SENATE BILL NO. 142 "An Act making appropriations, including capital appropriations, supplemental appropriations, reappropriations, and other appropriations; making appropriations to capitalize funds; and providing for an effective date." 3:06:44 PM PAT PITNEY, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, discussed the presentation, "State of Alaska FY2019 Capital Budget and Economic Recovery Act Overview" (copy on file). She addressed slide 2, "FY2019 Capital Budget": Two Separate Capital Appropriation Bills ?Base Capital Budget (SB142/HB284)- ?Lean compared to previous years ?Provides for leverage of available federal funds and certain DGF supported energy projects ?Certain technology efficiencies ?Alaska Economic Recovery Act (SB140/HB282)- ?Supported by a payroll tax ?Shovel ready/deferred maintenance projects designed to get work started today ?Many smaller projects directed to communities throughout the state (urban and rural) Ms. Pitney looked at slide 3, "Capital Budget Trend": ?The capital budget has been reduced 93 percent or $1.8 billion from FY2013 to FY2018. ?Important needs such a deferred maintenance have been unaddressed ?Less support to communities ?Impacting employment 3:10:12 PM Ms. Pitney highlighted slide 4, "Base Capital Budget (SB142/HB284)": Base Capital Budget The Governor's FY2019 capital budget prioritizes annual federal match programs, housing, energy, maintenance, and information technology. Vice-Chair Bishop wanted a later conversation about redirection of the money. Ms. Pitney addressed slide 5, "Base Capital Budget": ?Federal Match ?Transportation Match -$70.1 million leverages $700.0 million in federal ?Village Safe Water and Sewer Projects -$12.1 million leverages $52.3 million federal ?Housing ?Status quo housing project appropriations including teacher, health professional and trooper housing, cold climate research and grants through HUD ?Energy ?Renewable Energy Projects $11.0 million ?Rural Power Systems Upgrades -$11.0 million ?Maintenance ?AMHS Vessel Certification -$13.5 million ?Public Building Fund Deferred Maintenance -$5.0 million ?Information Technology ?Various state-wide software upgrades, continued IRIS implementation, Automated Park fee collections ?High Priority Investments ?Enhanced "9-1-1" -$8.5 million ?AKLNG legal and financial due diligence -$1.5 million 3:16:12 PM Ms. Pitney discussed slide 6, "Alaska Economic Recovery Act (SB140/HB282)": Alaska Economic Recovery Act ?$800.0 million over 3 years ($280.0 million in FY2019) ?$1.4 billion in economic impact with federal, local, and private funds ?Housing, state and school deferred maintenance, and energy projects ?Many smaller projects to ensure work is started today, not after years of environmental studies ?School maintenance impacts 60+ communities, both rural and urban ?Does not grow government, takes care of current liabilities ?Funded by a 1.5 percent wage tax, capped at 2 times the PFD amount ?Receipts designated for high-value capital projects ?Sunsets in 2.5 years ?Creating jobs and getting the economy working is the number one priority. Reassess in 2022 Ms. Pitney highlighted slide 7, "Construction Industry Employment": ?According to ISER, $100.0 million in reductions to the capital budget results in 506 direct and 425 indirect job losses. (Recall that that $1.8 billion has been cut from FY2013) ?Ensuring that Alaska has a trained construction workforce will ensure future development opportunities employ as many Alaskans as possible (additional North Slope exploration, AKLNG, etc.) ?Employment figures have a direct link to spending elsewhere in the budget (Public Assistance, Medicaid, etc.) ?For each percentage point of job loss, the traditional Medicaid population grows at an annualized rate of 4.04 percent Ms. Pitney addressed slide 8, "Deferred Maintenance": ?The state owns over 2,200 facilities though only about 200 over 10,000 square feet. ?19 million square feet of space ?Replacement value of $8.6 B ?Various types of facilities ?Classrooms ?Airport/maintenance shops ?Offices ?Laboratories ?Parks ?Pioneer Homes ?Correctional Facilities ?Road maintenance Ms. Pitney looked at slide 9, "Deferred Maintenance": ?DM appropriations of $100.0 M annually for 5 years (FY11-15) has brought the back-log down ?Lean funding since FY2015 is causing the backlog to grow again ?Without a consistent level of funding, entities cannot effectively execute planned renewal ?Current level of funding only prioritizes life/safety concerns ?Failure of building systems is much more costly than addressing the problem early through deferred maintenance 3:20:33 PM Ms. Pitney highlighted slide 10, "Alaska Economic Recovery Multi-Year Plan." She noted that the projects began with the K-12 Major Maintenance Grant program. She noted that AS 14.10 had schools send in their highest deferred maintenance projects, with a required local match in most cases. She stated that there was a prioritized list throughout the state. Ms. Pitney looked at slide 11, "K-12 Major Maintenance Grant Fund": ?Projects ranked according to AS 14.10 ?Participating share ranges from 5 percent to 35 percent based upon taxable property over Average Daily Membership ?Both municipal School Districts and REAAs Ms. Pitney discussed slide 12, "University Deferred Maintenance." She highlighted the deferred maintenance of the University of Alaska campuses. Ms. Pitney addressed slide 13, "State Deferred Maintenance." She stated that the size of the projects directed the money to local contractors. Ms. Pitney looked at slide 14, "Other Items": Alaska Economic Recovery Act ?Municipal Harbor Projects ?Sitka: Crescent Harbor ?Whittier: Small Boat Harbor ?Sitka: Eliason Harbor ?Ketchikan: Bar Harbor North Harbor ?Bulk Fuel Upgrades ?Statewide Impact ?Weatherization ?State-wide impact ?Senior Citizen Housing Development ?Anchorage Port ?Required Municipal Match ?Anchorage: South Float ?Whale Pass: Small Boat Harbor ?Juneau: Douglas Harbor ?Juneau: Harris Harbor 3:25:20 PM Co-Chair MacKinnon stated that the seismic would be discussed at a later meeting. Co-Chair MacKinnon discussed committee business. SB 142 was HEARD and HELD in committee for further consideration.