SENATE FINANCE COMMITTEE April 20, 2021 9:02 a.m. 9:02:08 AM CALL TO ORDER Co-Chair Bishop called the Senate Finance Committee meeting to order at 9:02 a.m. MEMBERS PRESENT Senator Click Bishop, Co-Chair Senator Bert Stedman, Co-Chair Senator Lyman Hoffman Senator Donny Olson Senator Bill Wielechowski Senator David Wilson MEMBERS ABSENT Senator Natasha von Imhof ALSO PRESENT Kris Curtis, Legislative Auditor, Alaska Division of Legislative Audit; Nate Graham, Staff, Senator Bill Wielechowski. PRESENT VIA TELECONFERENCE Betty Tangeman, Staff, Senator Josh Revak; Charles McKee, Self, Anchorage; Michael Chambers, Self, Anchorage; Deantha Skibinski, Alaska Miners Association, Anchorage; Ray Kreig, Self, Anchorage; Hans Zigmund, Director, Division of Finance, Department of Administration; Ryan McKee, State Director, Americans for Prosperity, Wasilla; Portia Noble, Self, Anchorage. SUMMARY SB 25 STATE GOV'T FINANCES: WEBSITE SB 25 was HEARD and HELD in committee for further consideration. SB 101 ADVISORY COMMISSION ON FEDERAL MGT AREAS SB 101 was HEARD and HELD in committee for further consideration. Co-Chair Bishop reviewed the agenda for the meeting. SENATE BILL NO. 101 "An Act extending the termination date of the Citizens' Advisory Commission on Federal Management Areas in Alaska; and providing for an effective date." 9:03:36 AM BETTY TANGEMAN, STAFF, SENATOR JOSH REVAK (via teleconference), introduced the legislation. She read the sponsor statement (copy on file): SB 101 is an important affirmation by the Alaska Legislature of the compelling need to maintain the vital efforts of the Citizens' Advisory Commission on Federal Management Areas in Alaska (CACFA). This bill extends this commission's sunset date from June 30, 2021 to June 30, 2029. CACFA was first established in 1981, shortly after Congress passed comprehensive legislation governing all federal public lands in the state, the Alaska National Interest Lands Conservation Act (ANILCA). Under the balanced compromise Congress crafted in ANILCA, 104+million acres were set-aside in permanent federal ownership as conservation system units,-(e.g., parks, preserves, wildlife refuges, wilderness areas) with many unique provisions enabling Alaskan's to maintain their traditions and livelihoods, accommodating the States and ANCSA corporations' social and economic needs, safeguarding opportunities for responsible resource development, and facilitating improvements in transportation and utility infrastructure. Those provisions included opportunities for the State, its communities, and rural populations to access and develop inholdings, allotments, and adjacent lands; construct and maintain transportation and utility systems; access, manage, and use State lands and waterways; retain state management of fish and wildlife; and provide for access and necessary facilities on federal lands. Adding in the Alaska Statehood Act and Alaska Native Claims Settlement Act, most Alaskans and most of Alaska are regulated under an extremely unique and complex legislative web. CACFA's mission is helping Alaskans navigate these complex rules and regulations and work with federal agencies to ensure Congressional intent is implemented with respect to their interests. As nationwide directives frequently ignore the Alaska context and balanced requirements in ANILCA, CACFA serves as a vigilant and knowledgeable resource for Alaskans to defend the rights and protections they were promised as stakeholders. While the State's ANILCA program and CACFA both monitor federal actions, the State cannot represent individuals/businesses and CACFA cannot defend State agencies' authorities. As institutional memory and expertise is lost, and as agency decisions that revise our history and upend our reasonable expectations are deferred to by the courts, federal managers have little incentive to uphold Congress's promises to Alaskans. The Sturgeon v Frost, U.S. Supreme Court case, is an example of a private citizen's $1.5 million battle against federal laws being enforced on state land. More recently, President Biden issued an Executive Order directing that at least 30% of our lands and waters be placed in permanent protection status by 2030 (30 by 30), placed a moratorium on new oil and gas leases and halted leasing in ANWR's 1002 area. These examples emphasize the need for vigilance to fight against the erosion of ANILCA protections by uninformed federal managers and politicians. With federal land management policies increasingly at odds with Alaska's desire to access, manage, and sustainably develop its natural resources, CACFA is an essential tool in ensuring Alaskans have a strong and powerful voice. Over the 62 years since statehood, the federal government has consistently failed to keep its promises to honor the Alaska way of life. Now is not the time to allow CACFA to sunset. I urge you to join me in allowing CACFA to continue its important mission by passing SB 101. 9:06:33 AM KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF LEGISLATIVE AUDIT, stated that there was an audit on CACFA dated April 2020 (copy on file). She explained that the purpose of the sunset audit was to determine whether a board or commission was serving the public's interest and whether it should be extended. The commission was active from 1981 until 1999 at which point its funding was eliminated. The commission was reestablished in 2007 and operated from FY 08 through FY 17 at which point its funding was again eliminated. Federal management of land in Alaska had been widely criticized. Concerns with federal overreach and unfulfilled commitments led to the reestablishment of CACFA. The commission was reestablished to advocate on behalf of Alaska's citizens on issues related to federal management of land in Alaska. Ms. Curtis indicated report conclusions began on page 7. She pointed out that the prior sunset audit was February 2015. The current sunset audit reviewed the period from February 2015 through June 2017. Ms. Curtis reported that beginning in FY 17 funding for CACFA had not been a priority - not a consistent priority for the governor or the legislature. Both entities had funded the commission at different times. Funding for the commission in FY 17 was approved by the legislature but vetoed by the governor. Funding for the commission for FY 18 and FY 19 was not included in the governor's request or in the final operating bills. The legislature approved funding in FY 20 but the governor again vetoed the appropriation. The governor's amended FY 21 included funding for the commission, but it was not part of the operating bill. Ms. Curtis continued that overall, the audit concluded that from the date of the prior sunset through June 2017 the commission operated effectively and did not significantly duplicate the activities of other entities. The audit also concluded that there was a continued public need for the commission and recommended an 8-year extension. The audit found that when CACFA was active, the executive director monitored the federal register for new information related to CACFA's mission, provided comments on proposed changes, and brought relevant information to the commission's attention. If determined necessary, CACFFA sent a comment letter to the applicable federal agency. Comment letters formally summarized CACFA's concerns with proposed management plans and changes to regulations and laws. The commission sent 14 comment letters and testified 4 times from February 2015 through August 2016 - indicative of a very active commission. Letters and testimony were directed to federal agencies and congressional subcommittees. Ms. Curtis added that CACFA invited federal agencies to present information and discuss federal plans and policies via panel discussions to help facilitate communication between the public, state, and federal agencies. Meetings generally lasted from 1 to 2 days and included multiple presentations from individuals representing federal agencies such as the U.S. National Park Service, U.S. Fish and Wildlife, the Bureau of Land Management, and state agencies like the Department of Natural Resources (DNR) and the Department of Fish and Game (DFG). Ms. Curtis continued that per the CACFA executive director, the director and staff assisted between 15 and 20 Alaska citizens at a time with issues related to federal land management by helping write complaints and requests for information and by guiding citizens to the appropriate agencies. In addition, staff accompanied citizens to permit and informational meetings to provide support and expertise. The report made no recommendations. She indicated that responses to the audit began on page 21. The DNR commissioner concurred with the recommended 8-year extension. 9:10:38 AM Senator Olson had heard Ms. Curtis discuss the effectiveness of the commission while it was funded. He asked her to provide an example of a significant effect the commission had regarding federal overreach. Ms. Curtis replied that one thing that impressed her most about the commission was how it advocated on behalf of citizens. The complexity of the Alaska National Interest Lands Conservation Act (ANILCA), the Alaska Native Claims Settlement Act (ANCSA), and the Federal Land Act, was a challenge for the average citizen to wade through and decipher. The commission was advocating on behalf of Alaska's citizens. She was extremely impressed with how the commission was hands on with the average person needing assistance. Co-Chair Bishop indicated someone from DNR was online and available for questions. Senator Olson commented that in looking at the commission make up there was a lack of ANCSA representation. He asked why more native corporation folks were not involved. Ms. Curtis responded that the commission was composed of 6 appointees of the governor, 3 from each body of the legislature including 1 House member and 1 Senate member. The audit did not investigate the makeup of the board. 9:13:07 AM Co-Chair Bishop OPENED public testimony. CHARLES MCKEE, SELF, ANCHORAGE (via teleconference), testified in support of the bill but did not understand how the legislation would be funded without additional resource extraction. 9:16:39 AM MICHAEL CHAMBERS, SELF, ANCHORAGE (via teleconference), testified in support of SB 101 and the funding of CACFA. He was aware the commission operated on $285,000, the bulk of which went to the intellectual property of the lawyer involved in the case. He referred to the Alaska State Lands Advisory Group (ASLAG) report which could be found on DNR's website and recommended that members read it. The 53-page report was put together under the chairmanship of Mr. Mead Treadwell regarding the violations of the federal government around ANILCA. He reported that since 1980, the federal government had violated ANILCA in accordance with the State of Alaska over 2000 times. The state's sovereign nature had been violated several times, and the commission stood in support of recognizing the violations and bringing them to a public format. He thought it was important to understand and recognize that in the ANILCA report there was a "no more" clause. He opined that having CACFA intact was essential to protecting Alaska's sovereign rights. 9:18:57 AM DEANTHA SKIBINSKI, ALASKA MINERS ASSOCIATION, ANCHORAGE (via teleconference), spoke in support of extending the sunset of CACFA. The commission was initially created a year after the passage of ANILCA to give Alaskans a voice in navigating the complex land management issues in Alaska. Ms. Skibinski continued that the state's largest landlord was not the state. It was the U.S. Department of Interior with large swaths owned and managed by the U.S. Department of Agriculture and the U.S. Forest Service. She noted that there was a secretarial order signed on the previous Friday by Interior Secretary Holland that revoked the following previous secretarial orders on the National Petroleum Reserve Alaska (NPRA), American Energy Independence, America First Offshore Energy Strategy, and streamlining National Environmental Policy Act (NEPA) policy reviews. She indicated that the introductory conversation included some great information about the 30/30 initiative. Ms. Skibinski continued that the orders and other initiatives were massive land management actions that required hours of reading and research to fully understand the implications to all Alaskans. She suggested that for many years CACFA had been the entity to keep up with the information. The Alaska Miners Association thought it was more critical than ever for the commission to be engaged in identifying the impacts of federal actions coming from the current administration. She believed SB 101 was a great start keeping CACFA in statute and addressing the issues. She noted having a letter on record and urged members to pass the bill out of committee. 9:21:03 AM RAY KREIG, SELF, ANCHORAGE (via teleconference), spoke in support of SB 101. He reported that in 1978 when President Carter declared national monuments across Alaska as a precursor to ANILCA, he owned two properties - one near Mt. McKinley National Park and one in the Upper Yukon River area. He noted Alaskans having had a huge problem with federal and state interface because of the action. He learned about CACFA being proposed, testified, and followed the legislation at the beginning of CACFA when Betty Fehrenkamp was carrying it 40 years prior. Since then, he had watched CACFA become an effective and economic means of helping citizens deal with federal overreach. He urged the legislature to extend CACFA's existence and to support it financially. 9:23:34 AM Co-Chair Bishop CLOSED public testimony. Co-Chair Bishop stated that the amendment deadline was Friday, April 23, 2021 at 12:00 P.M. Co-Chair Stedman commented that the funding for CACFA in the amount of $178,000 was not insurmountable and would be money well spent. SB 101 was HEARD and HELD in committee for further consideration. SENATE BILL NO. 25 "An Act relating to the establishment and maintenance of an Internet website providing information on state government financial transactions and specifying the information to be made available on the website." 9:24:57 AM SENATOR BILL WIELECHOWSKI, SPONSOR, introduced the bill. Senate Bill 25 would create a publicly searchable online checkbook. The state currently had an excel spreadsheet that could be downloaded. However, it was extremely difficult to download and very slow to operate. It was not intuitive and did not provide much information. It was also not easily searchable. Senator Wielechowski continued that all of the things he mentioned had led to the State of Alaska receiving a grade of F from groups that monitored access to government information. In the supporting documents there was a report from the United States Public Interest Research Group, a non-partisan organization, which rated states on financial transparency. The organization had given Alaska an F in 5 out of the previous 6 years. Alaska was currently ranked 49th out of the 50 states in terms of access to the state's financial information. In the prior spring the Department of Administration (DOA) removed the state's checkbook from the website. The information was back online after the most recent hearing in the Senate State Affairs Committee. The committee was displeased that the checkbook had been taken down. Senator Wielechowski asserted that Alaska was effectively the least transparent state in the United States when it came to providing access to government financial information. The bill was easy to implement, as the financial information was already collected by the state. It was simply a matter of someone putting together a publicly searchable website. He noted that when the website was taken down, he had his staff build an online checkbook which took about a day and a half. His staff's version was not as sophisticated as he would have liked, but the state's talented IT staff would likely be able to get the task done with ease. The bill had widespread support. He had introduced a bill in 2009 that was almost identical which passed in the Senate but not in the House in the final days of session. One of the arguments against it was that it was not needed because the state had already started doing it once the bill had been proposed. However, currently it was needed since the administration had taken it down. Senator Wielechowski relayed there were a couple of reasons why he thought the legislation could save the state in the long run. First, it allowed the public to see where state money was being spent and suggest efficiencies. He had heard from businesses and contractors who supported the bill because it allowed them to see the amounts of their competitors' contracts which would encourage more competitive bids to the state and save the state money. Currently, anyone who wanted information from the state had to submit a request. In other states where there were more sophisticated online checkbooks, it saved state resources. Instead of people having to submit formal requests for information, they would be able to go online and get the information themselves. It would reduce the efforts of state employees having to obtain the information in response to formal requests. He argued that the bill was a common-sense piece of legislation and urged members' support. Senator Olson wondered what other states did to try to make an online format more user friendly for looking at the state's finances. Senator Wielechowski noted that Ohio was one of the best states in terms of its access to state financial records online. He had talked to the department responsible for the State of Ohio's checkbook online to find out more. He deferred to his staff to provide additional insight. 9:29:59 AM NATE GRAHAM, STAFF, SENATOR BILL WIELECHOWSKI, replied that in Alaska if a member of the public wanted to see the state's financial transactions, they had to download an Excel spreadsheet that had 100,000 or more lines of data and search individually from the downloaded Excel sheet for the expenses they wanted to see. States like Ohio had a tool similar to a Google search where a person could type in a department or a vendor and the expenses would automatically pop up. Ohio used a system that did not use a giant Excel spreadsheet. The process was all online and it was easy to extract the necessary data. He suggested the search was similar to the one used on Alaska Public Offices Commission's (APOC) website. Senator Wilson directed a question to DOA. 9:31:44 AM HANS ZIGMUND, DIRECTOR, DIVISION OF FINANCE, DEPARTMENT OF ADMINISTRATION (via teleconference), introduced himself. Senator Wilson asked about the fiscal note and the new software upgrade to IRIS which was expected to conclude in FY 22. It would have to automatically be placed into the reporting requirement. He wondered if the new upgrade of IRIS already included a searchability function or whether it would be an additional cost. It looked like the additional consulting and development costs were expected to be $40,400. However, the fiscal note was zero. He wondered if the costs of the reporting requirement were already included. Mr. Zigmund responded that it was an additional fee. The IRIS upgrade was expected to conclude in January 2022 and was being paid for with the capital appropriations that had already been provided to the Division of Finance. The expense was a separate capability that required a separate capital expenditure. The monies that were in the online checkbook bill were for the servers and data visualization software that the state would be using to overcome some of the challenges that Senator Wielechowski presented in his testimony. For example, the current checkbook was not as visually appealing or as easily searchable as Ohio's. Mr. Zigmund continued that part of what the department intended to do was utilize software licenses and servers through the Office of Information Technology and would be ongoing operating expenses. There were also development costs for creating an online checkbook. The complexities of creating an online checkbook came from a number of different areas. He explained that when the Division of Finance was working with the data, they started at a level below what the public would see. The state had to do mass data for confidentiality, aggregate confidential payments, and avoid disclosure of anything that could not be disclosed. He also noted that conversations with the State of Ohio also highlighted some of the challenges they experienced in building their online checkbooks so that things like child welfare payments and victim restitutions were not improperly disclosed. The division would be using additional resources from CGI to help with the development beyond the cost of the IRIS upgrade. Senator Wilson wondered whether the vendor in Ohio would be the same vendor in Alaska. Mr. Zigmund replied in the negative. Senator Bishop asked Mr. Graham to walk through the sectional analysis of the bill. 9:36:11 AM Mr. Graham reviewed the Sectional Analysis (copy on file): Section 1 Names the act "the Alaska Online Checkbook Act." Section 2 Adopts legislative findings and intent: Subsection (a) establishes that this bill is intended to allow people identify and discover state revenue and expenditures. Subsection (b) requires that this act by interpreted in favor of disclosure and transparency. Subsection (c) finds that state revenue and expenditures must be accounted for and easily accessible to the public in order to maintain a fair and open government. Subsection (d) adopts intent that the state should strive to create a user-friendly website that gives the public access to the state's financial information in a centralized location. Section 3 Requires that the Department of Administration to make the financial transactions of the state and the annual audit available electronically for use in the public finance internet website. Section 4 Creates a new AS 37.05.215. AS 37.05.215 (a) Requires the Department of Administration to develop operate and maintain a searchable, free to the public, website that provides financial information available from the central accounting system or the annual financial report. AS 37.05.215 (a) (1)-(3) Requires the following information and transactions to be posted on the online check book website and monthly state income including: ? Receipts or deposits by a state agency into a fund or account established within the state treasury. ? Proceeds from taxes received, categorized by source type, including compulsory contributions imposed by the state for the purpose of financing services. ? Agency earnings including amounts collected for sales or services, licenses, or permits issued, or otherwise received by an agency. ? Revenue received for the use of state money or property including interest and lease payments gifts, donations and federal receipts and other revenue. Expenditures including: ? The names and locations of any persons to whom payment was made. ? The amounts of the expenditures disbursed. ? The type of transaction, by account code, including the purpose of the expenditure. ? Other information specified by the department. The balance of the following state accounts: ? Statutory Budget Reserve. ? Constitutional Budget Reserve. ? Permanent Fund Earnings Reserve Account. AS 37.05.215 (a) (4)-(7) Requires the following information be posted on the online check book website and updated monthly: The amount deposited into the Permanent Fund from all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments, and bonuses received by the state. State revenue and expenditures, summarized by: General fund revenue sources categorized by function, department, and account. Total general fund income compared to expenditures. Total assets compared to liabilities at the end of the fiscal year. For the preceding 10 years, by fiscal year the following: ? The number of state employees by department. ? The number of independent contractors engaged by the state by department. ? The total long-term debt owed by the state. ? Total general fund expenditures. ? All general fund payroll by department. AS 37.05.215 (b) Describes the reporting requirements for the previous subsection. AS 37.05.215 (c)(1) Requires that the website have reference materials to assist the public in understanding the financial provided on the website. AS 37.05.215 (c)(2) Requires the website to have a feature that allows users to search for information on the website by keyword and recipient. AS 37.05.215 (c)(3) Requires the site to have a link to the website of the Legislative Audit Division. The site must also include electronic copies of information related to state service procurement contracts, including compensation and contract length and of information related to independent contractors engaged by the state, by state agency, including compensation and contract length. AS 37.05.215 (d) Requires the Department of Revenue and other state agencies that use the central accounting system to provide information to the Department of Administration that is necessary to comply with this act. AS 37.05.215 (e) Clarifies that this bill will not require the disclosure of information that is confidential under state or federal law and requires that aggregated information be disclosed if it can properly protect confidentiality AS 37.05.215 (f) Defines "expenditure," "searchable Internet website," and "state agency." Section 5 Requires the website to be operating on or before October 1, 2022. Section 6 Requires information from the previous fiscal year be on the website by October 1, 2023 and requires site to be updated. Requires the Department of Administration to continue to make their current Alaska Checkbook Online Internet website operational until the bill goes into effect. Transitional Provisions Requires the Department of Administration to continue to maintain their current online checkbook, until section 4 of this act take effect. 9:42:05 AM Senator Hoffman pointed to page 5, and the definition of "expenditure." He remarked that at the end of each fiscal year the State of Alaska had encumbrances that committed to making payments of substantial amounts. He did not see encumbrances as a category. He wondered why it had not been included in the definition of expenditure. Mr. Graham would have to get back with an answer. There were a few issues with the expenditure that Senator Wielechowski was trying to address. For example, a Permanent Fund Dividend would be included, yet it was not the intent to list every Alaskan who was paid a PFD in the checkbook. There were some issues that still needed to be resolved. Senator Hoffman noted that it was not a small item, rather it was huge. Individuals would not see the total amount until an encumbrance was paid. He suggested that encumbrances be included in the expenditures to provide Alaskans a clear picture of committed monies. He provided an example of building a school. At the halfway mark of a project $10 million was expended, but $20 million was appropriated. The appropriation amount was important information for the public to know about as well as the amount already expended for the school project. Both pieces of information were critical for transparency. Co-Chair Stedman added to the topic of accrual. He thought it was also significant when looking at the state's savings. For example, the Constitutional Budget Reserve (CBR) had encumbrances, and it was nice to know about available cash balances. He wanted to avoid as much misinformation as possible. 9:46:10 AM Co-Chair Bishop asked if the bill sponsor had any anecdotal or analytical figures regarding the traffic accessing the checkbook in a given year. Mr. Graham deferred to Mr. Zigmund. Mr. Zigmund replied that he would have to research the answer and get back to the committee. Senator Wilson asked if the bill sponsor would consider including the reimbursable service agreements (RSAs). He was aware of one department having about $17 million of unbudgeted RSAs. He wondered if it had been a consideration and why it was excluded. Mr. Graham agreed to provide the information. Co-Chair Bishop asked Mr. Graham if he understood the senator's question. Mr. Graham replied in the affirmative. 9:48:00 AM Co-Chair Bishop OPENED public testimony. RYAN MCKEE, STATE DIRECTOR, AMERICANS FOR PROSPERITY, WASILLA (via teleconference), testified in support of the bill. Senate Bill 25 would create a free searchable website that would provide Alaskans with easy access to detailed and comprehensive information on state spending. It would encourage better understanding of state operations and ultimately reduce waste and ensure that funding was directed to the state's most important needs. All 50 states operated websites that made information on state expenditures and revenue open to the public. However, compared to other states, Alaska's website was ranked as one of the worst in the nation. Additionally, the state's online checkbook website removed all of FY 20 expenses and has not been updated in nearly a year. Although the state had an online checkbook, it did not provide any big picture context about state expenditures versus revenue. The checkbook codified in law. Mr. McKee continued that the ability to see how Alaska's government used public funding was fundamental to transparency, bolstered public confidence in government, and promoted fiscal responsibility. Americans For Prosperity also believed that if the state maintained a better website, it could save the state time and money. State employees currently spent time responding to freedom of information requests for public information that could and should already be accessible online. It was his hope that the state and federal government would champion economic opportunity-focused reforms that allowed Alaskans to keep more of their hard-earned paychecks and recover stronger from COVID-19. He encouraged the Senate Finance Committee to pass the legislation. 9:50:27 AM PORTIA NOBLE, SELF, ANCHORAGE (via teleconference), testified in support of the legislation. She was grateful for Senator Wielechowski's approach to giving Alaskans more access and transparency. Nearly every state in the nation had some kind of transparency website including Alaska. However, some websites were better than others. Alaskans deserved to know exactly how tax dollars were being spent. The checkbook site would be a user-friendly tool that would help Alaskans understand where public dollars were being used. More importantly, her hope was that the bill would help elected officials root out wasteful government spending. Increasing transparency and accountability was key to restoring trust in government and to not be a partisan issue. She was grateful that Senator Wielechowski addressed the concerns of the former commissioner of DOA regarding the number of independent contractors engaged by each agency and the total long-term debt owed by the agencies. She reiterated her support for SB 25. 9:52:10 AM Co-Chair Bishop CLOSED public testimony. 9:52:13 AM AT EASE 9:52:55 AM RECONVENED Co-Chair Bishop stated that there were many outstanding questions that needed addressing before an amendment deadline could be set. He discussed the following day's agenda. SB 25 was HEARD and HELD in committee for further consideration. ADJOURNMENT 9:53:45 AM The meeting was adjourned at 9:53 a.m.