Legislature(2015 - 2016)HOUSE FINANCE 519

03/24/2016 09:30 AM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time --
Moved CSHB 77(FIN) Out of Committee
-- Public Testimony --
Moved CSHB 231(FIN) Out of Committee
-- Public Testimony --
Moved CSHB 222(FIN) Out of Committee
-- Public Testimony --
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 222                                                                                                            
     "An Act relating to increases of appropriation items."                                                                     
Vice-Chair  Saddler MOVED  to ADOPT  the proposed  committee                                                                    
substitute  for  HB  222, Work  Draft  (29-LS1045\H).  There                                                                    
being NO OBJECTION, it was so ordered.                                                                                          
Ms.  Pierson explained  that the  committee substitute  (CS)                                                                    
before the  committee changed  the 45 day  limit to  90 days                                                                    
thereby  giving the  legislature more  time for  evaluation.                                                                    
The legislature  could always provide  approval prior  to 90                                                                    
days.  She  indicated  that Julie  Lucky  could  supply  the                                                                    
committee with additional detail.                                                                                               
9:50:17 AM                                                                                                                    
JULIE  LUCKY, STAFF,  REPRESENTATIVE MIKE  HAWKER, explained                                                                    
that  the  bill codified  a  procedure  for the  legislature                                                                    
during the  budgeting process to prohibit  using the revised                                                                    
program   legislative   (RPL)   process   to   increase   an                                                                    
appropriation  in the  budget. The  CS extended  the waiting                                                                    
period to 90 days. Therefore,  if the Legislative Budget and                                                                    
Audit Committee were to receive  an RPL the executive branch                                                                    
would have to  wait 90 days before expending  the RPL unless                                                                    
the  committee  took  action  to   hasten  the  timeline  by                                                                    
approving the RPL.                                                                                                              
Co-Chair Thompson OPENED public testimony.                                                                                      
Co-Chair Thompson CLOSED public testimony.                                                                                      
Vice-Chair  Saddler  explained  that  HB 222  had  one  zero                                                                    
fiscal note from the legislature.                                                                                               
9:52:03 AM                                                                                                                    
Vice-Chair Saddler  MOVED to  REPORT CSHB  222 (FIN)  out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying zero fiscal note.                                                                                                  
Representative Gara OBJECTED for discussion.                                                                                    
Representative  Gara  commented  that   no  one  would  have                                                                    
thought of  the current bill without  the Medicaid expansion                                                                    
debate in  the prior year.  The current process  allowed the                                                                    
state to accept  grant funds that fit  within the parameters                                                                    
agreed  upon by  the legislature  to appropriate.  The money                                                                    
came from the federal government  or a private donor. He did                                                                    
not believe  the legislature  could anticipate  what funding                                                                    
it   could  potentially   lose  out   on.  He   thought  the                                                                    
legislature  would be  overstepping  itself  by passing  the                                                                    
bill. He presented a  hypothetical situation where renewable                                                                    
energy money would be needed  to complete a project that the                                                                    
state would  not accept. If the  bill had been in  place the                                                                    
previous  year  and  the state  had  not  accepted  Medicaid                                                                    
expansion  money  the state  would  have  lost out  on  $140                                                                    
million of federal funding that  was rippling throughout the                                                                    
economy.  He suggested  that much  of the  budget reductions                                                                    
had been  possible because of the  Medicaid expansion monies                                                                    
coming  in. There  were reductions  in behavioral  health of                                                                    
$5.7 million  because the money was  being leveraged through                                                                    
the new federal law. In the  future it would be difficult to                                                                    
determine what the legislation would  prevent the state from                                                                    
accepting.  The bill  had to  do with  money coming  in from                                                                    
another source  for something  approved by  the legislature.                                                                    
He thought  the passage of  the legislation would  result in                                                                    
unintended consequences.  He believed that in  30 years into                                                                    
the future the legislature might  realize a project had been                                                                    
blocked that  could have  been useful to  the state.  He did                                                                    
not support changing  the current law and  would be opposing                                                                    
the bill.                                                                                                                       
9:54:57 AM                                                                                                                    
Representative Wilson  spoke about  a significant  amount of                                                                    
stimulus money coming to the  state a few years prior. After                                                                    
the  state  accepted  the  money  it  ended  up  backfilling                                                                    
certain projects,  although that had not  been the intention                                                                    
upon   taking  the   funding.  Her   understanding  of   the                                                                    
legislation was that  it did not disallow  the acceptance of                                                                    
funding.  It allowed  the legislature  to better  understand                                                                    
what the money would be used  for and to decide if a project                                                                    
should  move  forward.  She thought  the  bill  allowed  the                                                                    
legislature to be more proactive.  She did not feel the bill                                                                    
blocked  funding but  allowed  for more  due diligence.  She                                                                    
indicated she was in favor of the bill.                                                                                         
9:55:58 AM                                                                                                                    
Vice-Chair  Saddler suggested  that the  bill came  up as  a                                                                    
result of  a dispute regarding Medicaid  expansion. However,                                                                    
the  current issue  was not  Medicaid expansion  but clearly                                                                    
the  legislature's appropriation  authority  and the  proper                                                                    
balance between  the executive and legislative  branches. He                                                                    
opined  that the  legislation  allowed  the legislature  the                                                                    
improved opportunity  to consider  the meaning  of accepting                                                                    
more  money   through  the  RPL  process.   He  thought  the                                                                    
legislation was appropriate and would be supporting it.                                                                         
Representative   Guttenberg   commented    that   in   every                                                                    
department  cuts  were  applied  and  the  departments  were                                                                    
directed  to  go  out  to find  additional  monies.  He  was                                                                    
concerned  that the  bill was  a "pull  back" from  agencies                                                                    
being  able   to  function   with  more   efficiencies.  The                                                                    
legislature  had  told the  governor  and  agencies to  find                                                                    
additional  funding but  the legislation  did not  allow for                                                                    
flexibility. He objected to the bill.                                                                                           
9:58:18 AM                                                                                                                    
Representative  Pruitt   reported  that  within   state  and                                                                    
federal  government the  legislative body  had the  power of                                                                    
the  purse.  Any  money  that went  through  the  state  was                                                                    
appropriated  by  the  legislature.   He  thought  that  the                                                                    
current  discussion was  rethinking whether  the legislature                                                                    
had  given  up   the  ability  to  maintain   the  power  to                                                                    
appropriate.  The reason  the legislature  had appropriation                                                                    
power was  because legislators were  closest to  the people.                                                                    
Legislators had  a more direct connection  with constituents                                                                    
than  the administration  or the  governor. The  legislative                                                                    
body  recognized  that  there  was  a  situation  where  the                                                                    
legislature had  seated its authority  to another  branch of                                                                    
government. He  asserted that the  bill was  recognizing and                                                                    
correcting the scenario.  The bill was placing  the power of                                                                    
appropriations  back into  the hands  of the  people through                                                                    
the  legislature.  He   appreciated  the  legislation  being                                                                    
brought forward.                                                                                                                
Representative    Kawasaki   was    glad   there    was   an                                                                    
acknowledgement that  the legislation came about  because of                                                                    
Medicaid expansion  and that the  legislature had  the power                                                                    
of the  purse. Sometimes the legislature  disagreed with the                                                                    
governor.  He suggested  that  while  the legislature  might                                                                    
disagree with  the governor on  some issues it was  a simple                                                                    
separation  of  powers.  The governor  had  the  ability  to                                                                    
accept federal funds on behalf of  the rest of the state. He                                                                    
feared  a  program  such as  early  education  (the  federal                                                                    
government  was looking  at  granting  states certain  Pre-K                                                                    
dollars)  could come  up in  the middle  of the  summer. The                                                                    
state  was now  looking at  a window  of 90  days before  it                                                                    
could accept funding.  It was possible the  state might need                                                                    
to  receive   the  funds  earlier.   He  suggested   that  a                                                                    
legislative  chairman,   only  representing  a   portion  of                                                                    
Alaskans,  could  decide  they   did  not  like  Pre-K.  The                                                                    
governor  had  the  opportunity, representing  the  rest  of                                                                    
Alaskans, to  say it was  something the state would  like to                                                                    
see  but  would not  have  a  means  to accept  the  funding                                                                    
barring the  legislator's responsiveness and  willingness to                                                                    
bring  it  forward. He  added  that  he thought  there  were                                                                    
certain circumstances  in which  the legislation  could make                                                                    
things very difficult. He objected to the bill.                                                                                 
10:02:40 AM                                                                                                                   
Representative Munoz  thought it  was possible  to overthink                                                                    
the change.  It was a very  simple change adding 45  days of                                                                    
review time  to the  Legislative Budget and  Audit Committee                                                                    
when accepting new grant monies.  She thought the change was                                                                    
appropriate and one that she supported.                                                                                         
Co-Chair Thompson asked for clarification.                                                                                      
Ms. Lucky stated that the  policy discussion was exactly the                                                                    
result Representative Hawker was  looking for by introducing                                                                    
the legislation. She suggested  the discussion was about the                                                                    
separation of powers  and the power of the  purse versus the                                                                    
power to accept money (which  the governor had). She pointed                                                                    
out that the power to  accept additional federal funding was                                                                    
not a power granted to  the governor by the constitution but                                                                    
granted  via   the  legislature  by  statute   (the  current                                                                    
legislation  proposed to  amend  the statute).  It would  be                                                                    
reconsidered every year  in the full budget  and was granted                                                                    
each year. At any point  the legislature could choose not to                                                                    
include Section  24 in the  budget. She furthered that  by a                                                                    
quick budget  amendment the  legislature could  disallow the                                                                    
governor  from  accepting  any   federal  funds  during  the                                                                    
interim. She reported that the  State of Arizona had adopted                                                                    
such a policy.  She furthered that Arizona had  to call back                                                                    
into special  session anytime additional federal  funds came                                                                    
in. In  many other states  Legislative Budget and  Audit had                                                                    
more power  to accept or  reject based on the  difference in                                                                    
the constitutional balance of powers.                                                                                           
Ms. Lucky  continued to explain that  within Alaska's system                                                                    
the Legislative Budget and Audit  Committee did not have the                                                                    
power to reject the acceptance  of funds. She explained that                                                                    
the  legislature  had a  two-step  process  of granting  the                                                                    
power via  the budget and then  a process would be  put into                                                                    
place. She highlighted  that the power was  not absolute, it                                                                    
was limited.  In a  previous meeting  Mr. Teal  had reported                                                                    
that it  was allowed for  general funds but  the legislature                                                                    
had chosen to  amend the budget not  allowing general funds.                                                                    
The revised  program legislative  process was  not currently                                                                    
available for those funds at present.  It was not her job or                                                                    
duty   to  discuss   the  policy;   that  rested   with  the                                                                    
legislature.  However,  she was  providing  a  few facts  in                                                                    
front  of  legislators about  how  the  process worked.  The                                                                    
process   envisioned  by   HB  222   would  be   a  specific                                                                    
prohibition on a specific budget  item rather than a blanket                                                                    
prohibition on  many items.  It was the  intent of  the bill                                                                    
sponsor that if the  legislature, as the appropriating body,                                                                    
had  considered a  particular  appropriation and  determined                                                                    
not to  move forward with  it they  would have the  power to                                                                    
restrict  it  in  the  budget. It  was  not  necessarily  to                                                                    
prohibit the governor  or the executive branch  or the state                                                                    
from taking  advantage of the  funding but rather to  have a                                                                    
process where  the full legislature,  as opposed  to however                                                                    
many members sat  on the committee could  make any important                                                                    
policy  decision  that  had   already  been  considered  but                                                                    
rejected by the entire legislature.                                                                                             
10:06:45 AM                                                                                                                   
Representative  Guttenberg wondered  about the  first change                                                                    
in the bill on Page 1,  Line 4 [Section 1(h)]. He provided a                                                                    
hypothetical  scenario  where  the legislature  adopted  the                                                                    
previous  year's budget  outlining  that there  would be  no                                                                    
Medicaid  expansion   while  the   courts  ruled   that  the                                                                    
expansion  was mandatory.  He wondered  if there  would have                                                                    
been a conflict.                                                                                                                
Co-Chair  Thompson did  not want  to get  into a  discussion                                                                    
about Medicaid expansion.                                                                                                       
Representative Guttenberg  explained that  although Medicaid                                                                    
expansion was in the past he  was using it as an example. He                                                                    
rephrased  his  question. He  asked  about  if language  was                                                                    
inserted  into the  budget that  stated no  money should  be                                                                    
taken for a  certain program and the  federal government has                                                                    
defined  the  program  as mandatory.  He  wondered  how  the                                                                    
conflict would be resolved.                                                                                                     
Ms. Lucky was not a  constitutional scholar. She deferred to                                                                    
Legislative Legal Services online.                                                                                              
Representative Pruitt  thought that  the first  line related                                                                    
to the  legislature being able  to accept federal  funds. He                                                                    
explained that unless the  legislature excluded the language                                                                    
in the budget, there would have  to be a process in place to                                                                    
resolve  such a  conflict. He  thought  there was  a mix  of                                                                    
issues  at hand.  He suggested  it was  a two-step  process.                                                                    
First,  the   legislature  would  give  authority   for  the                                                                    
acceptance of federal funds. A  second step was being added.                                                                    
If the  legislature did not  ask for the authority  then the                                                                    
step would not  be needed. He presumed  that the legislature                                                                    
had not indicated that there  was not the authority in place                                                                    
for the  administration to accept federal  money. He thought                                                                    
that it  was moving away  from a court decision  because the                                                                    
legislature  would have  to first  elect not  to accept  any                                                                    
additional federal funding.                                                                                                     
Representative   Guttenberg  wondered   how  to   resolve  a                                                                    
conflict  in   which  the  budget  included   language  that                                                                    
specified  that   the  state  not  accept   certain  federal                                                                    
funding,  yet there  was  a federal  mandate  to accept  the                                                                    
Ms. Lucky believed  it would be resolved similar  to the way                                                                    
in which  the state resolved anything  regarding the balance                                                                    
of powers. She suggested that  the bill only stated that the                                                                    
RPL process  could not  be used  to accept  federal funding.                                                                    
She  thought that  if the  legislature chose  not to  accept                                                                    
funds  in the  budget  process  or in  any  process and  the                                                                    
federal  government required  the state  to accept  it, then                                                                    
the issue  would likely  have to be  litigated. In  the bill                                                                    
being discussed,  it stated that  the RPL process  would not                                                                    
be an appropriate avenue for a particular issue.                                                                                
10:10:36 AM                                                                                                                   
Co-Chair Thompson indicated someone from legal was online.                                                                      
MEGAN  WALLACE, ATTORNEY,  LEGISLATIVE  LEGAL SERVICES  (via                                                                    
teleconference), relayed that she was available.                                                                                
Representative Guttenberg referred to Page  1, Line 4 of the                                                                    
committee  substitute.  He   highlighted  the  portion  that                                                                    
stated,  "Unless   expressly  prohibited  language   of  the                                                                    
appropriation."  He  wondered how  the  issue  of passing  a                                                                    
budget that  identified funds the  state was not  allowed to                                                                    
accept from the federal government but mandated to do so.                                                                       
Ms. Wallace responded that it  would be a difficult question                                                                    
to answer in a hypothetical  context. It would depend on the                                                                    
program  and the  Alaska statutes  surrounding the  program.                                                                    
Hypothetically, the  language would  prevent an  increase to                                                                    
an existing appropriation. If there  was a program funded in                                                                    
the budget  and additional  federal dollars  for it  came in                                                                    
but   the  legislature   had  chosen   to  insert   language                                                                    
prohibiting  the acceptance  of additional  funds, a  person                                                                    
would likely  have to turn  to the statutes. There  would be                                                                    
the question  of whether the additional  federal funding was                                                                    
needed to  fully fund  the program. If  so, the  question of                                                                    
what would happen if the  program was not fully funded would                                                                    
need to be addressed.                                                                                                           
Representative Gara MAINTAINED his OBJECTION.                                                                                   
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Gattis, Munoz, Pruitt, Saddler, Wilson, Thompson                                                                      
OPPOSED: Gara, Guttenberg, Kawasaki                                                                                             
The MOTION PASSED (6/3).                                                                                                        
Co-Chair Neuman  and Representative Edgmon were  absent from                                                                    
the vote.                                                                                                                       
CSHB  77 (FIN)  was REPORTED  out  of committee  with a  "do                                                                    
pass" recommendation  and with a  new zero fiscal  note from                                                                    
the Alaska Legislature.                                                                                                         
10:13:45 AM                                                                                                                   
AT EASE                                                                                                                         
10:15:28 AM