SENATE BILL NO. 19 "An Act making appropriations, including capital appropriations, supplemental appropriations, reappropriations, and other appropriations; making appropriations to capitalize funds; and providing for an effective date." 9:04:53 AM Co-Chair von Imhof relayed that the committee had heard the bill on March 12, 2019, at which time public testimony had been taken. Co-Chair Stedman MOVED to ADOPT proposed committee substitute for SB 19, Work Draft 31-GS1904\K (Caouette, 5/2/19). Co-Chair von Imhof OBJECTED for discussion. 9:05:55 AM SHAREEN CROSBY, STAFF, SENATOR NATASHA VON IMHOF, discussed the changes to the bill. She stated that when evaluating projects, the priorities of the capital budget were to maximize federal match, ensure health and safety, determine reasonable deferred maintenance, and protecting access to resources through bridges, roads, airports, and ports. She discussed the changes to the legislation and highlighted the following appropriations in the bill: Page 2, Line 16 Department of Commerce, Community and Economic Development Alaska Energy Authority Rural Outdoor Lighting Efficiency Retrofit $1,000,000 GF Page 2, Line 19 Department of Commerce, Community and Economic Development Alaska Railroad: Seward Dock Replacement $3,100,000 GF Page 2, Line 24 Department of Commerce, Community and Economic Development Alaska Travel Industry Association (ATIA) $7,420,000 GF Ms. Crosby said that Page 3 reflected funding for the Alaska Marine Highway System (AMHS) and additional small district grants. Ms. Crosby continued with the line items: Page 4, Line 13 Department of Corrections Juneau Lemon Creek Correctional Center Laundry Expansion $420,000 GF Ms. Crosby noted that intent language had been added on Page 5, Line 30, to allocate up to $2,000,000 of Pittman- Robertson federal funds for agreements with nonstate entities, the Alaska Mental Trust Authority, and local governments that provided the required federal match for eligible Pittman-Robertson projects. Ms. Crosby continued with the line items. Page 6, line 12 included $47,600,000 for statewide deferred maintenance. She noted that the monetary request was the same as the governors, but the fund sources had been changed. Line 18 was a state match of $500,000, for federal funds that went directly to the Code Blue Project. 9:11:13 AM Ms. Crosby continued to address the changes to the bill. Line 29 listed $2,500,000 for the Arctic Strategic Transportation and Resources and was the same as the governors request. She relayed that Page 7, line 17, reflected the addition of $120,000 for the Jonesville Public Use Area Management Plan, specifically, for detailing the expenditure and scope of the work from the Department of Natural Resources. She furthered that Line 32 reflected receipts of $250,000 from snowmobile registrations for the Snowmobile Trail Development Program. Page 8, line 3, showed $2.5 million for the South Denali Visitors Center, which was 10 percent of the governors total request. Line 5 reflected the addition of $1.4 million in federal funds for the Specialty Crop Grant for Peony Research. She said that Line 20 listed the addition of $1 million for the Alaska Housing Finance Corporation (AHFC) Cold Climate Housing Research, Line 24 showed $5 million in GF and $2 million in other funds for AHFC Energy Programs Weatherization. Page 9, Line 8, listed the addition of $1.75 million for AHFC Teacher, Health, and Public Safety Professional Housing. She relayed that Line 13 and 16 added funds for AMHS, $3 million and $13.5 million, respectively. She shared that Line 26 showed a reduction of $2.5 million, down to $12.5 million, with intent language encouraging the department to improve standard operating procedures for fleet management. 9:14:24 AM Senator Olson considered the $2.5 million decrease for fleet management. He asked whether the decreased funds were federal funds. ROB CARPENTER, ANALYST, LEGISLATIVE FINANCE DIVISION, stated that the funds were comprised of collected fees from all agencies for the rental and leasing of state equipment. 9:15:09 AM Ms. Crosby continued to address the changes to the bill. She spoke to Page 10, line 4, which were $60 million, which came back in $690 million federal match. She said that $25 million had been added in the CS and was a fully funded match to maximize the federal highway funds. She remined the committee that the funds had been changed from the governors reappropriation from the M/V Tustumena. She said that intent language had been added to Lines 9 and 20, requesting a quarterly report form the Department of Transportation and Public Facilities (DOT&PF) on projects. Ms. Crosby addressed Page 11, line 13, pertaining to University deferred maintenance. She said that the governors original request had been increased from $5 million to $10 million; the current UA deferred maintenance backlog was $1.2 billion. Ms. Crosby addressed page 12, which reflected the funding sources, by agency, for Section 1. Ms. Crosby looked at Section 4 on page 17, which included FY 19 Supplemental Capital Projects requested by the governor. 9:17:32 AM Co-Chair Stedman informed the public that in an effort to maintain a positive working relationship with the administration, the legislature had extended the governor's deadline for submitting budget amendments. 9:18:18 AM Senator Bishop appreciated that funds had remained in the bill for the Statewide Per- and Polyfluoroalkyl Substances Response. 9:18:43 AM Ms. Crosby addressed Sections 5 and 6 on pages 19 and 20, which listed fund sources for Section 4. She spoke to Section 7, which was the Department of Corrections (DOC) Inmate Health Supplemental for $3 million, requested by the governor. Section 8 contained standard language for RPLs or receipts. Section 9 contained standard language for agencies to collect and expend insurance claims. Line 20, Section 10 contained national Petroleum Reserve Alaska Impact Grant Program language for FY 19 and FY 20. Ms. Crosby looked at page 24 of the CS, Sections 11 and 12. Section 11a was a $200,000 grant for earnings from the Exxon Valdez oil spill restoration fund to the Prince William Sound Science Center. Section 11b was $125,000 in lapsing cruise funds going to the Railroad Seward Dock Planning. Ms. Crosby addressed 12a, which was a $125,000 supplemental reappropriation requested by the governor for abandoned school site assessments. She said that 12b stated that the proceeds from the sale of Department of Education and Early Development (DEED) state-owned land in Sitka received during the fiscal years ending June 30, 2020, June 30, 2021, and June 30, 2022, are to be allocated to Mt. Edgecumbe boarding school. state-owned lands sold in Sitka 9:21:02 AM Co-Chair Stedman clarified that the lands were held by DEED for the boarding school and if the properties were sold, the benefit should be for the school. 9:21:52 AM Ms. Crosby addressed Page 25, line 10; which combined the request for troopers, wildlife troopers, and VPSO equipment into one appropriation of $659,958,000. Ms. Crosby moved to Page 26, Section 14a - sale of any AMHS assets went to the AMHS Vessel Replacement Fund. She said that 14b stated that reappropriation of $1.6 million in completed project harbor project funds would be returned to the harbor facility matching grant fund. Section 15 was the governor requested, late amendment, for receipt authority for the Alaska Gasline Development Corporation (AGDC), not to exceed $25 million. 9:23:07 AM Senator Wielechowski was curious about the statutory designated program through which the Department of Environmental Conservation (DEC) could receive up to $25 million. Co-Chair von Imhof did not know the exact program but did know that this item had been seen over the years. She believed that the receipt authority was to finish the Federal Energy Regulatory Commission (FERC) process. She said that large oil companies that were doing business in the state were interested in seeing the FERC process meet completion. The analysis had shown that an additional $25 million for the next 18 to 24 months in order to finish the analysis and permitting. Senator Wielechowski had no problem with the completion with the FERC process but was curious of the fund source for the appropriation. Mr. Carpenter stated that the cited fund source was the statutory designated program receipts, which included third party, non-state. Non-federal receipts coming to the state. 9:24:40 AM Co-Chair Stedman recalled that there were hundreds of millions of dollars invested in the FERC permit, which held value even if there was no project. He wondered whether a financial summary of the cost to the state could be provided to the committee. Co-Chair von Imhof added that Mr. Carpenter could request a short summary from AGDC of the cost of the FERC process and what timeframe that was expected for completion. 9:26:38 AM Senator Hoffman thought that the timeframe for completion of the process was critical information. 9:26:55 AM Ms. Crosby relayed that she had notes from AGDC: • Senate proposes very limited receipt authority to permit AGDC to accept $25 million of third-party money to help complete defined tasks at hand; very narrow proposal versus last years denied request for unlimited receipt authority. • Should AGDC successfully attract third-party funding, it sends a very powerful market signal that Alaska LNG is on the right course. • AGDC taking very measured approach to Alaska LNG project, focusing on FERC permitting and partner engagement so the state does not have to pay, build, run Alaska LNG. • AGDC will continue to consult with legislature at every decision point along the way. • There is no loss of project control to the state at this funding level. • The third-party funding would allow AGDC to extend remaining funds further and off-set the need for any additional state funds at this point when the state is in a budget crunch. 9:28:08 AM Co-Chair Stedman pointed out that Alaska Oil and Gas Conservation Commission (AOGCC) was the regulatory body; and just because an entity received a permit did not mean that there was a project. FERC could issue multiple LNG export permits across the country but that did not guarantee that a project would be built. He 9:28:53 AM Ms. Crosby continued to page 27 and addressed Section 16 pertaining to the District 10 library reappropriation to another library in the same district. Section 17 was the scope change of the project in District 35-36. Section 18 was the reappropriation of the Office of the Governors lapsing funds back to their office, as requested. She added that the word redistricting had been added to the langue to accommodate census language in the section. 9:29:41 AM Senator Wielechowski spoke to Section 18, lines 27-30: estimated balance of $1,100,000, are reappropriated to the Office of the Governor for capital costs relating to advancing the governors initiatives, including elections voting system replacement and security, and state government efficiency and consolidation initiatives. Senator Wielechowski asked whether there was more detail available about the aspects of the section. Ms. Crosby stated that there were election systems that needed upgrades. She offered to get more information from the administration. Senator Wielechowski was interested to understand what kind of voting system replacement and security was being purchased. Co-Chair von Imhof echoed Senator Wielechowskis request for more information on Section 18. 9:30:47 AM Senator Micciche recalled that there had been an increment denied in the Operating Budget that was being covered by reappropriations in the Capital Budget. He stressed that these were not additional funds but unexpended funds from the past. Ms. Crosby agreed. 9:31:22 AM Senator Shower spoke to his understanding of the states election system. He shared that the director of the Division of Elections had testified that the division was currently under a bid for proposals. 9:31:54 AM Senator Wielechowski was curious about the items listed in the beginning of Section 18. He wondered why the money was not being spent on what had been previously authorized. Ms. Crosby agreed to provide the information later. 9:32:38 AM Ms. Crosby moved to page 28, Section 19; pertaining to reappropriation of Legislative funds back to the Legislature for Legislative Capital Projects. Section 20 pertained to the Alaska Housing Capital Corporation. She detailed that her office had met with every agency and had scrubbed any lapsing funds. She stated that due to the fiscal situation, it was decided that all lapsing funds would go into one fund entitled, the Alaska Housing Capital Corporation Fund, where the funds would remain until FY 2020. Co-Chair von Imhof detailed that the reason for the fund movement was due to the long list of reappropriations. She said that time constraints prevented the legislature to reappropriate them individually; the additional time would allow the legislature to plan for FY 2020 and reappropriate equivalently across projects while also knowing the final balance. 9:34:42 AM Senator Micciche was curious about the Sterling Highway road widening (Page 31, line 29). He noted that the road was very busy in the summer and assumed that before the funds were swept that a status of the project had been investigated and that DOT had agreed that the funds were not needed in the immediate. Ms. Crosby stated that all funds that were lapsing had been approved by the respective agencies. 9:35:42 AM Senator Bishop thought some of the projects dated back to 2007 and could be closed out. Co-Chair von Imhof stated all projects would be closed by Juneau 2019, and had been approved by their respective agency. 9:36:20 AM Senator Wielechowski requested more information concerning Page 30, line 12 and Page 31, line 25, which were reappropriations that effected his district. 9:36:47 AM Senator Shower expressed concern for the combining of appropriations on Page 25, line 10. He said that he would be monitoring the issue. 9:37:46 AM Co-Chair von Imhof reminded that the committee was discussing $5.4 million that could be reappropriated as general funds, matching funds, or to give districts funds for playgrounds, parks, etc. She stressed that by putting the funds into a big slush fund, it was possible ensure that all districts received the same amount; or, an argument could be made line by line. She asserted that those discussions would occur in the next legislative session. 9:38:49 AM Co-Chair Stedman explained that conversations had occurred with the other body concerning how to deal with the funds. He thought the proposed action was the fairest way handle the funds at this time. He emphasized that accounting would ensure that information on the genesis of the project funds was known. He stated that the action was to close out all the old projects around the state and move forward. Co-Chair von Imhof added that school bond debt reimbursement was still on a hiatus. She suggested that the $5.4 million could come in handy for school debt renovation. She believed that waiting a year to revisit how the money should be spent was prudent. 9:41:24 AM Senator Micciche appreciated Co-Chair von Imhof's approach on the matter. 9:41:56 AM Senator Olson asked whether any of the $5.4 million balance included lapsing grants by Department of Commerce, Community and Economic Development. Mr. Carpenter informed that some of the funds included lapsing grants. He could not speak to the amount. 9:42:31 AM Ms. Crosby agreed to provide Senator Olson with an amount. She addressed Section 21 of the bill, which covered lapsed provisions. Line 19 of Section 22 was the retroactivity clause. Section 23 through 25 contained effective dates. Ms. Crosby referenced a document entitled "Multi-year Agency Summary - FY 2020 Senate Structure" (copy on file). 9:43:42 AM Senator Hoffman asked about the specificity of the effective date. th Mr. Carpenter said that May 15 had been chosen in anticipation that it would be the last day of the legislative session. 9:44:15 AM Senator Wielechowski asked for more detail on the ASTAR project, Page 6, lines 29 and 30. He wanted to know how much had been appropriated and how the money had been spent. Ms. Crosby was happy to provide additional details to Senator Wielechowski. Co-Chair von Imhof recalled that the project was a way to connect the North Slope communities with broadband. 9:45:12 AM Senator Olson recalled that there was a commercial impetus to move the project forward. Co-Chair von Imhof thought some of the guiding principles of the capital budget had been not only health and safety, but connecting Alaskans to each other, and providing access to healthcare, education, and resources. She felt that the ASTAR project embodied those principals. 9:45:56 AM Senator Wielechowski asked about the South Denali Visitors Center, Page 8, lines 3 and 4. He wanted more information about how the funds would be used. He wondered whether the state would assume ownership or receive financial benefit from the investment. Co-Chair von Imhof stated that request was intended to get the project started and begin planning. She thought it was dependent upon the level of the state's involvement in the future. There was an expectation that a fee would be charged at the center. There was a lot of pressure on the Denali park and another entrance closer to Anchorage could relieve some of that pressure. She reiterated that the project was in the planning stages. 9:47:32 AM Senator Bishop thought there was a goal to fund the Division of Parks and Outdoor Recreation entirely through designated general funds. 9:48:02 AM Ms. Crosby noted that the Legislative Finance Division would have capital budget reports posted to their website. She relayed that the statewide total for the budget was $1,385,715,700. The UGF total was $172,086,300; DGF total was $55,112,000; other funds totaled $114,491,300; and federal funds totaled $1,044,026,100. Co-Chair von Imhof WITHDREW her OBJECTION. She stated that amendments were due by noon Monday, May 6, 2019. Co-Chair Stedman thanked Co-Chair von Imhof for her hard work on the capital budget. He discussed his past work on the capital budget and recalled the tremendous amount of work it took to craft the budget. Co-Chair von Imhof thanked her staff Shareen Crosby and Rob Carpenter. 9:50:33 AM Senator Bishop echoed the comments of Co-Chair von Imhof. SB 19 was HEARD and HELD in committee for further consideration.