He clarified that when he says "grant those permissions" he is not talking about by the Legislative Budget and Audit Committee but by the statutes along with whatever is put into the operating budget. Representative Tuck related that this last year $1.6 billion came through the Legislative Budget and Audit Committee. There are programs that were never set up by the legislature, there are programs that were never in existence, programs that the governor unilaterally set up on his own. That is not the intent of the RPL process, he stressed, [the legislature] is the appropriations body, and that was exercising way more power than what is granted in statute and granted in the operating budget. 4:56:39 PM REPRESENTATIVE CLAMAN stated he likes HB 177 because he didn't like the process last year as he thought it was way too much power to the governor and [the legislature] had given up too much power as the appropriating body. He posed a scenario in which the governor comes in with an RPL for $100 million and, via negotiations before the committee ever sits, it becomes clear that committee members don't want to agree to the $100 million. He asked whether, under the framework of HB 177, the governor would be able to withdraw that RPL and resubmit an RPL for $50 million. REPRESENTATIVE TUCK answered yes and advised that that is the way it is currently. As well, he said, that opportunity would still be there through this legislation. 4:58:09 PM REPRESENTATIVE TARR remarked that a main benefit of HB 177 is that it would force it to be used the way it is supposed to be used with already established programs. She cited the [2020] business assistance program as an example of a program that was done improperly, causing delay in businesses receiving the funds. She stated that in addition to the separation of powers and cleaning up of the process as identified by the courts, the other benefit of HB 177 is that it would naturally mean that the programs would already exist, and if additional funds were to come through and if things needed to be changed there would be the ability to do that. REPRESENTATIVE TUCK recounted that as introduced to the Legislative Budget and Audit Committee, the RPL for small business relief funds was for loans, not grants. After the committee said that would be a problem, he continued, the governor pulled that RPL and re-submitted an RPL as grants. However, the Alaska Industrial Development and Export Authority (AIDEA), which only does loans, had already started a request for proposal process to get banking institutions to administer those loans. Upon being converted to grants, the request for proposal had to be modified and there was no response from financial institutions; it took three RPLs to finally get institutions to respond. The governor then ended up running the money for the RPL process through the Department of Commerce, Community and Economic Development (DCCED) because that is where grants are administered, and then money was transferred to AIDEA and AIDEA exercised its procurement policies to get institutions to do that. So, Representative Tuck continued, it was very messy and there are three questions: Did people receive the money who really needed to receive the money? Did people get money who should not have gotten the money? Did the program really do what it was wanted to do? He said the answer is probably no on all three questions. He stated he understands why, during a pandemic, the vote was to overrule the [committee] chair to get those monies out rather than to allow the full legislature to do that. He said HB 177 would put up sidebars to prevent that from happening again. 5:02:56 PM REPRESENTATIVE TUCK addressed Section 1 of the bill. He said a problem with the Legislative Budget and Audit Committee having the powers to amend is the same problem that is had on the second page, which is the committee having the power to stop an RPL. He pointed out that currently the governor can act within 45 days after submitting an RPL if the Legislative Budget and Audit Committee takes no action. He suggested a potential amendment to the bill that would: stop [the governor] for 45 days for anything not exceeding $20 million, stop the governor for 90 days for anything between $20 million and $50 million, stop the governor for 180 days for anything between $50 million and $100 million, and stop the governor for 270 days for anything over $100 million if the Legislative Budget and Audit Committee does not act. That would take it into the legislature coming back into session, Representative Tuck explained. The legislature has difficulty calling itself into a special session, he continued, and if the governor doesn't call the legislature into a special session to appropriate these funds, then the governor cannot act until these timeframes are up. This would give the legislature time to get its act together to call a special session if the Legislative Budget and Audit Committee did not approve an RPL. REPRESENTATIVE TUCK, responding to Chair Kreiss-Tomkins, allowed that the legislature does not like special sessions and said a reason for having the RPL process is so special sessions can be prevented. However, he added, a balance is needed so the governor doesn't just do whatever he or she wants. 5:05:05 PM REPRESENTATIVE EASTMAN asked whether the Legislative Budget and Audit Committee can sponsor bills. REPRESENTATIVE TUCK replied that because the Legislative Budget and Audit Committee is a joint committee made up of both the House and Senate, the only way the committee can introduce bills is through the Rules Committee, much like the governor introduces a bill through the Rules Committee. In this case, he stated, he decided to introduce this legislation in the House. 5:05:48 PM REPRESENTATIVE EASTMAN allowed he is not acquainted with the procedures of the Legislative Budget and Audit Committee and that this is his first time to deal with this statute. He drew attention to the language on page 2, line 2, that states "not initiate the additional activity". He asked whether this language is still an artifact to the creation of a new activity when what is being talked about now is the creation of a new activity as well as spending a little bit more on the same type of project. He further asked whether there might be a benefit to making that more in line with the new language that is at the beginning of Section 1. Responding to Representative Tuck for clarification, he questioned whether the language "not initiate the additional activity" captures the new statute because it isn't just starting new projects that is being talked about, but also conceivably spending additional money on the same project. He suggested that the language read, "not make an expenditure concerning the additional activity". He said it is the word "initiate" that he is looking at and whether that word is still appropriate given the changes that are trying to be made to the statute. REPRESENTATIVE TUCK replied that that is existing language. He explained that what is being said is that if the Legislative Budget and Audit Committee does not call itself into a committee hearing to take up the RPL, or if the committee denies the RPL, then the governor cannot go any further with the additional activity. Therefore, he continued, he thinks it reads alright, but he is open to how that can be improved. Basically, it is additional activity according to a program established by the legislature, signed by the governor, and appropriated by the legislature. 5:08:54 PM REPRESENTATIVE TUCK added that there were three classifications of inappropriate RPLs seen by the Legislative Budget and Audit Committee this year. One was setting up the governor's own program, another was appropriating money which the governor had previously vetoed, and the third was putting into an RPL items in the capital budget that [the legislature] did not pass. He stated that if the governor vetoes something, then it isn't prescribed by law to have that program. One such vetoed program was the community assistance program, which the governor then appropriated around the legislature. REPRESENTATIVE EASTMAN asked what an appropriate remedy would be when a governor takes the aforementioned kind of liberty with an appropriation. REPRESENTATIVE TUCK answered that that is something for the court to decide; he would have liked for the court case go a little further. He said he originally thought the lawsuit would come from a municipality rather than from outside, and it was only an injunction, not a full discussion about the appropriateness of the RPL process and the way the governor is using it. A lawsuit is needed that continues all the way to the supreme court, he continued, and then the judges would decide a remedy. However, he said, he doesn't think the remedy would be anything more than don't do it again because the money has been appropriated. [There needs to be] checks and balances to ensure that that activity doesn't happen anymore, he added. CHAIR KREISS-TOMKINS stated that he, too, wishes the lawsuit by Mr. Forrer and Mr. Geldhof had reached a conclusion of the supreme court just to have the clarity regarding appropriation powers and executor discretion. 5:11:55 PM CHAIR KREISS-TOMKINS announced that HB 177 was held over.