Legislature(2015 - 2016)HOUSE FINANCE 519
03/24/2016 09:30 AM House FINANCE
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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 funds. 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 RECONVENED