SENATE BILL NO. 71 "An Act relating to special request registration plates celebrating the arts; relating to artwork in public buildings and facilities; relating to the management of artwork under the art in public places fund; relating to the powers and duties of the Alaska State Council on the Arts; and providing for an effective date." 9:10:27 AM Co-Chair Bishop relayed that it was the first hearing of SB 71, and the intent of the committee was to hear the bill and set it aside. After hearing from invited testimony, he would open public testimony on the bill. 9:11:32 AM SENATOR GARY STEVENS, SPONSOR (via teleconference), thanked the committee for hearing the bill. He relayed that SB 71 was drafted at the request of the Alaska State Council on the Arts (ASCA). It was a bill that allowed the council to raise funds from the sale of arts license plates, and held the council harmless by disallowing a veto hold for funding the council raised private funds. 9:12:32 AM TIM LAMKIN, STAFF, SENATOR GARY STEVENS, addressed a Sectional Analysis for Version I of the bill (copy on file): Sec. 1: AS 28.10.421(a), relating to fees paid to the Division of Motor Vehicles (DMV) for vehicle license plates, allows for an additional fee, set by Alaska State Council on the Arts (ASCA) regulation, and not to exceed $50, when a person chooses a new or replacement ASCA artistic plate. The subsection also provides that these additional fees will be accounted for separately and that the total amount that exceeds the costs of the Artistic License Plate Program may be appropriated to fund the ASCA. Mr. Lamkin noted that in Section 1, the fee was intended not to exceed $50, but clarified that the fee would not be set at $50. He continued to address the Sectional Analysis: Sec. 2: AS 35.27.020(h), relating to the Art Works in Public Buildings and Facilities program, adds a new subsection to specify ASCA's management responsibility for public artwork created under the program, to include the management of the relocation, disposition, or exchange of such artwork. Sec. 3: AS 44.27.050(7), relating to the duties of the ASCA, is a cross reference to the prior section, specifying ASCA's management responsibility for public artwork created through its programs, to include the management of the relocation, disposition, or exchange of such artwork. Sec. 4: AS 44.27.053(a), establishes the Attorney General being legal counsel for ASCA, similar to other state agencies, and allows the ASCA to retain additional legal counsel as needed, subject to the approval of the Attorney General. Sec. 5: AS 44.27.055(d), relating to the ASCA managing its affairs, exempts from the purview of the Executive Budget Act those funds received by ASCA from private non-profit foundation partners. Sec. 6: AS 44.27.080(a), relating to an ASCA-sponsored competition for artistic plates design, from being mandatory to being optional, every four years, at the discretion of ASCA. Sec. 7: AS 44.27.080(c), relating to the artistic plate design competition, restores authority for the ASCA to award the artist of the winning design a monetary amount set in regulation, from the funds generated by the artistic plates. This provision was repealed in 2018. Sec. 8: Provides an effective date of July 1, 2021. 9:15:59 AM BEN BROWN, CHAIRMAN, ALASKA STATE COUNCIL ON THE ARTS (via teleconference), thanked the sponsor and his staff for the work on the bill. He affirmed that Mr. Lamkin had addressed the provisions accurately and succinctly. He commented that the bill was somewhat time sensitive. He discussed the current Alaska Artistic License Program, which involved artist-designed license plates. He explained that the plates were not like other special plates. There was a dual purpose to the plates: to celebrate an Alaskan artist, and to provide a small piece of visual artistic beauty on cars. The program was originally structured with no additional fee to Alaskans. The public response had been amazingly positive. Mr. Brown mentioned the National Arts and Humanities Act, which dictated the calculation for state funding, and explained that there was a minimum state contribution in every state to trigger the federal match, which for the arts council equated approximately $600,000. He noted that much of the ASCA budget was from non-governmental sources. Without the state contribution, the council would not have access to funding partners such as the Rasmussen Foundation. He relayed that the council wanted to earn some income to help with the state match. He continued that foundation funds could not be used to fund the state much, however designated general funds (DGF) in the form of revenues from the Artistic License Program, could do so. He asserted that every dollar from an artistic license plate signified an undesignated general fund (UGF) dollar that did not need to be requested from state general funds. He noted that other provisions of the bill were targeted changes identified when the topic of the bill had been raised. 9:20:47 AM Senator Wilson asked about the total of state funds needed for matching funds. Mr. Brown specified that the council needed $686,000 to trigger federal matching funds. Senator Wielechowski asked for the approximate amount of private funding or funds from nonprofit organizations the council received. Mr. Brown relayed that for FY 22, the governor's proposed budget for the council included $685,100 in UGF, $10,900 in DGF, $806,000 in federal funds, and $2,359,700 in statutorily designated program receipts. He approximated that about 54 percent of the council's overall budget was coming from non-governmental foundation partner sources. Senator Wielechowski referenced Section 5 of the bill, which exempted the council from the Executive Budget Act. He asked for the rationale behind the provision. Mr. Brown explained that the provision was a direct result of the council's experience from a few years ago when all of the council's funding had been vetoed. He explained that at the time, if the statutorily designated program receipts had not been vetoed, the council would have been able to stay in operation longer and not have had to abruptly shut down and lay off all its staff, close its offices, and erase its website. After the funds had been restored by the legislature, he had met with the governor and his chief of staff to discuss putting a provision in the statute to exempt the component of the budget from the Executive Branch Budget Act. He noted that the bill section was there with the concurrence of the Dunleavy Administration. He did not see the provision as problematic. The rationale was that the funds were not governmental and did not need to be subject to the act in the same way that state and federal dollars were. 9:24:04 AM Co-Chair Bishop asked if Mr. Brown could discuss auditing protocol for the council if Section 5 of the bill were to go into effect. Mr. Brown did not believe that being exempted from the Executive Branch Budget Act would prevent the Legislative Audit Department from looking at all funds received and spent by the council. He noted that the council was administratively housed in the Department of Education and Early Development (DEED). He elaborated that the council could come up with any new procedures that might be necessary if Section 5 became law along with the rest of the provisions of the bill. He noted that there were specific provisions that detailed how funds from the National Endowment for the Arts could be spent. He thought there might be additional steps to ensure transparency for Legislative Audit or other entities but assured that the provision was not to escape tracking but rather to prevent private foundation funds from being vetoed by a future governor. Co-Chair Bishop stated he would reach out to the legislative auditor for clarification on some of the questions that had been raised. Senator Wielechowski was curious how procurement would be done with funds from private or non-profit organizations. He asked if there were any related procedures in place at the council. Mr. Brown explained that ASCA had undergone a transition to become a quasi-public corporation and ceased to be a regular-line agency, it was already somewhat exempted from the strictures of state procurement. He relayed that ASCA had since endeavored to come up with a standalone code, but at the current time, the council followed all of DEED's current requirements. He continued that ASCA was farther along with its personnel policy that the conversion to a public corporation status allowed for. He noted that ASCA only had three staff that were juggling the administrative and finance tasks to run the agency, and unfortunately did not have a dedicated finance person. Mr. Brown continued to address Senator Wielechowski's question. He qualified that ASCA was not in the same position of a regular agency but continued to behave as one with regard to procurement until such time that there was sufficient staff to set up a separate set of procedures. The change in procedure would be done in concurrence and with the approval of DEED, and he was confident that the change would satisfy the public's interest in ensuring that procurement activities were legitimate and documented. 9:28:53 AM Co-Chair Bishop OPENED public testimony. 9:29:10 AM Co-Chair Bishop CLOSED public testimony. Co-Chair Bishop set the bill aside. SB 71 was HEARD and HELD in committee for further consideration.