CS FOR HOUSE BILL NO. 39(FIN) am(brf sup maj fld)(efd fld) "An Act making appropriations for the operating and loan program expenses of state government and for certain programs; capitalizing funds; repealing appropriations; amending appropriations; making reappropriations; and making supplemental appropriations." 9:37:14 AM Senator Wilson MOVED to ADOPT proposed committee substitute for CSHB 39(FIN), Work Draft 33-GH1347\P (Marx, 5/5/23). Co-Chair Stedman OBJECTED for discussion. 9:38:01 AM PETE ECKLUND, STAFF, SENATOR BERT STEDMAN, discussed the changes proposed in the CS. He read from a document titled "Changes from HB 39 version H (SCS2) to version P (SCS3)" (copy on file): • Technical correction to the structure of the FY23 legislature budget • DOH cost allocation assessment tool - fund as an FY24-26 multi-year, not a temporary increment (Inc T) this is already in the Senate budget, just changing how it is funded o Dollar amounts are unchanged. o Medicaid Services Cost Allocation assessment tool $2.04 million fed, $227 thousand UGF match o Senior and Disabilities Services Cost Allocation Assessment Tool - $698 thousand fed, 420 thousand UGF match Update the estimate in the FY23 judgments/settlements to include a new $115 thousand settlement (dept of law) • Fund the Alaska Gasline Development Corporation (AGDC) at the FY24 Unrestricted General Fund requested amount as a one-time item (3,086.1) • Add two fire standards council positions (Fire Training Specialist II, Fire Training Administrator) $250 thousand UGF head-start addition of $5 million UGF as a one-time item (above the $6.85 million UGF in the head-start base budget) • Office of the Governor Office of Management and Budget up to $5 million in FY23 lapse for distribution by OMB to central services agencies if cost allocation rates fall short of full reimbursement. Co-Chair Stedman WITHDREW his objection. There being NO further OBJECTION, it was so ordered. The CS for CSHB 39(FIN) was ADOPTED. Co-Chair Stedman relayed that the director of LFD would offer a brief review of the states fiscal position. He commented that the Senate was in discussions with the other body and there would likely be a forthcoming CS or amendments to consider. 9:41:24 AM ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION, addressed a document entitled "Document C," (copy on file), and informed that the document was updated from a previous version the committee received. He pointed out the first line, which showed the spring revenue forecast with a $73/bbl price of oil. He identified that SCS 2 and SCS 3 had modified the Alaska Industrial Development and Export Authority (AIDEA) dividend from the full amount, so the $17.9 million showed up as a revenue reduction. He continued that net fund transfers also took away from revenue, resulting in about $6.26 billion of revenue available. He listed that SCS 2, the previous version of the bill, had agency operations at about $4.48 billion which included the $175 million for K-12 education outside the funding formula. There were no changes from the previous version of the bill and SCS 3 in statewide items or the UGF capital budget numbers. Mr. Painter pointed out that the Permanent Fund Dividend (PFD) also showed no change from the previous version of the bill and was $881 million or 25 percent of the percent of market value (POMV) draw. With the items together there was an estimated $123 million surplus. The third Senate Committee Substitute (SCS 3) added $8.3 million UGF to the operating budget. The items that Mr. Ecklund reviewed included $3.1 million to AGDC, $5 million to Head Start, and $2500,000 to the Fire Standards Council. The fiscal notes estimate had been revised from $7 million in the previous version up to $26.4 million. Mr. Painter explained that the reason for the change was that the amendments made to the Base Student Allocation bill had added about $12 million, and the elections bill heard in committee the previous day had a capital fiscal note of $5.7 million. Adding the two items together had significantly increased the estimate for fiscal notes, which was still evolving and did not include all of the bills in the finance committees but represented a working estimate for those bills that were considered likely to pass. He continued that the $22.7 million estimate shown for Conference Committee additions represented the outside high case if the higher House items were chosen for everything. He summarized that line 15 showed a remaining surplus of $65.5 million. He thought the previous summary had shown a surplus of $93 million, the difference being the higher fiscal note estimate and operating budget additions. He noted that the surplus could potentially go to an increase in the capital budget in the other body, supplementals for next session, or a cushion in case oil prices were lower than expected. 9:44:46 AM Co-Chair Stedman asked what type of volatility in oil would it take to eradicate the $65.5 million surplus. Mr. Painter estimated that the amount would signify about $1/bbl in oil price swing. Co-Chair Stedman asked if Mr. Painter had absolute confidence that the Department of Revenue accurately predicted the oil price within a dollar. He thought it was unlikely that the price would come within a dollar. Co-Chair Stedman noted that the summary that Mr. Painter had addressed had been circulated amongst the House Finance Committee Co-chairs, the Speaker of the House, and Rules Committee Chair. There was a slight change from the previous days number due to the adjusted fiscal note estimate. He described that the document was subject to change with alterations with the budget. He thanked Mr. Painter for his balanced budget presentation. CSHB 39(FIN) was HEARD and HELD in committee for further consideration. Co-Chair Stedman handed the gavel to Co-Chair Olson. 9:46:27 AM AT EASE 9:48:43 AM RECONVENED Co-Chair Olson relayed that the committee would consider three bills: SB 95, SB 140, and SB 99.