Legislature(2015 - 2016)Anch LIO BUILDING

05/21/2015 03:00 PM House FINANCE

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Audio Topic
03:11:56 PM Start
03:13:23 PM HB2001
03:40:49 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Location: 1st Floor Auditorium
-- Testimony <Invitation Only> --
+ FY15 and FY16 Operating Budgets TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
**Due to construction, streaming available in
Juneau in Capitol Rm 106**
HOUSE BILL NO. 2001                                                                                                           
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain  programs  and  capitalizing  funds;  repealing                                                                    
     appropriations;  making appropriations  under art.  IX,                                                                    
     sec. 17(c),  Constitution of the State  of Alaska, from                                                                    
     the constitutional  budget reserve fund;  and providing                                                                    
     for an effective date."                                                                                                    
3:13:23 PM                                                                                                                    
PETE  ECKLAND, STAFF,  REPRESENTATIVE MARK  NEUMAN, reviewed                                                                    
the legislation. He pointed out  that members had a one page                                                                    
handout  titled,  "The  FY 16  Operating  Budget  -  Special                                                                    
Session"  (copy   on  file)  in  their   bill  packets  that                                                                    
summarized the bill. He explained  that HB 2001 restored any                                                                    
vetoes that  the governor  made in  CCSHB 72;  the operating                                                                    
budget  passed   by  the   Conference  Committee   (CC).  He                                                                    
explained that HB 2001 restored  all of the line item vetoes                                                                    
made by the Governor. He  referred to two additional reports                                                                    
in the  members bill packet titled,  "Agency Summary Numbers                                                                    
and Language  (UGF Only)"  that he  referred to  as document                                                                    
"A" and "2015 Legislature  - Operating Budget Agency Summary                                                                    
- FY16  Post-CC Structure"  he referred  to as  document "B"                                                                    
that compared the totals from  the different versions of the                                                                    
budget  bills.  He  reported the  totals  from  the  various                                                                    
columns  on document  A. He  related  that the  CC total  on                                                                    
document  A   for  formula   and  non-formula   programs  in                                                                    
undesignated general  funds (UGF) only was  $4,059,039.9 and                                                                    
the total amount  the governor enacted after  his vetoes was                                                                    
$1,923,209.5. He furthered that  the column titled, "Special                                                                    
Session Operating" reflected  the UGF total in  HB 2001 that                                                                    
was $2,135,830.4. The combined  total of the enacted version                                                                    
of HB  72 (Approp:  Operating Budget/Loans/Funds) and  HB 73                                                                    
(Approp: Mental Health Budget) and  HB 2001 equaled the same                                                                    
total as  the CC version  of HB 72 and  HB 73 as  adopted by                                                                    
the  legislature.   He  offered  that  documents   A  and  B                                                                    
presented  the  "mathematical  check" for  the  budget  bill                                                                    
Mr.  Ecklund  addressed  the document  titled,  "The  FY  16                                                                    
Operating Budget  - Special Session". He  read the following                                                                    
from the document:                                                                                                              
     HB  2001 essentially  returns the  operating budget  to                                                                    
     the conference committee version.                                                                                          
     The  bill  does the  following  in  Section 1  (of  the                                                                    
     numbers section);                                                                                                          
     1.  Restores  all vetoes,  so  that  HB 2001  plus  the                                                                    
     enacted  version of  HB  72  duplicates the  conference                                                                    
     committee version of Section 1 of HB 72.                                                                                   
     2. Restates  intent and conditioning language  from the                                                                    
     conference committee  version of HB 72  as appropriate.                                                                    
     No new intent or conditioning language has been added.                                                                     
     The language  sections HB restores all  vetoes, so that                                                                    
     HB 2001  plus the enacted  version of HB  72 duplicates                                                                    
     the  conference  committee   version  of  the  language                                                                    
     sections fo HB  72. Sections 4 through  7 correspond to                                                                    
    original sections of HB 72 (as shown on the table).                                                                         
Mr. Ecklund explained  that the table showed  the changes in                                                                    
the language section  of HB 2001 (Sections 4  through 7) and                                                                    
where the items were located in  the CC version of HB 72. He                                                                    
further discussed  the document. He detailed  that Section 8                                                                    
(from HB 2001) provided  access to the Constitutional Budget                                                                    
Reserve  Fund (CBR)  under the  supermajority  rules for  FY                                                                    
2015 and FY 2016. He read the following:                                                                                        
     Section 9  repeats language from  HB 72 related  to the                                                                    
     use of the Higher Education  Fund to ensure that the FY                                                                    
     15 budget is fully funded.                                                                                                 
Mr. Ecklund  elaborated that  the governor  partially vetoed                                                                    
many items from  HB 72. He specified that one  area that was                                                                    
partially funded was education funding  for K through 12. He                                                                    
revealed that HB 2001 repealed  the partial vetoes and fully                                                                    
restored the  original mechanism  for funding  in HB  72. He                                                                    
reported  that  if HB  2001  was  adopted education  funding                                                                    
would be  "funded exactly the  way it  was funded in  the CC                                                                    
report of HB 72."                                                                                                               
3:18:48 PM                                                                                                                    
Co-Chair Neuman clarified  that HB 2001 restored  all of the                                                                    
vetoes due to  lack of funding to be funded  to the point of                                                                    
the CC version of HB 72.                                                                                                        
Mr. Ecklund pointed to page 30,  line 31 in Section 14 of HB
2001 and read the following:                                                                                                    
     * Sec. 11. Sections 26(d), 26(e), 33, and 36, ch. 23,                                                                      
     SLA 2015, are repealed.                                                                                                    
Mr.  Ecklund  informed  the  committee  that  the  repealers                                                                    
repealed  the  partial  vetoes of  K  through  12  education                                                                    
funding. The full funding that  was passed for education was                                                                    
contained within HB 2001.                                                                                                       
Representative  Kawasaki deduced  that  HB  2001 added  non-                                                                    
vetoed items to  HB 72 and equaled the CC  version of HB 72.                                                                    
Mr.  Ecklund  confirmed  that  Representative  Kawasaki  was                                                                    
correct. Representative Kawasaki  wondered about the meaning                                                                    
of "appropriate"  from the document  that Mr.  Ecklund read.                                                                    
Mr. Ecklund explained that the  language "in this Act" in HB
72 pertained  to the partial veto  appropriations therefore,                                                                    
in  order to  restore the  funding  the language  had to  be                                                                    
repeated in  HB 2001  since it related  to the  remainder of                                                                    
the funding in the partial veto.                                                                                                
Co-Chair  Neuman recognized  Representative Reinbold  in the                                                                    
Vice-Chair Saddler  wanted to  better understand  section 11                                                                    
and  asked Mr.  Ecklund  to re-explain.  Mr. Ecklund  stated                                                                    
that Section 11 repealed the  K through 12 education funding                                                                    
formula  sections  of  HB  72   because  the  sections  were                                                                    
partially  vetoed  by 72  percent.  He  delineated that  the                                                                    
"cleanest"  way to  restore the  funding in  HB 2001  to the                                                                    
level  of  the  CC  version  of HB  72  was  to  repeal  the                                                                    
remaining  funds  that were  enacted  and  restate the  full                                                                    
funding in HB 2001.                                                                                                             
Representative Wilson wanted to  clarify that there was $2.1                                                                    
billion more in  HB 2001 than the enacted version  of HB 72.                                                                    
Mr. Ecklund affirmed that the  statement was correct for the                                                                    
UGF and formula and non-formula area of the budget.                                                                             
3:23:08 PM                                                                                                                    
Representative Wilson  recalled that  the state  had roughly                                                                    
$1.6  billion in  other funds  that were  available for  the                                                                    
$2.1  billion additional  expense  in HB  2001. Mr.  Ecklund                                                                    
wondered if by "other funds"  she was referring to the Power                                                                    
Cost   Equalization   (PCE)    endowment   fund   containing                                                                    
approximately $1 billion and  the Higher Education endowment                                                                    
fund  with  roughly   $460  million.  Representative  Wilson                                                                    
replied  that  that  besides  the  funds  he  mentioned  she                                                                    
understood  that  other  "pots  of money"  from  the  Alaska                                                                    
Housing  Finance  Corporation   (AHFC)  and  elsewhere  were                                                                    
available. She  was ultimately  attempting to  discover what                                                                    
the  "bottom  line" figure  of  what  was available  without                                                                    
reserve funds.  Mr. Ecklund referred  to report "B"  on page                                                                    
2,  column   4  titled,  "Special  Session   Operating."  He                                                                    
determined that  when the number and  language sections, and                                                                    
statewide  items and  operations  were  included the  column                                                                    
indicated  that  the  amount  needed  was  $3,100,350.3.  He                                                                    
relayed  that the  state did  not have  $3.1 billion  in all                                                                    
other funds but did not know the exact amount.                                                                                  
Representative Wilson  wanted to  know how the  numbers went                                                                    
from   $2.135  billion   to  $3.12   billion.  Mr.   Ecklund                                                                    
communicated  that  report  A summarized  agency  operations                                                                    
formula  and  non-formula  funds  and  report  B  summarized                                                                    
formula and  non-formula funds and statewide  items such as,                                                                    
debt  service,  retirement  funding,  fund  capitalizations,                                                                    
Representative Wilson  maintained that she still  "wanted to                                                                    
see the  numbers." Co-Chair Neuman asked  for clarification.                                                                    
Representative Wilson  understood that  "a lot  of different                                                                    
smaller  funds" were  available and  that the  Department of                                                                    
Revenue  (DOR)   could  provide  a  list.   Co-Chair  Neuman                                                                    
responded that he would ask for the figures from DOR.                                                                           
Representative  Gara reiterated  the totals  in the  various                                                                    
versions  that was  discussed earlier  in  the meeting.  Mr.                                                                    
Ecklund concurred  with his statements.  Representative Gara                                                                    
voiced that  he did not  support the  budget in HB  2001 but                                                                    
wanted to understand the numbers.                                                                                               
Co-Chair   Neuman  recognized   Representative  Tilton   and                                                                    
Representative Hughes.                                                                                                          
Representative  Gara asked  Mr. Ecklund  how certain  he was                                                                    
that  the  math  was  accurate   in  HB  2001.  Mr.  Ecklund                                                                    
commented that  he was  100 percent  confident and  that was                                                                    
the  reason he  included  the summary  reports. He  reported                                                                    
that  David  Teal,  Director, Legislative  Finance  Division                                                                    
could speak to the accuracy of the legislation.                                                                                 
3:30:18 PM                                                                                                                    
DAVID TEAL,  DIRECTOR, LEGISLATIVE FINANCE  DIVISION, stated                                                                    
that he was  also confident that the  numbers were accurate.                                                                    
He explained  that the  governor transmitted  the electronic                                                                    
transactions of  the vetoes themselves  and he  reversed all                                                                    
of  the  vetoes  which  became HB  2001.  He  restated  that                                                                    
reversing  the vetoes  restored  the budget  to the  numbers                                                                    
adopted in the CC version of HB 72.                                                                                             
Representative Gara  understood that the governor  could not                                                                    
veto language sections. Mr. Teal  answered that the governor                                                                    
was  authorized  to  veto language  sections  and  did  veto                                                                    
language  sections in  the CC  version and  referred to  the                                                                    
table in the document titled,  "The FY 16 Operating Budget -                                                                    
Special Session" that cross referenced the vetoes.                                                                              
Mr. Teal further explained that  the governor could not veto                                                                    
"intent or conditioning language."  He could veto the amount                                                                    
of money affecting the intent or conditioning language.                                                                         
Representative  Guttenberg remarked  that  HB  2001 was  not                                                                    
"adjusted to  any changes or  requests" by the  agencies and                                                                    
that the  bill was adjusted  to the CC numbers.  Mr. Ecklund                                                                    
responded in the affirmative.                                                                                                   
Representative  Munoz understood  that  the governor  vetoed                                                                    
the incorrect  version of the operating  budget and wondered                                                                    
how that  affected HB 2001.  Mr. Teal assured  the committee                                                                    
that the  confusion was between  the engrossed  and enrolled                                                                    
versions and did not affect HB 2001.                                                                                            
3:34:11 PM                                                                                                                    
Mr. Teal explained that the  engrossed version was sent from                                                                    
the Chief  Clerk's office to Legislative  Legal Services for                                                                    
a final review. Subsequent to  the final review the enrolled                                                                    
version was sent to the governor for his signature.                                                                             
Mr.  Ecklund interjected  that  the  enrolled version  could                                                                    
contain technical corrections.                                                                                                  
Co-Chair Neuman discussed the agenda  for the following day.                                                                    
He  communicated  that  tomorrow's House  Finance  Committee                                                                    
meeting  would be  held at  10am to  11:00am and  would hear                                                                    
public  testimony on  HB 2001  from 11:00am  to 2:00  pm. He                                                                    
encouraged  the members  of the  public  to participate  and                                                                    
reminded the public that the  focus would be strictly on the                                                                    
operating budget.                                                                                                               
Representative  Kawasaki  stated   that  HB  2001  contained                                                                    
fairly  significant changes  from the  previous version  and                                                                    
asked if  the committee would  have the opportunity  to hear                                                                    
from  the Office  of Management  and Budget  (OMB). Co-Chair                                                                    
Neuman  indicated  that  Pat  Pitney,  Director,  Office  of                                                                    
Management  and  Budget, Office  of  the  Governor would  be                                                                    
available for questions.                                                                                                        
Vice-Chair  Saddler  reminded  the public  that  they  could                                                                    
submit written  testimony if they  were not able  to testify                                                                    
in  person. Further  discussion ensued  about the  logistics                                                                    
for tomorrow's meeting.                                                                                                         
HB  2001  was  HEARD  and  HELD  in  committee  for  further                                                                    

Document Name Date/Time Subjects
HB 2001 Staff Summary.pdf HFIN 5/21/2015 3:00:00 PM
HB 2001 Summaries -- Charts A & B.pdf HFIN 5/21/2015 3:00:00 PM