HB 223-REPEALING FUNDS, ACCOUNTS, AND PROGRAMS  12:26:20 PM CHAIR SPOHNHOLZ announced that the final order of business would be HOUSE BILL NO. 223, "An Act relating to the curriculum improvement and best practices fund; relating to the fuel emergency fund and fuel emergency grants; relating to the Railbelt energy fund; relating to the Alaska affordable energy fund; 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." 12:26:39 PM CHAIR SPOHNHOLZ moved to adopt Amendment 1 to HB 223, labeled 32-LS0830\B.2, Marx, 3/8/22, which read: Page 1, line 1, following "Act": Insert "relating to inactive state accounts and  funds;"    Page 1, following line 8: Insert new bill sections to read:  "* Section 1. AS 24.20.231 is amended to read: Sec. 24.20.231. Duties. The legislative finance division shall (1) analyze the budget and appropriation requests of each department, institution, bureau, board, commission, or other agency of state government; (2) analyze the revenue requirements of the state; (3) provide the finance committees of the legislature with comprehensive budget review and fiscal analysis services; (4) cooperate with the office of management and budget in establishing a comprehensive system for state budgeting and financial management as set out in AS 37.07 (Executive Budget Act); (5) complete studies and prepare reports, memoranda, or other materials as directed by the Legislative Budget and Audit Committee; (6) with the governor's permission, designate the legislative fiscal analyst to serve ex officio on the governor's budget review committee; (7) identify the actual reduction in state expenditures in the first fiscal year following a review under AS 44.66.040 resulting from that review and inform the Legislative Budget and Audit Committee of the amount of the reduction; and (8) not later than the first legislative day of each first regular session of each legislature, (A) conduct a review in accordance with AS 24.20.235 of the report provided to the division under AS 43.05.095; and  (B) conduct a review of inactive state  accounts and funds, make recommendations regarding  which inactive state accounts and funds, if any,  should be repealed, and submit an electronic report of  the division's recommendations to the governor, the  president of the senate, the speaker of the house of  representatives, the chair of the finance committee of  each house of the legislature, the senate secretary,  and the chief clerk of the house of representatives,  and notify the legislature that the report is  available.  * Sec. 2. AS 37.07.020 is amended by adding a new subsection to read: (f) The governor shall review the report submitted by the legislative finance division under AS 24.20.231(8)(B) and may introduce legislation in accordance with the report." Page 1, line 9: Delete "Section 1" Insert "Sec. 3" REPRESENTATIVE EASTMAN objected for discussion purposes. 12:26:45 PM CHAIR SPOHNHOLZ explained Amendment 1 would require that Legislative Finance Division produce recommendations regarding which inactive fund should be repealed at the beginning of each two-year legislative cycle, and the recommendations would be forwarded to the governor and the legislature for consideration. She said Amendment 1 would also encourage the governor to introduce legislation in accordance with the report. While the legislature can't tell the governor what to do, she noted, the legislature can encourage the governor to do that. The intent of the amendment, she stated, is to create a system in which inactive funds are regularly reviewed and acted upon, incorporating Representative Kaufman's continuous quality improvement feedback loop into the process. REPRESENTATIVE EASTMAN asked what the criteria would be for making that recommendation, other than the Legislative Finance Division's opinion. He further asked whether the division would be encouraged to give as long a list of funds to repeal as possible or whether there is some other guidance. 12:28:04 PM REPRESENTATIVE JAMES KAUFMAN, Alaska State Legislature, as prime sponsor of HB 223, responded that in a general sense it is time and inactivity or if there is a known lack of need for the fund. There is some subjectivity to it, he said, but if there had to be criteria it would be what the fund was created for, whether it is still needed, and long it has been unused. He advised that while criteria can be made for it, that would sometimes still miss things that could be opportunities. CHAIR SPOHNHOLZ noted that the large list of potential funds in HB 223 was whittled down through the process of looking at which ones were practical to close and hadn't had activity. She said Amendment 1 is crafted broadly and the legislature can decline to act on any of the recommendations at any time. The amendment has no automatic closure element, she continued, it is just asking the Legislative Finance Division to produce a report and share it with the legislature and the administration to provide an ongoing feedback loop that is designed to help with being more effective as a government. 12:29:31 PM REPRESENTATIVE EASTMAN withdrew his objection. There being no further objection, Amendment 1 was adopted. 12:29:41 PM REPRESENTATIVE JOSEPHSON moved to adopt Amendment 2 to HB 223, labeled 32-LS0830\B.1, Marx, 2/28/22, which read: Page 1, line 2: Delete "relating to the Railbelt energy fund;" Page 1, line 9: Delete "AS 37.05.520, 37.05.610" Insert "AS 37.05.610" REPRESENTATIVE EASTMAN objected for discussion purposes. 12:29:48 PM REPRESENTATIVE JOSEPHSON explained Amendment 2. He related that the Legislative Finance Division and the Alaska Energy Authority (AEA) have raised concerns about repealing the Railbelt energy fund. There are two projects that are still under the umbrella of the fund, he said, and the $3 million existing in it recently came from lapsed funds in those projects. He related that if those projects lapse funds in the future, the Legislative Finance Division believes they should go back into the Railbelt energy fund. The question of repealing the Railbelt energy fund is a larger one than simply a cleanup of the dormant and inactive funds, he continued. If the bill's purpose is to simply be a cleanup bill to repeal inactive funds, he stated, the Railbelt energy fund should remain as having a modicum of merit still. REPRESENTATIVE KAUFMAN suggested that Mr. Thayer be able to provide AEA's comment on Amendment 2. 12:31:04 PM CURTIS THAYER, Executive Director, Alaska Energy Authority (AEA), stated that he agrees with Representative Kaufman and Representative Josephson on Amendment 2 regarding the Railbelt energy fund. He related that in 1991 when Bradley Lake Hydroelectric Project was built, a power sales agreement was signed with all the utilities including AEA's predecessor but now AEA. One of the provisions in the 30-year-old document, he said, is the disposition of payments which states that all excess payment amounts received from purchasers and all additional charges paid pursuant to Section 29(b) shall be paid to AEA for deposit in the Railbelt energy fund. The bonds were paid off in July [2021], he specified, and AEA with the utilities can use it for required project work to benefit Bradley and if there is not identified projects on Bradley that would improve it then the excess payments, which could be up to $12.5 million would be deposited into the Railbelt energy fund. This piece has been silent for 30 years, Mr. Thayer continued, because there wasn't the ability or the funds available, but potentially for the next 20 years there could be funds to deposit in the Railbelt energy fund. He said AEA and the utilities would prefer to keep the Railbelt energy fund as is as not to reopen a 30-year-old agreement. REPRESENTATIVE EASTMAN inquired about the point at which the current agreement would expire or would need to be renewed. MR. THAYER replied approximately 2050. REPRESENTATIVE EASTMAN withdrew his objection. There being no further objection, Amendment 2 was adopted. 12:33:15 PM REPRESENTATIVE JOSEPHSON moved to adopt Amendment 3, labeled 32- LS0830\B.3 Marx, 3/8/22, which read: Page 1, line 3: Delete "relating to the Alaska affordable energy  fund;" Page 1, line 9: Delete ", 37.05.610" REPRESENTATIVE EASTMAN objected for discussion purposes. 12:33:18 PM REPRESENTATIVE JOSEPHSON explained that Amendment 3 is about 37.05.610, the Alaska affordable energy fund, created in 2014 as part of either House Bill 4 or Senate Bill 138, he believes, on the large gasline. He paraphrased from AS 37.05.610(a) and (b), which are written as follows [original punctuation provided]: (a) The Alaska affordable energy fund is created as a special account in the general fund. The fund consists of the amount determined and deposited in the fund under (b) of this section and interest earned on the fund balance. The purpose of the fund is to provide a source from which the legislature may appropriate money to develop infrastructure to deliver energy to areas of the state that are not expected to have or do not have direct access to a North Slope natural gas pipeline. (b) The amount to be deposited in (a) of this section is 20 percent of the revenue received from the state's royalty gas transported in an Alaska liquefied natural gas project that remains after the payment to the Alaska permanent fund under AS 37.13.010. REPRESENTATIVE JOSEPHSON stated that [this fund] seems like a good idea on paper, somebody put energy into it eight years ago, and the gasline is something this administration wants, as did the previous administration. The interest to be served, he continued, is infrastructure development off the Railbelt between Prudhoe roughly and Southcentral Alaska and he doesn't want to bury this into the historical footnote. 12:35:15 PM REPRESENTATIVE EASTMAN asked whether some other activity will be required on the part of the legislature if the state were to begin using this fund as originally designed or whether it is just waiting for some change in market forces. He surmised it would be easy to reactivate this fund or come up with something better should the legislature need to make changes in the future to bring this back to life. REPRESENTATIVE JOSEPHSON answered that things in the books will be reviewed and those that aren't may not. He posited that it could be a component part of the larger bill, a deal that was struck, someone's win that required a sacrifice of other elements. He said he is inclined to leave it there because it looks to be in defense of rural Alaska. 12:36:44 PM REPRESENTATIVE KAUFMAN said he respects the sponsor's argument, but in a slight rebuttal he would say that it's that instinct which has perhaps kept so many of these dormant accounts sitting around. He stated that the bill's only intent is to clean up that which isn't needed, and he has no strong objection to Amendment 3. 12:37:39 PM REPRESENTATIVE EASTMAN spoke to his objection to Amendment 3. He stated that in looking to create this better process going forward, the precedents that are set are important. He argued that the criteria should be focused objectively and on whether it has a legal effect, not on why a particular bill got into law or was sponsored by a particular legislator. If it has a legal effect now like Amendment 2, he said, then he would maybe support keeping that. But, he continued, if it isn't needed, isn't being used, or doesn't have a legally beneficial purpose, then it should be slotted for being removed and then put back at a different time or in a better way. 12:39:29 PM REPRESENTATIVE STORY commented that the things brought up by Representative Eastman are things always taken into account. With the Alaska affordable energy fund, she said, consideration must be given to how current is the need, and this is very current and something the legislature is trying to ensure all of Alaska has. So, she stated, it seems right to keep that account. 12:40:04 PM CHAIR SPOHNHOLZ related that the governor recently announced he believes Alaska is closer than ever to a gasline. She said that while she isn't sure she entirely agrees, she understands the rationale behind leaving this fund on the books. She pointed out that Amendment 1 creates an ongoing feedback loop, so even if the committee chooses to leave this fund on the books now, a mechanism has been created for addressing it in the future. 12:41:09 PM REPRESENTATIVE EASTMAN maintained his objection to Amendment 3. 12:41:14 PM A roll call vote was taken. Representatives Wool, Josephson, Story, and Spohnholz voted in favor of Amendment 3. Representative Eastman voted against it. Therefore, Amendment 3 was adopted by a vote of 4-1. 12:41:41 PM CHAIR SPOHNHOLZ announced that HB 223 was held over.