Legislature(2015 - 2016)HOUSE FINANCE 519

03/17/2016 01:30 PM House FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

Audio Topic
01:31:23 PM Start
01:32:20 PM HB222
02:29:19 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
<Bill Hearing Canceled>
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 222                                                                                                            
     "An Act relating to increases of appropriation items."                                                                     
1:32:20 PM                                                                                                                    
JULIE LUCKY,  STAFF, REPRESENTATIVE MIKE  HAWKER, introduced                                                                    
the legislation and read from prepared remarks:                                                                                 
     House  Bill 222  would codify  a process  to allow  the                                                                    
     legislature  to prevent  the  governor  from using  the                                                                    
     Revised Program Legislative  - which we know  as RPLs -                                                                    
     procedure  from  increasing   funds  for  a  particular                                                                    
     specified budget  item. As we all  know the legislature                                                                    
     has the  constitutional power and duty  to appropriate.                                                                    
     All appropriations  must be authorized by  law, meaning                                                                    
     they must be  included in the budget bill  that we pass                                                                    
     during  our legislative  session  with  the whole  body                                                                    
     voting on it.                                                                                                              
     For some  appropriation items the exact  amount may not                                                                    
     be known when you all  finalize the budget or there may                                                                    
     be  additional funds  that  come  available during  the                                                                    
     year while the legislature is  not in session. In order                                                                    
     to  allow  the  governor  to accept  these  funds,  the                                                                    
     legislature codified  a process in the  late 1970s that                                                                    
     is what we call our RPL  process. Just to be clear, the                                                                    
     RPL  process  can only  be  used  to accept  additional                                                                    
     funds  for   existing  budget  items;  it   has  to  be                                                                    
     something  that was  included in  the  budget and  then                                                                    
     additional funds become available.                                                                                         
1:34:21 PM                                                                                                                    
Co-Chair Thompson  noted Representative Kawasaki  had joined                                                                    
the meeting.                                                                                                                    
Ms. Lucky relayed there were  two necessary steps to the RPL                                                                    
process. She  noted she had  provided information  about the                                                                    
RPL process  and budgetary language  in the bill  packet for                                                                    
committee  members (copy  on file).  The first  step was  to                                                                    
include language  in the budget  that allowed  an open-ended                                                                    
appropriation  for specific  types  of  receipts (listed  in                                                                    
Section 24  of the  current and  prior year  budgets), which                                                                    
allowed  additional funds  to  be accepted  as  long as  the                                                                    
process outlined  in AS  37.07.080(h) was  followed. Second,                                                                    
the  governor  must  follow  the   process  outlined  in  AS                                                                    
37.07.080(h)  to submit  the RPL  to the  Legislative Budget                                                                    
and Audit (LBA) Committee for  review. The submission of the                                                                    
RPL started a  45-day clock; at the end of  the 45 days, the                                                                    
governor  could   expend  the  funds.  She   noted  the  LBA                                                                    
committee was  not required to  hold a hearing on  the RPLs,                                                                    
to  take any  action,  and  had no  authority  to reject  or                                                                    
reduce the  funds. She explained  that giving  the committee                                                                    
the authority  would require  a constitutional  amendment as                                                                    
it  would  be an  improper  delegation  of duty.  She  added                                                                    
Legislative  Legal  Services  was available  to  answer  any                                                                    
constitutional questions.                                                                                                       
Ms.  Lucky  continued  to  address   the  RPL  process.  She                                                                    
reiterated  the process  included  putting  language in  the                                                                    
budget  and following  the statutory  process. The  practice                                                                    
involved the  RPL coming in  from the executive  branch, the                                                                    
Legislative Finance Division conducted  a review of the RPL,                                                                    
and LBA typically  added the RLP to the  next meeting agenda                                                                    
for  consideration. The  committee could  take an  action to                                                                    
approve  the  RPL,  meaning it  agreed  with  accepting  the                                                                    
additional  funds,  which  would waive  the  45-day  waiting                                                                    
period  and   would  enable  the  governor   to  accept  and                                                                    
appropriate the funds immediately.  The committee could also                                                                    
make  a recommendation  to reduce  or reject  the additional                                                                    
funds; however, the recommendation  was not binding. Most of                                                                    
the   time   the   executive  branch   respected   the   LBA                                                                    
recommendation  and would  reduce the  amount of  funding or                                                                    
may bring the  RPL up during a subsequent  meeting with some                                                                    
changes  made  by  the  recommendations.  She  detailed  the                                                                    
governor could still use the  funds after the 45-day waiting                                                                    
period if  LBA rejected  the RPL; however,  statute required                                                                    
the governor to review the  request and send LBA a statement                                                                    
with the  reasons the  governor wanted  to expend  the funds                                                                    
notwithstanding LBA's recommendation.                                                                                           
1:37:28 PM                                                                                                                    
Ms. Lucky  stated the spirit of  the law related to  the RPL                                                                    
process was  to allow additional funds  for already approved                                                                    
budget items  to be  accepted in a  timely fashion  when the                                                                    
legislature  was not  in session.  Without the  process, all                                                                    
funds would have  to be approved during  the regular session                                                                    
budgeting process; any funds coming  in from May to December                                                                    
would have  to wait  until the legislature  convened. During                                                                    
the past  interim there had  been a situation where  the RPL                                                                    
process  had  been  used  to  accept  funds  that  had  been                                                                    
rejected by  the legislature during the  budget process. She                                                                    
detailed the  case had been  unique where a budget  item had                                                                    
been  approved   by  the  full   legislature  and   yet  the                                                                    
legislature chose  not to accept  additional funds  for that                                                                    
particular  item. She  elaborated it  had uncovered  a basic                                                                    
problem in  the process in  which the legislature  could not                                                                    
fully exercise  its power to appropriate.  The situation had                                                                    
been viewed  by many as  an "end-run" to the  budget process                                                                    
and a threat to the balance of powers.                                                                                          
Ms.  Lucky continued  that as  chair of  LBA, Representative                                                                    
Mike Hawker thought the topic  was important enough to bring                                                                    
to everyone's  attention. She relayed  Representative Hawker                                                                    
had spoken  with Legislative Legal Services  about coming up                                                                    
with some possible  solutions, which had led to  HB 222. The                                                                    
bill  would  allow  the legislature  to  establish  language                                                                    
expressly prohibiting use of the  RPL process for a specific                                                                    
appropriation item.  The legislature  would have to  know in                                                                    
advance  it did  not want  to accept  additional funds  on a                                                                    
specific  item and  would  have to  put  language about  the                                                                    
specific  item into  the budget  during the  budget process.                                                                    
The bill would prohibit using  the RPL process going through                                                                    
LBA for  the particular  item. Additionally, the  bill would                                                                    
ensure the  executive branch could  not use the  RPL process                                                                    
to  fund  items  that  were considered  but  denied  by  the                                                                    
legislature  during its  regular  budget deliberations.  The                                                                    
bill also  included a technical  change. She  explained that                                                                    
Representative  Hawker's  office   had  been  unclear  about                                                                    
whether or  not any  action by LBA  would hasten  the 45-day                                                                    
timeline. Legislative Legal Services'  position was that the                                                                    
only way to  shorten the timeline was with  an approval vote                                                                    
by  LBA.  Therefore,  the  bill  sponsor  had  requested  to                                                                    
include a technical change clarifying  that should LBA chose                                                                    
to recommend rejecting  the funds, it would  not shorten the                                                                    
timeline and  the governor  would have  to wait  the initial                                                                    
45-day period. The bill did not  make any changes to the 45-                                                                    
day period; it  only clarified that unless  LBA approved and                                                                    
took  an affirmative  vote on  the RPL,  the initial  45-day                                                                    
waiting period would have to be honored.                                                                                        
1:40:30 PM                                                                                                                    
Ms.  Lucky  shared that  others  were  available online  for                                                                    
Co-Chair Neuman recalled that when  he had served on the LBA                                                                    
many of  the funds  coming through  had been  excess federal                                                                    
highway funds.  He referred  to the  45-day time  period. He                                                                    
believed  some  of the  funds  would  impact projects  under                                                                    
construction.  He  elaborated  the money  had  already  been                                                                    
approved   by   the   legislature  through   the   Statewide                                                                    
Transportation  Improvement   Program  (STIP)  appropriation                                                                    
process, but  there were other  funds coming in that  may be                                                                    
needed during  the construction season.  He wondered  if the                                                                    
timeframe  was shortened  or  extended past  45  days if  it                                                                    
could impact projects.                                                                                                          
Ms.  Lucky believed  it was  the reason  the 45-day  waiting                                                                    
period could  be shortened  by a  positive approval  vote by                                                                    
LBA.  For example,  if  the  money came  in  and  LBA had  a                                                                    
meeting where  the Department  of Transportation  and Public                                                                    
Facilities (DOT) testified  there would be a  problem with a                                                                    
project  if the  funds were  not  received in  15 days,  LBA                                                                    
could  approve the  RPL  and the  funds  would be  available                                                                    
Co-Chair  Neuman   believed  the  option  was   a  wonderful                                                                    
Co-Chair  Thompson added  that  the option  could also  help                                                                    
avoid missing an entire construction season.                                                                                    
Vice-Chair  Saddler  remarked  that  the  problem  may  have                                                                    
arisen  during consideration  of a  program in  the previous                                                                    
year. He  asked for verification  that the bill  had nothing                                                                    
to do with  Medicaid and it was not the  sponsor's intent to                                                                    
affect the Medicaid expansion lawsuit in any way.                                                                               
Ms. Lucky answered  in the affirmative. She  shared that the                                                                    
bill had  come about  because it exposed  a loophole  in the                                                                    
process,  by  which if  the  legislature  had the  power  to                                                                    
appropriate  it   should  be  within  its   power  to  limit                                                                    
additional monies. The bill did  not have a retroactive date                                                                    
and  she  believed  if  a  retroactive  effective  date  was                                                                    
included it  would have no  impact on previous  RPLs because                                                                    
the specific  language had not  been included in  the budget                                                                    
that would  be required by  the process. However, it  was an                                                                    
example of a  time that the legislature had  in full session                                                                    
found an appropriation it did not  want to add money to, but                                                                    
there was  no process by  which it could prohibit  using the                                                                    
process.  The  bill  would  also   have  no  effect  on  the                                                                    
governor's  ability  to  call   the  legislature  back  into                                                                    
session to  have the  full body  review additional  funds or                                                                    
any RPL. The bill would  only allow the legislature to limit                                                                    
the process the legislature (had  put in place to streamline                                                                    
the  accepting of  additional money)  for items  it approved                                                                    
Vice-Chair  Saddler   surmised  the   bill  was   not  about                                                                    
Medicaid,  but  was about  the  legislature  making sure  it                                                                    
could use  its appropriation authority properly  and setting                                                                    
limits on when the executive  branch could or could not seek                                                                    
to use the legislature's appropriation authority.                                                                               
1:45:12 PM                                                                                                                    
Representative  Kawasaki asked  if  the  governor would  not                                                                    
have  been able  to do  Medicaid expansion  if the  bill had                                                                    
been law during that time.                                                                                                      
Ms.  Lucky  deferred  the   question  to  Legislative  Legal                                                                    
Services.  She remarked  that the  example  of the  Medicaid                                                                    
expansion was  so complex related  to mandatory  versus non-                                                                    
mandatory and how  a supreme court case  impacted the issue.                                                                    
She was uncertain how the  bill would have impacted Medicaid                                                                    
expansion because she  did not know if it  would be possible                                                                    
to parse out the appropriation item.                                                                                            
Representative  Kawasaki looked  at page  2, line  3 of  the                                                                    
legislation  related  to  the 45-day  period  provision.  He                                                                    
asked for  verification the 45-day period  language referred                                                                    
to the original timeframe and  did not include an additional                                                                    
45  days.  Ms.  Lucky   answered  in  the  affirmative.  She                                                                    
elaborated  the sponsor  had asked  for  a clarification  on                                                                    
what  Legislative Legal  Services believed  was the  current                                                                    
practice.  The   language  "until  the  45-day   period  has                                                                    
elapsed" referred to the initial timeline.                                                                                      
Representative  Gattis discussed  that  there  was a  90-day                                                                    
session, in  which the legislature could  appropriate money.                                                                    
Outside of  the session, the  option allowed LBA  to conduct                                                                    
business.  She  wondered  how  other  states  with  biennial                                                                    
legislative sessions conducted business outside of session.                                                                     
Ms.  Lucky  answered  that  she  had  not  researched  other                                                                    
states. She would get back to the committee.                                                                                    
Representative Gara  did not want  Ms. Lucky to  research 49                                                                    
other states.  He referred to Ms.  Lucky's earlier testimony                                                                    
that  the bill  did  not address  something  because it  was                                                                    
unconstitutional. He asked for detail.                                                                                          
Ms.  Lucky  deferred  to   Legislative  Legal  Services  for                                                                    
detail. She  explained there had  been some  questions about                                                                    
why the  state could not allow  LBA to reject an  RPL, which                                                                    
was the process she had  been referring to. She explained it                                                                    
was  seen  as  an  unconstitutional  delegation  of  powers.                                                                    
Currently,  the   executive  branch  was  notified   of  the                                                                    
additional money  and was allowed  to use the money  45 days                                                                    
after notifying  LBA. People  had asked why  LBA only  had a                                                                    
recommendation  option. She  believed that  allowing LBA  to                                                                    
reject the  funding would be an  unconstitutional delegation                                                                    
of powers.                                                                                                                      
1:49:23 PM                                                                                                                    
Representative  Gara  asked if  it  was  because the  action                                                                    
would be seen as doing  something the legislature as a whole                                                                    
should do. Ms. Lucky answered in the affirmative.                                                                               
Representative Guttenberg asked how  many times the governor                                                                    
had requested an RPL in the  LBA process. He stated it would                                                                    
be for capital projects and  other. He remarked that LBA met                                                                    
a limited  number of  times per year.  He wondered  how many                                                                    
times  the  committee  met on  a  policy  substantive  issue                                                                    
versus a capital project or other.                                                                                              
Ms.  Lucky   deferred  to  David   Teal  (director   of  the                                                                    
Legislative Finance  Division). She detailed there  had been                                                                    
16 RPLs (one  RPL had been submitted twice) in  the past two                                                                    
fiscal years. She  believed there had been  hundreds of RPLs                                                                    
during  the American  Recovery and  Reinvestment Act  (ARRA)                                                                    
funding  years.  As  money  had  come in  it  had  been  for                                                                    
university projects and many  various things. She elaborated                                                                    
that the process was used  widely for many different things.                                                                    
Generally the  RPLs were just accepted  because they related                                                                    
to items that  had already been approved  by the legislature                                                                    
- it  merely meant  opting to  accept additional  funds. Her                                                                    
review  had  shown a  few  capital  projects that  had  been                                                                    
deferred  to   the  next  capital  budget,   which  LBA  had                                                                    
determined   would  be   better  considered   by  the   full                                                                    
legislature.  Since the  process had  been in  place in  the                                                                    
1970s there  had been seven  times the governor  had elected                                                                    
to  spend the  funds  after the  45-day  period had  expired                                                                    
(where  LBA  had  not  agreed with  using  the  funds).  She                                                                    
believed  the   governor's  decision  to  go   forward  with                                                                    
Medicaid expansion  was the first  time where a  policy call                                                                    
was made via an RPL.                                                                                                            
Representative  Guttenberg asked  when the  seven times  had                                                                    
occurred [when the  governor had elected to  spend the funds                                                                    
after the 45-day period had  expired where LBA had disagreed                                                                    
with the use of the funds].                                                                                                     
Ms.  Lucky answered  that the  seven instances  had occurred                                                                    
since 1979. The  specific items occurred in  the early 1990s                                                                    
and the last was in 1998.                                                                                                       
1:53:07 PM                                                                                                                    
Representative  Kawasaki asked  about  the  legality of  the                                                                    
rejection of an  RPL. He asked if  the legislature currently                                                                    
had the authority to reject an RPL outright.                                                                                    
MEGAN  WALLACE,  LEGISLATIVE  LEGAL  SERVICES,  JUNEAU  (via                                                                    
teleconference), replied in the  negative. She detailed that                                                                    
LBA could  advise the governor  it did not approve  the RPL,                                                                    
but  it  did not  have  authority  to explicitly  reject  or                                                                    
prevent the expenditure after the 45-day period elapsed.                                                                        
Representative  Kawasaki  pointed  to the  language  "Unless                                                                    
expressly prohibited  by the language of  the appropriation"                                                                    
on line  3 [page 1].  He asked  if the language  would allow                                                                    
LBA to reject an RPL.                                                                                                           
Ms.  Wallace answered  in the  negative.  She explained  the                                                                    
language  would allow  the legislature  in an  appropriation                                                                    
bill  (e.g.   the  operating  budget)  to   insert  language                                                                    
underneath an  appropriation or  allocation stating  the RPL                                                                    
process was  not to be  used to  increase the amount  of the                                                                    
specific appropriation.                                                                                                         
Representative  Kawasaki asked  if the  governor would  have                                                                    
been prevented from accepting the  Medicaid expansion RPL if                                                                    
law had been enacted before the preceding year.                                                                                 
Ms.  Wallace answered  that the  question  was complex.  She                                                                    
elaborated even if  the legislature were able  to state that                                                                    
an  appropriation item  could not  be increased  through the                                                                    
RPL  process,  the   general  prohibition  against  changing                                                                    
substantive  law in  an appropriation  bill  would still  be                                                                    
intact. If the bill had been  law at the time and the budget                                                                    
included  language specifying  the appropriation  item could                                                                    
not  be  increased  through  the RPL  process  or  under  AS                                                                    
37.07.080(h), it  would have  merely prevented  the governor                                                                    
from  accepting   additional  Medicaid  funds   through  the                                                                    
particular process. However, it  would not have impacted the                                                                    
substantive legality  of whether expansion was  permitted or                                                                    
prohibited.   The   state's   Medicaid   statutes   included                                                                    
provisions  about what  happened if  Medicaid was  not fully                                                                    
funded. She believed  if the situation had  occurred and the                                                                    
legislature had  not accepted  the additional  federal funds                                                                    
necessary  to implement  Medicaid expansion,  services would                                                                    
have needed  to be  prorated under the  substantive Medicaid                                                                    
provisions  or   the  governor  hypothetically   could  have                                                                    
submitted a supplemental budget  or called a special session                                                                    
asking for  the legislature to  approve the funds.  The bill                                                                    
would just  prohibit taking the additional  federal receipts                                                                    
as they came available.                                                                                                         
1:56:55 PM                                                                                                                    
Representative  Guttenberg asked  if there  was another  way                                                                    
the  governor could  add  money  to a  program  if the  bill                                                                    
allowed the  legislature to include  language in  the budget                                                                    
preventing the  governor from using  the RPL process  to add                                                                    
money to a program.                                                                                                             
Ms. Wallace  replied that  the bill  would not  prohibit the                                                                    
governor from using the process;  it would only prohibit use                                                                    
of  the   RPL  process  under  specific   appropriations  as                                                                    
requested or  noted by the  legislature. The  governor would                                                                    
still  have   the  ability   to  introduce   a  supplemental                                                                    
appropriation  or  separate  appropriation bill  asking  the                                                                    
legislature to approve the increase.                                                                                            
Representative Guttenberg surmised that  it meant during the                                                                    
interim there would  be no way for the  governor to increase                                                                    
the  funds   appropriated  to  a  program   until  the  next                                                                    
legislature  came  in and  a  supplemental  budget could  be                                                                    
submitted.  He  asked  if the  request  could  be  submitted                                                                    
through Legislative Council or another avenue through LBA.                                                                      
Ms.  Wallace  agreed  that   if  the  legislature  expressly                                                                    
prohibited  the use  of the  AS  37.07.080(h) process  there                                                                    
would  be  no  other  avenue  for  the  governor  to  accept                                                                    
appropriations until the legislature  went back into session                                                                    
and  approved  a  supplemental  or  some  other  substantive                                                                    
legislative action was taken.                                                                                                   
Representative Guttenberg asked if  the action would have to                                                                    
be  affirmative.  He  returned  to  the  topic  of  Medicaid                                                                    
expansion.  He asked  for  verification  that Governor  Bill                                                                    
Walker   could  not   have   expanded   Medicaid  until   an                                                                    
appropriation   was  approved   by   the  next   legislature                                                                    
(supplemental or  otherwise) if he  had not had  the ability                                                                    
to use the  RPL to expand Medicaid. He wondered  if it would                                                                    
have resulted in a new Medicaid formula.                                                                                        
Ms.  Wallace believed  that if  Medicaid had  been expanded,                                                                    
but there was a  prohibition of receiving additional federal                                                                    
receipts as they became available  under the RPL process and                                                                    
the  legislature   did  not  approve  the   receipt  of  the                                                                    
additional funds, the proration  statutes would take effect.                                                                    
She explained  the Medicaid  statutes did  not differentiate                                                                    
between   the   expansion   population  and   the   required                                                                    
categories;  therefore, all  Medicaid recipients  would have                                                                    
seen their services prorated per that statute.                                                                                  
Representative Guttenberg  referred to the seven  times [the                                                                    
governor had  elected to  spend the  funds after  the 45-day                                                                    
period had expired  where LBA had disagreed with  the use of                                                                    
the funds]  and asked how  many times  the issue had  been a                                                                    
significant policy change.                                                                                                      
Ms. Wallace answered that she  had not looked into the issue                                                                    
recently,  but  in her  research  over  the summer  she  had                                                                    
determined that  the governor  had only  moved forward  in a                                                                    
couple of instances after LBA  rejected the funding. She did                                                                    
not  know  whether  the  instances  involved  a  substantial                                                                    
policy change.                                                                                                                  
2:01:29 PM                                                                                                                    
Representative Gara believed the  Medicaid funds coming into                                                                    
the  state were  not  differentiated  between expansion  and                                                                    
non-expansion funding.  He provided a  hypothetical scenario                                                                    
in  which  the  state's  population  spiked  and  the  state                                                                    
qualified for  additional federal  Medicaid funds.  He asked                                                                    
for  verification that  if the  bill passed  and the  budget                                                                    
included  language  specifying  the  legislature  could  not                                                                    
accept  additional Medicaid  receipts,  the  state would  be                                                                    
prevented  from  accepting  funds  during  the  interim  and                                                                    
individual's services would be prorated down.                                                                                   
Ms.  Wallace  replied that  he  was  generally correct.  She                                                                    
referenced   AS   47.07.020(a),  which   required   Medicaid                                                                    
coverage for  individuals under  federal law.  She explained                                                                    
that because the particular  provision did not differentiate                                                                    
between  the expansion  population and  traditional Medicaid                                                                    
recipients,  if  the  legislature  prevented  acceptance  of                                                                    
additional  federal receipts  through  the  RPL process  and                                                                    
there  was  insufficient  funding to  provide  services  for                                                                    
required  recipients,  the   proration  statutes  went  into                                                                    
effect for  all of  the recipients.  For example,  the state                                                                    
would   not  stop   paying   for   the  Medicaid   expansion                                                                    
population.  All Medicaid  recipients would  be impacted  by                                                                    
the proration.                                                                                                                  
Representative  Gara  relayed  the  legislature  had  always                                                                    
operated  under  the   assumption  that  legislative  intent                                                                    
language  was constitutionally  unenforceable.  He asked  if                                                                    
the bill language specifying  the legislature could prohibit                                                                    
the acceptance of funds would be constitutional.                                                                                
Ms.  Wallace  replied  that generally  intent  language  was                                                                    
unenforceable. For  example, if  language had the  effect of                                                                    
amending  or changing  existing law;  however, language  was                                                                    
appropriate  in  the  budget  if it  explained  an  item  of                                                                    
appropriation or  how an appropriation  was to be  spent. In                                                                    
the particular  case, if the language  stated something like                                                                    
"this  appropriation   item  may  not  be   increased  under                                                                    
37.07.080(h)"    it    likely    would   not    be    deemed                                                                    
unconstitutional  because  it   was  merely  describing  the                                                                    
appropriation. She  detailed the  substantive change  in the                                                                    
bill would go hand-in-hand  with the budgetary language. She                                                                    
explained   the  legislature   would   have  the   statutory                                                                    
authority to include the language  in the budget; therefore,                                                                    
the language would not have  the effect of amending existing                                                                    
law. Transversely, it may not  work if the legislature tried                                                                    
to  insert  the language  in  the  budget without  the  bill                                                                    
because it may have the effect of amending existing law.                                                                        
2:05:56 PM                                                                                                                    
Ms.  Lucky  clarified  that the  RPL  process  involved  two                                                                    
steps,  which was  outlined in  statute.  She explained  the                                                                    
governor did not  have the outright authority  to accept the                                                                    
RPLs, the authority was granted  annually by the legislature                                                                    
in the budget.  She noted the authority had  been granted in                                                                    
Section 24 of the prior  year's budget (included in member's                                                                    
bill packets).  Another option could be  for the legislature                                                                    
could  to  remove  the language  from  the  budget,  thereby                                                                    
choosing not to grant the  executive branch the power to use                                                                    
the  RPL process  to accept  additional  funds. She  relayed                                                                    
that  limiting the  power (granted  annually in  the budget)                                                                    
would meet a constitutional challenge.                                                                                          
Co-Chair  Neuman  asked if  the  legislature  would have  to                                                                    
specify it did not want  to accept specific funds or whether                                                                    
it would  be sufficient  to remove  the language  giving the                                                                    
ability to accept RPL funds from an appropriation bill.                                                                         
Ms. Lucky answered  that the RPL process could  only be used                                                                    
for  appropriations existing  in the  budget. She  explained                                                                    
the  one   particular  statutory  process  was   limited  to                                                                    
additional funds for items already residing in the budget.                                                                      
Co-Chair Neuman explained he had  wanted to clarify that the                                                                    
legislature did  not have to  specifically state it  did not                                                                    
want to accept funds and  that it was already determined the                                                                    
legislature chose not to accept  funds by not including them                                                                    
in an appropriations bill.                                                                                                      
Representative  Gara surmised  that  if the  bill passed  it                                                                    
could  somehow  prohibit a  category  of  federal money  the                                                                    
legislature  did  not intend  to  prohibit.  He reasoned  it                                                                    
would mean waiting  until session or addressing  the item in                                                                    
a  special session.  For example,  he believed  the governor                                                                    
would have to  call a special session  to consider accepting                                                                    
funding if  $50 million  in federal  funds coming  in during                                                                    
the  interim fell  within the  definition  of something  the                                                                    
legislature chose to block in an appropriations budget.                                                                         
Ms. Lucky replied in the affirmative.                                                                                           
2:10:00 PM                                                                                                                    
Representative Guttenberg referred to  an excerpt from HB 72                                                                    
in members' packets  [Section 24, page 80,  lines 19 through                                                                    
27]   related  to   federal  receipts;   designated  program                                                                    
receipts;  and specific  programs including  the University,                                                                    
Exxon  Valdez  oil  spill trust  receipts,  and  the  Alaska                                                                    
Housing  Finance Corporation   (copy  on file).  He wondered                                                                    
how  much  more  detail  would   be  needed  if  to  prevent                                                                    
something specific  from going  through the RPL  process. He                                                                    
wondered if it would require  listing all of the programs in                                                                    
the budget  or just specific programs  the legislature chose                                                                    
to prohibit receiving additional federal funds.                                                                                 
Ms.  Wallace  responded  that  Section   24  was  a  general                                                                    
allowance  of federal  receipts  or  other program  receipts                                                                    
received during the interim. The  specific section served as                                                                    
the  appropriation by  the  legislature  for conditioned  on                                                                    
compliance  with the  RPL process  with no  restriction. She                                                                    
elaborated  that  if  it was  the  legislature's  intent  to                                                                    
prohibit  the RPL  process  to be  used  from increasing  an                                                                    
appropriation  item,  language  would   either  need  to  be                                                                    
inserted under  the specific  appropriation (whether  in the                                                                    
numbers   or  language   sections)   expressly  saying   the                                                                    
appropriation  may  not  be increased  through  the  process                                                                    
under AS 37.07.080(h).  Alternatively, an explicit reference                                                                    
to  an exclusion  could  be included  in  Section 24,  which                                                                    
would likely  be sufficient to  prohibit the  increase. Some                                                                    
kind of  express prohibition  would be  necessary, otherwise                                                                    
the item would  serve as authority to go  ahead and increase                                                                    
an   existing  appropriation   based  on   the  receipt   of                                                                    
additional federal or other program receipts.                                                                                   
Representative  Guttenberg observed  that Section  24 looked                                                                    
like a denial of the  state's ability to expand Medicaid. He                                                                    
wondered how it was different.                                                                                                  
Ms. Wallace  answered that Section  24, subsection  (b) from                                                                    
the FY  16 operating  budget was  not standard  language; it                                                                    
was one-time-only  language. The  specific language  had the                                                                    
effect of  amending existing law  under a  complicated legal                                                                    
analysis as  to whether  Medicaid expansion  recipients fell                                                                    
under  the  required  category under  substantive  law.  She                                                                    
elaborated  the  subsection  changed  the  way  the  state's                                                                    
substantive Medicaid provisions were interpreted.                                                                               
2:13:47 PM                                                                                                                    
Representative  Gara  provided  a scenario  where  the  bill                                                                    
passed  and   the  legislature  inserted  language   [in  an                                                                    
appropriation  bill] prohibiting  the  state from  accepting                                                                    
any  RPL funds  during the  interim for  Medicaid expansion.                                                                    
However,   he  understood   that   Medicaid  expansion   and                                                                    
[original]  Medicaid  funds  were  not  divisible  and  were                                                                    
treated  as  general  Medicaid funds.  He  wondered  if  the                                                                    
scenario  meant the  legislature  would  be prohibiting  all                                                                    
additional  Medicaid   funds  from  coming  in   during  the                                                                    
Ms.  Wallace  replied that  if  there  was some  prohibition                                                                    
against  receiving  additional  Medicaid  receipts  as  they                                                                    
became available  and the  funds were  needed to  fully fund                                                                    
Medicaid,  the  governor  would  either  have  to  submit  a                                                                    
supplemental appropriation request  or another appropriation                                                                    
bill  asking  the  legislature to  approve  the  receipt  of                                                                    
funds. If  that did  not occur the  proration would  kick in                                                                    
and the services for recipients would be impacted.                                                                              
Representative Gara clarified that  if the legislature tried                                                                    
to  ban the  acceptance of  Medicaid expansion  funds during                                                                    
the interim,  the action  would also  ban the  acceptance of                                                                    
additional  Medicaid   funds  even  for   the  non-expansion                                                                    
Medicaid recipients.                                                                                                            
Ms.  Wallace  answered  in the  affirmative.  She  specified                                                                    
there  was  currently  no differentiation  between  Medicaid                                                                    
funds for  the expansion population or  traditional Medicaid                                                                    
Representative Gattis clarified that  she could research the                                                                    
other states. She did not intend Ms. Lucky to do the work.                                                                      
Vice-Chair Saddler asked for verification  that the bill was                                                                    
not intended to address  Medicaid expansion and pertained to                                                                    
any other revised program language.                                                                                             
Ms.  Lucky agreed.  She detailed  the legislation  basically                                                                    
"shoring up" a rules based  system where the legislature had                                                                    
the  power  to  appropriate and  to  appropriate  additional                                                                    
unknown funds  via Section 24. The  bill was a way  to limit                                                                    
the appropriation  made in  the budget bill  with a  vote of                                                                    
the  full legislature.  The bill  did not  specifically deal                                                                    
with Medicaid funds. She furthered  that based on the nature                                                                    
of  the Medicaid  appropriation it  was unclear  whether the                                                                    
process  would   have  affected  that  ability   other  than                                                                    
affecting  the ability  to receive  funds  above and  beyond                                                                    
what the legislature  had put into the  budget. She believed                                                                    
the legislature  could choose to  account for the  amount of                                                                    
federal  money  it  was comfortable  with  spending  in  the                                                                    
budget  process;  therefore,  additional  receipt  authority                                                                    
would  not be  needed  regardless of  the  timeframe of  the                                                                    
incoming  funds.  She  deferred  to  Mr.  Teal  for  further                                                                    
Vice-Chair Saddler referred  to hypothetical statements made                                                                    
during the  meeting. He asked  about the entire  universe of                                                                    
other federal  programs the bill  may apply to.  He wondered                                                                    
if there were any limitations.                                                                                                  
2:18:56 PM                                                                                                                    
Ms. Lucky deferred the question to Mr. Teal.                                                                                    
DAVID   TEAL,   DIRECTOR,  LEGISLATIVE   FINANCE   DIVISION,                                                                    
answered  that  any  allocation and  program  using  federal                                                                    
receipts  would be  eligible for  the review.  He referenced                                                                    
Section  24 and  relayed the  provision was  not limited  to                                                                    
federal receipts; it included  Exxon Valdez [oil spill trust                                                                    
receipts],  University receipts,  the Alaska  Marine Highway                                                                    
System  fund, and  other. He  stated that  out of  the seven                                                                    
times the 45-day  rule had been used [when  the governor had                                                                    
elected  to spend  the  funds after  the  45-day period  had                                                                    
expired where LBA had disagreed  with the use of the funds],                                                                    
about half  were Exxon  Valdez related  RPLs. He  noted that                                                                    
issues  came and  went,  and he  believed  the Exxon  Valdez                                                                    
issue was one of the past.  He clarified the bill applied to                                                                    
any program  that used  any of the  receipt types  listed in                                                                    
Section 24  [of the FY  16 budget bill] or  similar language                                                                    
appearing in other budget years.                                                                                                
Vice-Chair Saddler asked for verification  that the bill was                                                                    
not intended to impact Medicaid.                                                                                                
Mr. Teal  did not believe  it could be because  Medicaid had                                                                    
already been  expanded. He specified  the program  could not                                                                    
be differentiated  between the expanded population  and pre-                                                                    
expansion  population.   He  did   not  disagree   with  any                                                                    
statements made  by Ms. Lucky  and Ms. Wallace.  He observed                                                                    
there  was perhaps  still confusion  about exactly  what the                                                                    
bill meant.  He believed the  intent was clear that  the RPL                                                                    
process  would not  be available  if  an appropriation  bill                                                                    
passed   by  the   full  legislature   specified  that   the                                                                    
legislature could  not use the  RPL process through  LBA. He                                                                    
explained the legislature  could not "do that as  is done in                                                                    
[Section]   24(b)   because   that's  trying   to   use   an                                                                    
appropriation   bill  to   change  substantive   law."  Once                                                                    
substantive  law was  changed the  appropriation bill  could                                                                    
take that action.                                                                                                               
2:22:10 PM                                                                                                                    
Representative Gara  pointed to the Section  24 excerpt from                                                                    
HB 72  in members' packets  [page 80, lines 19  through 27].                                                                    
He provided  a scenario where  excess federal funds  came in                                                                    
for an  item in  the budget. He  thought Section  24 limited                                                                    
permissible funds  to certain areas  (i.e. money  related to                                                                    
Exxon Valdez, AHFC, AMHS, and  other), but under current law                                                                    
he thought any additional  funds related to an appropriation                                                                    
were  allowable and  accepted through  the RPL  statutes. He                                                                    
asked about the  purpose of listing the  examples in Section                                                                    
Mr. Teal  answered that  the purpose was  to limit  the fund                                                                    
sources that could  be approved via RPL.  For example, until                                                                    
about  2000, General  Fund (GF)  program  receipts had  been                                                                    
listed  in the  budget  bill section  as  an allowable  fund                                                                    
source.  He  detailed  the specific  fund  source  had  been                                                                    
removed because during the five-year  plan of the late 1990s                                                                    
when there  had been  an effort to  reduce GF  spending, the                                                                    
legislature  had discovered  that executive  branch agencies                                                                    
would cut  their GF  receipts and  count it  as a  GF budget                                                                    
reduction  to   meet  their  target   and  the   funds  were                                                                    
subsequently  restored in  LBA. He  furthered that  agencies                                                                    
could no  longer bring a  request for additional  GF program                                                                    
receipt authority to LBA for approval.                                                                                          
Mr.  Teal relayed  the fund  sources listed  were important;                                                                    
any  fund  sources not  listed  were  not  a valid  RPL.  He                                                                    
referred to  a question  from Co-Chair Neuman  about whether                                                                    
leaving an item  out of the budget indicated an  RPL was not                                                                    
allowed.  He   believed  the  answer  in   relation  to  the                                                                    
operating budget was no. He  elaborated the operating budget                                                                    
was broad and  an RPL did not have to  be something that was                                                                    
addressed  in   the  operating   budget  already.   The  new                                                                    
program/money  merely had  to fall  under the  legislature's                                                                    
general  responsibilities in  order to  qualify for  the RPL                                                                    
process. However,  in the capital budget,  a capital project                                                                    
approved  by  the legislature  could  be  increased, but  if                                                                    
there was no existing capital  project the RPL process could                                                                    
not be  used because  the project had  not been  approved by                                                                    
the  full  legislature.  He   summarized  that  capital  and                                                                    
operating RPLs  differed, which was  the reason for  the RPL                                                                    
language in both the capital and operating budgets.                                                                             
2:25:57 PM                                                                                                                    
Representative Kawasaki noted  he had been on  LBA one time.                                                                    
He  thought Mr.  Teal  had communicated  that  absent of  an                                                                    
appropriation within  the budget, the RPL  process was still                                                                    
the way for LBA to accept an appropriation.                                                                                     
Mr. Teal responded in the  affirmative. He stated it was not                                                                    
possible to  come in  with a brand  new capital  project. He                                                                    
provided an  example of  money coming  in from  a foundation                                                                    
wanting  to  give  the Department  of  Education  and  Early                                                                    
Development  (DEED)   funding  for  a  school   program.  He                                                                    
expounded the  money was  not currently  in the  budget, but                                                                    
fell under the general  responsibilities of DEED; therefore,                                                                    
the  money  could  be  accepted even  though  there  was  no                                                                    
existing  program. He  reiterated that  the RPL  process for                                                                    
capital versus  operating budgets  differed; related  to the                                                                    
operating  budget it  was possible  to come  in with  an RPL                                                                    
without an existing program in the operating budget.                                                                            
Representative  Kawasaki remarked  that HB  222 specifically                                                                    
addressed  an  increase  of an  appropriation  and  did  not                                                                    
mention  a new  appropriation.  He wondered  if it  appeared                                                                    
somewhere else.                                                                                                                 
Mr.  Teal  answered that  an  increase  of an  appropriation                                                                    
merely meant an  increase could be from zero  to $10,000; it                                                                    
did not necessarily mean existing funds were necessary.                                                                         
Representative Kawasaki referred  to statements by President                                                                    
Barak Obama related  to early education and  pre-K. He noted                                                                    
the programs were not a  current part of Alaska's budget. He                                                                    
provided a  scenario where federal  funds were  allocated to                                                                    
states and  Alaska received  the funds.  He wondered  if the                                                                    
state would accept the funds through the RPL process.                                                                           
Mr.  Teal replied  that  it  was a  perfect  example of  the                                                                    
ability to accept an operating RPL for federal receipts.                                                                        
HB  222  was  HEARD  and   HELD  in  committee  for  further                                                                    
Co-Chair Thompson  discussed the schedule for  the following                                                                    

Document Name Date/Time Subjects
HB222 Sponsor Statement.pdf HFIN 3/17/2016 1:30:00 PM
HB 222
HB222 Background Information.pdf HFIN 3/17/2016 1:30:00 PM
HB 222
HB 226 Background.pdf HFIN 3/17/2016 1:30:00 PM
HB 226
HB 226 Sponsor Statement.pdf HFIN 3/17/2016 1:30:00 PM
HB 226
HB 226 Support Letters.pdf HFIN 3/17/2016 1:30:00 PM
HB 226
HB222 NEW FN LEG 3-16-16.pdf HFIN 3/17/2016 1:30:00 PM
HB 222