CS FOR HOUSE BILL NO. 41(FIN) am "An Act making appropriations for the operating and capital expenses of the state's integrated comprehensive mental health program; and providing for an effective date." 2:04:09 PM Senator Bishop MOVED to ADOPT proposed committee substitute for CSHB 41(FIN), Work Draft 33-GH1349\S (Marx, 4/17/23). Co-Chair Stedman OBJECTED for discussion. Mr. Ecklund addressed page 7 of the document, which addressed changes to the proposed mental health bill. MENTAL HEALTH BUDGET LANGUAGE CHANGES SB42 (VERSION A) TO SENATE CS FOR HB41 (VERSION S) There only differences in the Mental Health budget language are the sections designed to mirror the operating sections for the salary adjustment language and for the bonuses. The details are below. 1. Revision of Sec 10, which is language related to salary and benefit adjustments for bargaining units. Two additional bargaining units were added to the language to incorporate additional unions and the addition to clarify Bonuses for certain employees of the executive branch. 2. Addition of Section 8 and Section 12. This language states that funding included in the budget for BONUSES FOR CERTAIN EMPLOYEES OF THE EXECUTIVE BRANCH is contingent upon o the state and the applicable bargaining unit of the employee entering into a letter of agreement for the bonus AND that o the Department of Administration provide a copy of the letter of agreement to the legislative finance division in electronic form not later than 30 days after the department enters into the letter of agreement. Mr. Ecklund noted that the changes mirrored proposed changes in the operating budget. Co-Chair Stedman WITHDREW his OBJECTION. There being NO further OBJECTION, it was so ordered. The CS for CSHB 41(FIN) was ADOPTED. CSHB 41(FIN) was HEARD and HELD in committee for further consideration. Co-Chair Stedman relayed that the committee would consider amendments and set an amendment deadline of 2 o'clock p.m. for Friday, April 21. He relayed that the director of the non-partisan LFD would give an update of the state's fiscal picture. He noted that there were a couple of large items that were not in the budget, primarily the Permanent Fund Dividend (PFD) and education funding. He emphasized that there were items that needed to be included in future CSs but contended that the state could not have an unbalanced budget. 2:07:33 PM ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION, spoke to a document entitled "LFD 1" (copy on file). He cited that the simplified document put numbers to what Co- Chair Stedman discussed. The first line showed the Department of Revenue's (DOR) Spring Forecast, based on $73/bbl price of oil. He noted that the Alaska Industrial Development and Export Authority (AIDEA) dividend was currently not in the proposed budget, which reduced revenue. The amount available on line 3 showed about $6.25 billion, while line 4 showed the agency operations numbers in HB 39 and HB 41. Line 5 had statewide items. Mr. Painter continued that Line 6 showed the capital budget from the first CS that was released the previous week, plus the mental health budget capital items that were also in the CS that was just adopted. The capital budget was $190.7 million compared to the governor's amended capital budget that was a bit over $300 million. Line 7 showed total appropriations of about $4.85 billion, and Line 8 showed $1.4 billion remaining for the PFD and additional education or other items as the committee chose. Co-Chair Stedman asked if Mr. Painter had any slides prepared that might show what it would look like to pay a statutory dividend versus a 50/50 or other amount PFD's. Mr. Painter relayed that he did not have any prepared slides but could tell the committee the numbers. Co-Chair Stedman noted that the other body had proposed a 50/50 dividend to total $1.763 billion. He asked Mr. Painter about the calculations if the budget were to pay the amount out of the $1.4 billion. Mr. Painter cited that the dividend level proposed in the other body would leave a deficit of approximately $360 million based on the CSs in front of the committee. Co-Chair Stedman noted that the deficit would occur without including additional education funding or additional capital budget funding. Mr. Painter agreed. Senator Merrick asked if $190 million for the capital budget captured all federal funds. Mr. Painter thought that the CS for the capital budget captured all the federal funds but did not invest in state- funded projects beyond that amount. Co-Chair Stedman asked about the roughly projected revenue if the committee decided to appropriate funds for K-12 education and a 75/25 percent PFD. He asked about projected revenue for education and capital projects if there was lower than expected revenue. Mr. Painter explained that the 75/25 dividend was $880 million, which would leave about $620 million remaining that could go to additional capital funds or K-12 education funding. For reference, he cited that the other body had considered $175 million in funding outside the education funding formula. The amount was not funded due to the failure of the vote to access the Constitutional Budget Reserve (CBR). The bill currently before the committee was roughly $100 million more. 2:12:10 PM Co-Chair Stedman asked if Mr. Painter had indicated that there was no K-12 funding in any currently proposed budget. Mr. Painter affirmed there was no funding proposed in addition to the K-12 education funding formula in either the House or Senate budget. He continued that both the CS being considered and the House version of the budget funded the K-12 statutory formula as it currently existed. The House had included an amendment to include funding outside the formula funding from the CBR. When the required vote failed the funding was deleted from the bill. Both the CS being considered, and the other body's budget only contained formula funding. Co-Chair Stedman thought the previous year the legislature had added $58 million to the formula funding, so if nothing additional was funded in the current year it would actually be a reduction. Mr. Painter affirmed that there had been $57 million funded outside the formula. He continued that while there was a $30 Base Student Allocation (BSA) increase in the current year, it was nowhere near to the size of the previous year's increase. Co-Chair Stedman asked Mr. Painter to prepare a summary sheet for members with illustrated options such as what it would take to fund a 50/50 or 75/25 dividend. He noted that members would have to consider a range for funding the BSA. He thought there was a desire by all committee members to increase the BSA and have a number in excess of the previous year's funding to varying degrees. He thought a summary would also assist in consideration of the capital budget. He wanted committee members to consider the possibility of revenue in excess of expectations, as well as the possibility of a backstop in the case that revenue fell below expectations. He mentioned a waterfall provision for the purpose of forward funding of education or other items. He discussed the possibility of revisiting the budget in January and February to add additional capital and maintenance money. CSHB 41(FIN) was HEARD and HELD in committee for further consideration. Co-Chair Stedman handed the gavel to Co-Chair Olson. 2:15:46 PM AT EASE 2:20:21 PM RECONVENED Co-Chair Olson relayed that the committee would consider two bills.