HB 155-AUTHORIZE ECONOMIC STIMULUS PARTICIPATION 1:04:44 PM CHAIR WILSON announced that the first order of business would be HOUSE BILL NO. 155, "An Act relating to the authorization for the Department of Transportation and Public Facilities to participate in the American Recovery and Reinvestment Act of 2009; and providing for an effective date." 1:05:31 PM MIKE BARNHILL, Senior Assistant Attorney General, Labor and State Affairs Section, Department of Law (DOL), offered that on February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA), referred to as the federal stimulus bill. He explained that the administration decided on a two-fold approach to implement funding in Alaska. First, a bill or a panel of bills would provide authorization for state agencies to apply. He opined that state agencies are creatures of statute and the administration wanted to assure state agencies had explicit legal authority to apply for funding from the federal stimulus bill. Secondly, a panel of appropriations bills would identify the funding and the specific projects. He reported that HB 155 is the first effort with respect to the authorization component. This bill would authorize the Department of Transportation & Public Facilities (DOT&PF) to apply for and participate in the funding provided by the federal stimulus plan. 1:07:37 PM MR. BARNHILL referred to page 2, lines 19 to 22, which provide explicit authority for DOT&PF to participate in the programs and funding of the federal economic stimulus bill. He related that the remainder of HB 155 is intent language. He explained that the intent language is intended to track the various sections of the federal stimulus bill. He referred to proposed Section 1, subsection (a), that DOT&PF would participate in the funding provided by Title VI, P.L. 111-5 of the economic stimulus bill which pertains to homeland security funding. Each agency within homeland security has line items in the federal stimulus bill for which the DOT&PF could apply. Subsection (b) tracks Title XII, P.L. 111-5 of the federal stimulus bill, and that section pertains to programs with funding provided by the U.S. Department of Transportation (U.S. DOT). He referred to page 2, lines 8-12, which identify the federal sub-agencies that have money available. Finally Subsection (c) is an intent section that expresses that DOT&PF seeks to maximize funding made available to the state in Title VI and XII of the federal stimulus bill, recognizing that federal agencies may have some discretion in the manner in which they allocate funds to the states. 1:09:34 PM MR. BARNHILL recalled a prior question whether this bill is necessary. He affirmed that is a good question. He further opined that DOT&PF has ample authority to receive funds. However, he allowed that not all state agencies have explicit authority, and the attorney general advises that this bill provides consistency. He remarked that at some point a decision might be made to expand the scope of the bill to apply to all agencies. 1:10:29 PM REPRESENTATIVE DOOGAN inquired as to whether this bill provides the authorization to receive funds that have been earmarked for Alaska and the DOT&PF and/or if this bill also provides an authorization to obtain federal stimulus funding from other states that they cannot specifically use. MR. BARNHILL related his understanding that the bill would cover both instances. He related that HB 155 is intended to authorize the DOT&PF to accept federal stimulus funding that is available. He further related his understanding that the DOT&PF could obtain competitive grant funds that are not earmarked for the state, and potentially other funds in Title VI and Title XII. Thus, the DOT&PF would like to maximize its receipt of funds. REPRESENTATIVE DOOGAN related his understanding that the DOT&PF has developed a list of projects it anticipates using the stimulus funds for as well as a secondary list of projects that would be eligible if the state received additional funding. He inquired as to whether the committee would be signing off on the second list if HB 155 were passed. 1:13:16 PM FRANK RICHARDS, Deputy Commissioner, Office of the Commissioner, replied that HB 155 would allow the DOT&PF to compete for funds, including any redistribution of funds that the DOT&PF could also capture that that legislature has provided authority to use. He related that the governor's bill provides a list of projects, both recommended and contingency projects. However, the legislature will select the projects that will ultimately be funded. REPRESENTATIVE DOOGAN related his understanding that the DOT&PF will have to come back to the legislature "in another round" for anything not in the $117 million list of projects. MR. RICHARDS explained that the appropriations bill asked for contingency authority necessary in the event that a project "trips up" to allow the DOT&PF can shift to another project. Thus, the DOT&PF would like the flexibility to "slip in" another project. 1:15:23 PM REPRESENTATIVE GRUENBERG allowed that he is not fond of intent language, and inquired as to whether subsection (a) and (b) are necessary. MR. BARNHILL answered no. The language in subsections (a) and (b) are designed to give assurance to the legislature that it is the intent of the administration for the DOT&PF to apply for all available funding offered in Title VI and Title XII of the federal stimulus bill. REPRESENTATIVE GRUENBERG referred to page 2, to lines 20 to 22, and related his understanding that the language does exactly what Mr. Barnhill just explained. MR. BARNHILL replied yes. REPRESENTATIVE GRUENBERG referred to page 2, lines 13 and 15 of subsection (c) up to the "," after "state" and offered his belief that language seems to be important intent language. However, he related that the language on page 2, lines 14-17 does not seem to be important. MR. BARNHILL explained that the idea is to put people on notice that the state does not have complete control over how the U.S. DOT, in particular the Federal Aviation Administration is going to allocate the distribution of funds. He reiterated that this alerts people that funds are allocated subject to the discretion of the federal agency. 1:17:36 PM REPRESENTATIVE GRUENBERG recalled that the bill might be expanded to include other agencies. He inquired as to whether that is likely to happen. MR. BARNHILL related that a spectrum of options is available to the administration and the legislature with respect to authorization bills. One option is to expand the scope in HB 155 to provide explicit authority to ensure that state agencies have the authority to participate in the entire stimulus bill. Another option is to introduce another bill to provide authority for the remaining agencies to participate. He offered that another option is to not enact an authorization bill. He surmised that most states do not appear to be seeking explicit authorization. However, the Alaska Supreme Court has held on multiple occasions that state agencies are the "creatures of their statutes" and they can only exercise authority found within the statutes. He opined that the DOT&PF statutes are littered with authorization to participate in federal grant programs. He opined that $100 million is available through the state fiscal stabilization fund through the federal stimulus bill that requires the governor to apply for the funds. However, statutes to authorize participation are absent. Thus, the DOL recommends some sort of explicit authorization. Ultimately, if legislature does not deem that the authorization is necessary, the DOL "will live with that." 1:20:08 PM REPRESENTATIVE GRUENBERG pointed out two competing policies. One, to ensure the administration has authority to apply for the funds. Secondly, he inquired as to whether the legislature would set precedent if it adopts language for explicit authority now. MR. BARNHILL opined that the precedent has already been set since the DOT&PF already has five or six statutes that provide authorization to participate in federal grant programs. REPRESENTATIVE GRUENBERG asked whether HB 155 should be expanded to a general authorization, given the timeframe of the 90 day session. MR. BARNHILL conceded that the agency might wish to address this. REPRESENTATIVE GRUENBERG agreed he would like other agencies to address this also. MR. BARNHILL offered his belief that the issues will be taken up in the House Finance Committee. 1:22:07 PM CHAIR WILSON stated that she would like to review the bill as it currently reads, and if another committee would like to amend the bill to expand it, that they can do so. 1:22:18 PM REPRESENTATIVE JOHNSON related that the intent language states to "seek to maximize" the funding made available to the state. He expressed concern about funding for programs that the state may be "stuck with" over time. He conceded that the DOT&PF is the least likely agency, but maintained his cautiousness about establishing programs that 18 months from now the state would need to appropriate general funds. He asked for assurances that nothing in HB 155 mentions funding for programs. MR. BARNHILL offered his belief that nothing in the bill mentions program or obtains funding for program. The bill simply would permit authorization for the state to apply with intent to maximize receipt of funds. He recalled media articles that mentioned the governor shares Representative Johnson's views. 1:23:42 PM REPRESENTATIVE JOHNSON referred to page 2, line 19, which reads, "(d) Notwithstanding any provision of state law, and to the extent not already authorized by state law, the Department of Transportation & Public Facilities is authorized to participate in the programs and funding enacted by Division A, Titles VI and XII, P.L. 111-5 (American Recovery and Reinvestment Act of 2009)." He stated that the language does not restrict the DOT&PF and could be a five-year program that "we're stuck with after three you're authorized under that to do this." He asked for clarification. 1:24:40 PM MR. BARNHILL acknowledged that his question is a fair question. He related that the companion bill, HB 154, identifies all the funding, but not for programs since the bill relates to capital projects. REPRESENTATIVE JOHNSON conceded that the DOT&PF is the least likely department, but also related his understanding that the bill may later be expanded to other agencies. He maintained his concern for funding programs with stimulus funding that might require the legislature to subsequently fund them with general fund dollars or be forced to cut the programs. He said, "I want to be on the record that is something I don't support. I think the governor is on the record, as well. So I do not want to inadvertently pass something that is contrary to what the governor and I happen to share a common belief in." 1:25:39 PM MR. BARNHILL affirmed that he shares Representative Johnson's concern, as he believes the governor does also. He offered his belief that the companion bill will contain language that suggests funding received under the federal economic stimulus bill is one-time funding. He indicated that the purpose of the language in HB 155 is to put people on notice that this situation is unique and not to expect future funding from the federal government. REPRESENTATIVE JOHNSON inquired as to whether it would be appropriate to add specific language to this bill to further clarify that the funding is one-time federal funding. MR. BARNHILL agreed that specific language could be added in this committee or the bill could be amended in the House Finance Committee. 1:26:47 PM REPRESENTATIVE JOHNSON expressed confidence in the House Finance Committee. He maintained his concern that he does not support funding future programs with the federal economic stimulus funding. 1:27:07 PM REPRESENTATIVE HARRIS stressed that he has full faith in DOT&PF. He said he would like to see additional maintenance funding. He opined that the crux of problem is who will authorize the expenditure of the funding. He recalled that under the constitution the legislature is empowered to appropriate funds. However, he opined that the legislature's power is eroded in a variety of ways. He expressed concern that the administration should not be allowed to spend funds without explicit direction from the legislature through the appropriation process. MR. BARNHILL related that the concern is one that has been expressed to the administration several times over the past month. He offered that the administration attempts to address that concern by submitting the companion appropriation bill. He indicated that further language, probably in a separate bill, will identify the source of funds and how the funds will be expended. He pointed out that these bills reflect the administration's recognition that the legislature plays an important role in exercising its appropriation authority over the stimulus funds. He said, "And, ultimately, I think it's the administration's hope that there will be a meeting of the minds between the administration and the legislature as to how the economic stimulus funds will be expended." He remarked that as far as the administration can tell, other states are not seeking express authorization, other than Washington. He noted that Washington passed its appropriation bill two weeks ago for the transportation funds and that bill has been signed into law. He said, "Given the legislature's express desire to have a role in the expenditure of these funds, the administration is seeking to accommodate them." 1:29:32 PM REPRESENTATIVE HARRIS offered that the state has a constitutional provision that is implicit that the legislature has the authority as the entity which appropriates funds. He opined that the administration only has a role when the legislature authorizes it. He indicated that the legislature has given statutory authority to entities such as the Alaska Railroad Corporation to expend funds without legislature authorization. He emphasized that the administration does not have that right. He stressed that the legislature has not denied the administration the right to obtain all the money it can get. He recalled that the governor has expressed she might not want all the money since "strings might be attached." He acknowledged the governor's right to do so. However, he stressed that the administration needs an appropriation bill once it has accepted any federal stimulus funds since the constitution mandates it. He said, "I don't see any reason why we need this to give you authorization to go get any money. Go get all you can get; the more, the merrier." He acknowledged that some members have expressed concern some funding might "have strings attached" that attempt to bind the state in the future. He further opined that any authorization or appropriations bill the moves forward has a fiscal note attached to define funding sources. He said, "And if they don't we ought not to approve the expenditure. That's my whole point." 1:31:24 PM MR. BARNHILL acknowledged that is a fair point. He maintained the administration submitted an appropriation bill to do just that. He indicated the reason for HB 155 is to ensure that explicit authorization is in law for state agencies to apply. He agreed that DOT&PF is the least likely agency to need the authority since it has statutory authorization. He maintained that other agencies do not which is the reason for consideration of this bill. He further acknowledged that the legislature may decide that such state authorization is not necessary. He highlighted that he cannot guarantee that someone will not raise the issue to the governor of the state's authorization to accept the federal stimulus funding, which may be an issue that needs to be dealt with later. 1:32:27 PM REPRESENTATIVE HARRIS inquired as to whether the Department of Health and Social Service (DHSS) has that authorization since it routinely receives federal funding. MR. BARNHILL said he has not reviewed the DHSS. He offered to provide that information to the committee. He recalled that several Alaska Supreme Court cases suggest state agencies need authority to exercise their power. 1:33:04 PM REPRESENTATIVE HARRIS inquired as to whether any state has been sued due to lack of authorization for federal funds. MR. BARNHILL said he did not know. REPRESENTATIVE HARRIS asked for clarification of the concern that HB 155 would address. MR. BARNHILL reiterated that the concern is that the state has authorization to accept federal funding for some state agencies such as DOT&PF, but not for all agencies. He acknowledged that the bill might address an overly cautious perspective. He offered that given the significance of the federal stimulus funding that the approach was that it "would be better to be cautious." However, if the legislature decides not to do that, there may not be any consequences, he stated. REPRESENTATIVE HARRIS highlighted that he would share the concern if the view was that litigation might arise. He indicated that he did not want to deny any state agencies the ability to obtain federal stimulus funds. He related that if the administration simply desires to have a blanket authorization to accept federal funding that he has no issue. However, he emphasized that when it comes to who authorizes the actual expenditure of the funds, the legislature is the authority. He reiterated that he does not have a problem with the administration seeking blanket funding authority to accept the federal stimulus funds. 1:35:07 PM REPRESENTATIVE JOHANSEN echoed his frustration, similar to what Representative Harris stated. He stressed the legislature's constitutional right to appropriate funds. He said, "I would hope that the next time you testify you are a little more careful in the way you characterize the powers of the legislature. It's very frustrating to me." 1:36:48 PM REPRESENTATIVE DOOGAN related his understanding that the process is a three part process consisting of an authorization process and this bill attempts to give extra impetus of law, whether or not it is necessary so why not do it. He said, "Can't hurt, might help." The next process is the expenditure process and by constitution the legislature must be involved. Finally, the application process falls in between the authorization and appropriation process in which someone makes a decision as to whether to apply for the funds. He surmised the bill is lengthy, the funds are large, and the programs are diverse. Thus, he inquired as to how the administration views the application decision and what, if any, role the legislature has in the decisions. 1:38:35 PM MR. BARNHILL answered that at the outset, the most important aspect is to have an awareness of the programs and the funding sources available, and to identify the timelines. He remarked that the administration must check the federal website recovery.org daily to identify any new requirements for timelines and application submissions. Thus, obtaining all the information is the first step. He highlighted the next step is to coordinate with state agencies to identify who will fill out the application, what information is necessary to support the application, and identify projects for an appropriation bill. MR. BARNHILL mentioned the administration is currently gathering an extraordinary amount of information. He related his understanding that the information will be distilled in an appropriation bill of global magnitude for the legislature to consider. He emphasized that the administration will review all information and will decide whether to apply for every program. He acknowledged that some policy issues are rising as part of the information review. He further related his understanding that the governor plans to share the policy concerns with the legislature so it can weigh in on them. He surmised that some policy concerns to obtain funds will require statutory changes. He said, "The administration is working as hard and as fast as it can to gather that information, to distill it into a form that is understandable and bring it to your attention." He opined that this set of bills, including HB 155, was designed to get the process going, primarily since the federal stimulus funding represents a lot of money. He stated it was a way to "get the ball rolling." 1:41:10 PM REPRESENTATIVE DOOGAN related his understanding that the legislature has a larger role than to weigh in on funds the governor may not wish to accept. He opined that under the terms of the bill, the legislature can accept, by joint resolution say, "Ah, no, we want to take the money anyway." MR. BARNHILL answered, "Yes, that is exactly correct." REPRESENTATIVE DOOGAN asked if it is the intention of the administration to make its decisions not to accept funds in sufficient time to allow the legislature time to decide if it agrees with that decision. MR. BARNHILL answered yes. 1:42:19 PM CHAIR WILSON recapped the committee's comments. She related that the legislature is recognizing that some other states are not taking the same approach. However, she opined that the governor has more power than any other governor in the U.S. Thus, the legislature holds jealously its ability to appropriate. She said, "We don't want that taken away from us. Those are the facts and everyone needs to realize that. That's something we really hold dear." MR. BARNHILL said: Madame Chair, that point's very well taken. By sharing what is going on in other states was in no way intended by me or the administration to suggest that we're going in that direction. In fact, quite the opposite. We are going in the direction that we have laid before you. That is a two-fold approach with an authorization and an appropriation bill. 1:43:15 PM REPRESENTATIVE GRUENBERG referred to page 1, lines 9 and 12, and page 2, lines 4 & 6, are both to apply for and expend. He acknowledged that he did not have a problem with "apply for" but the expenditure could be read as authorization for programs that are not even in existence now. He stressed that he has considerable problems with that. He said he did not understand the necessity for authority to apply for money. He said it seems to him that the administration can do that anyway. He related his understanding that a number of states are moving forward to obtain the funds anyway. He inquired as to whether the other states have the authority to expend funds without legislature authorization. He said, "That's a blank check." MR. BARNHILL answered that he cannot comment on the legal structure in other states. He offered to research and to provide the information at a later time. He pointed out that the language says subject to appropriation so the intent was not a blanket authorization to expend it, just a method to apply, subject to appropriation. REPRESENTATIVE GRUENBERG answered that while it may be the intent, the language is broader. He referred to page 2, line 21, and stated the language is to participate, which he stated is an authorization. He opined that normally the authorization is held, then the appropriation. He said he thought this seems to be in place of an authorization. MR. BARNHILL reiterated that this language is not intended to authorize an appropriation. He suggested that the committee may wish to consider an amendment to make it clear and he has no objections to an amendment. REPRESENTATIVE GRUENBERG stated that he will consider the matter. He recalled Representative Doogan's question, and opined that nothing requires the governor to notify the legislature if she doe not to intend to apply for federal stimulus funds. Additionally, intent language provides power. He inquired as to whether language should be explicit in the bill that if the governor does not intend to apply for all funds, that the legislature should be given adequate notice to pass a resolution. MR. BARNHILL offered that he has no objection to that type of amendment. He related his understanding that the administration intends to disclose exactly what stimulus funding it will and will not apply for so "cards will be on the table and there will not be any playing hide the ball." REPRESENTATIVE GRUENBERG asked to place on the record his statement. He said, "I've known you. I know you are highly ethical. I know you are a very fine attorney. And I know there was no intent in anything than the highest professionalism here. I think that I commend you and the department." 1:46:52 PM REPRESENTATIVE HARRIS related that the legislature could pass a joint resolution to apply for federal stimulus funds which would be subject to veto. MR. BARNHILL said, "I believe that it is. I'm hoping we don't have to cross that bridge, Representative Harris." REPRESENTATIVE HARRIS offered his belief that any expenditure of funds by the legislature is also subject to veto. 1:47:55 PM REPRESENTATIVE GRUENBERG recalled Representative Doogan was suggesting a vehicle of resolution. He offered his belief that a resolution is read by the governor but there is not a right to veto. 1:48:28 PM MR. BARNHILL confessed that everyone is operating in some ignorance since the federal law recently passed. He offered his believe that Representative Harris stated that the governor has power to veto the appropriation. He referred to Section 67 (b) of the ARRA, which he opined states that if the governor does not certify that she will apply for and use funds provided for by the economic stimulus bill, the legislature has the right to accept the funds by resolution. REPRESENTATIVE GRUENBERG inquired as to whether that would be constitutional. He offered that he does not need an oral answer. However, he pointed out that a joint resolution, according the Uniform Rules, aside from constitutional items, does not direct anyone to take an action. He stated that it simply expresses the intent or position of the legislature. He clarified that a joint resolution is directed externally, while a concurrent resolution is normally directed internally. He highlighted that the application is an issue that is normally outside the scope of a resolution. He inquired as to whether the legislature has the power, given the separation of powers, or if the resolution would be governed under the supremacy clause under this unusual provision under federal law. He suggested that Mr. Barnhill may wish to provide something in writing for the legislature. 1:50:26 PM MR. BARNHILL opined that Representative Gruenberg raised a fascinating question. He deferred answering the question. However, he recalled that the question was posed to the Congressional Research Service and it rendered a ten page memorandum on the subject. He said he was not sure he agreed with it, but would provide it to the committee. 1:51:16 PM REPRESENTATIVE GRUENBERG further inquired as to whether the committee could also obtain a legal opinion on state constitution with respect to the separation of powers. CHAIR WILSON reiterated the committee was seeking two legal opinions. MR. BARNHILL inquired as to whether the matter could be deferred until the legislature faces the issue over it. REPRESENTATIVE GRUENBERG withdrew his request. He suggested that the information from the Congressional Research would initially suffice. 1:51:59 PM REPRESENTATIVE JOHANSEN inquired as to whether the legislature will have sufficient time to react to the governor's decision on whether to accept the federal economic stimulus funds. He pointed out that only two weeks remained until April 3, 2009. He inquired as to whether the legislature would have sufficient time to address the matter. MR. BARNHILL referred to Section 67 (b) of the ARRA, and related that there is not a specific deadline. He related his understanding that some people have speculated that the legislature would have an April 3 deadline. However, he stated that he disagrees. He asserted that the federal ARRA does not have a deadline. He noted the administration has sought guidance from the federal Office of Management & Budget for any deadline. He offered his belief that the governor is preparing to disclose what the issues are this week. He maintained that everyone is working as fast as they can to allow people to make decisions. 1:53:34 PM MR. BARNHILL, in response to Representative Johansen, said he believes that the governor will make decisions this week. However, he related his understanding that is the timeframe although he could not offer total certainty. 1:53:50 PM CHAIR WILSON stated that she would like to hold the bill. 1:54:42 PM REPRESENTATIVE HARRIS inquired as to whether the companion bill, HB 154 is currently before the House Finance Committee. MR. BARNHILL answered yes, and that it is scheduled for a hearing. 1:54:56 PM The committee took an at-ease from 1:54 pm. to 1:55 p.m. 1:55:19 PM REPRESENTATIVE GRUENBERG volunteered to assist in reviewing the language in the bill. He surmised that the resolution process was deliberate on the part of the Congress in order to allow the legislatures the ability to act on the matter if a governor did not. He opined the real question is whether that takes precedence over the constitution. 1:55:44 PM CHAIR WILSON stated that the bill would be held over.