Legislature(2019 - 2020)ADAMS ROOM 519

06/11/2019 09:00 AM FINANCE

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Audio Topic
10:06:18 AM Start
10:06:39 AM SB19
10:31:22 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 10:15 a.m. Today --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved HCS CSSSSB 19(FIN) Out of Committee
CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 19(FIN)                                                                         
     "An  Act   making  appropriations,   including  capital                                                                    
     appropriations,       supplemental      appropriations,                                                                    
     reappropriations,  and  other appropriations;  amending                                                                    
     appropriations;  making  appropriations  to  capitalize                                                                    
     funds; and providing for an effective date."                                                                               
10:06:39 AM                                                                                                                   
Vice-Chair  Johnston  MOVED   to  ADOPT  proposed  committee                                                                    
substitute  for  CSSSSB   19(FIN),  Work  Draft  31-GS1904/N                                                                    
(Caouette 6/10/19)(copy on file).                                                                                               
Co-Chair Foster OBJECTED for discussion.                                                                                        
Co-Chair Wilson  asked her  staff to  review the  changes in                                                                    
the bill  and acknowledged Representative Chris  Tuck in the                                                                    
10:07:17 AM                                                                                                                   
REMOND  HENDERSON,  STAFF,   REPRESENTATIVE  TAMMIE  WILSON,                                                                    
reviewed the  major changes  that were  made since  the bill                                                                    
was presented and public testimony  was heard. He pointed to                                                                    
page 2,  line 19. There  was a $4 million  appropriation for                                                                    
the Interior  Gas Project  to help  the Fairbanks  area come                                                                    
into   air  quality   compliance   with  the   Environmental                                                                    
Protection  Agency. The  appropriation was  conditional upon                                                                    
the commercialization of the gas  utility after January 2020                                                                    
but  before  January  2021 and  was  funded  through  Alaska                                                                    
Industrial Development and Export Authority receipts.                                                                           
Mr. Henderson  moved to  page 2, line  27 where  $10 million                                                                    
was  added to  statewide  addiction  treatment for  facility                                                                    
capital  matching  grants.  It  was  the  intention  of  the                                                                    
legislature that  the Department of Commerce,  Community and                                                                    
Economic Development  (DCCED) administered  capital matching                                                                    
grants  to Alaska  organizations committed  to building  new                                                                    
addiction  treatment facilities  throughout  the state.  The                                                                    
grants  would  match  dollar-for-dollar  local  and  private                                                                    
contributions to increase the  number of available addiction                                                                    
treatment  slots   in  the  9  regions   identified  by  the                                                                    
Department  of  Health  and  Social  Services'  1115  waiver                                                                    
Mr. Henderson continued  to page 4, line  30 which specified                                                                    
funding to  the Department of Corrections  (DOC) for laundry                                                                    
services. The  fund was contingent  upon contracts  with DOC                                                                    
and  individual   and  private  organizations   for  laundry                                                                    
services.  He  pointed  to  page 6,  line  30  reflecting  a                                                                    
reduction of  $16 million to statewide  deferred maintenance                                                                    
and  renovation repair.  The legislature  was requiring  the                                                                    
Office of Management and Budget  (OMB) to submit a statewide                                                                    
prioritized list  of deferred maintenance projects  no later                                                                    
than December 31, 2019.                                                                                                         
Mr. Henderson reported that the  funding of $2.5 million for                                                                    
the  South  Denali Visitor's  Center  was  removed from  the                                                                    
budget.  He highlighted  page  11, line  28  which showed  a                                                                    
reduction in  funding for the University  of Alaska deferred                                                                    
maintenance  in the  amount of  $2.5  million. Instead,  the                                                                    
money was appropriated to  the USArray Earthquake Monitoring                                                                    
Network  for  sensor  devices. Co-Chair  Wilson  interjected                                                                    
that $7.5 million was left  in the budget for the University                                                                    
of Alaska Deferred Maintenance Program.                                                                                         
Mr. Henderson  continued to  page 17,  line 18  added intent                                                                    
language to  better analyze  the dangers  of polyfluoroalkyl                                                                    
substances  (PFAS) and  to develop  a plan.  Co-Chair Wilson                                                                    
clarified  that  PFAS  was the  foam  used  in  firefighting                                                                    
throughout  the state.  There had  been an  uproar regarding                                                                    
the change in the threshold  considered to be dangerous. The                                                                    
legislature  was  asking  the  Department  of  Environmental                                                                    
Conservation  (DEC)   to  conduct   more  analysis   on  the                                                                    
potential  harm  of PFAS  to  Alaska's  drinking water.  She                                                                    
confirmed  with DEC  that the  department could  fulfill the                                                                    
intent language.                                                                                                                
Mr. Henderson moved to the changes  on page 28, line 1 which                                                                    
contained   funding  for   the  reopening   of  the   Palmer                                                                    
Correctional  Center  and housing  prisoners  in  or out  of                                                                    
state. It also added specific reporting requirements.                                                                           
10:12:12 AM                                                                                                                   
AT EASE                                                                                                                         
10:12:58 AM                                                                                                                   
Co-Chair Wilson  indicated that on  page 31, line  8 vaccine                                                                    
receipts collected,  under AS  18.09.220, were  estimated to                                                                    
be  $25.5  million  and were  appropriated  to  the  vaccine                                                                    
assessment  fund.   The  appropriation   was  a   result  of                                                                    
legislation passed earlier in the current year.                                                                                 
Mr. Henderson  continued with page 38,  line 21 encompassing                                                                    
reverse  sweep  language  pertaining to  the  Constitutional                                                                    
Budget  Reserve (CBR).  Section 26(b)  appropriated interest                                                                    
earned  on general  fund investments  to go  to the  CBR. He                                                                    
continued that Section  26(c) on page 39  clarified that the                                                                    
reverse sweep was subject to a three-quarter vote.                                                                              
Co-Chair  Wilson  noted  there  were close  to  200  savings                                                                    
accounts for  different purposes. The funds  in the accounts                                                                    
were  not  dedicated but  designated  funds.  She noted  the                                                                    
Power  Cost  Equalization  fund which  helped  residents  in                                                                    
high-energy cost  places. She  also mentioned  the Community                                                                    
Revenue  Sharing Fund  and the  Higher  Education Fund  that                                                                    
helped students to acquire  scholarships. She explained that                                                                    
without including the language the  monies would go into the                                                                    
CBR. She  reiterated that  any money coming  out of  the CBR                                                                    
required a three-quarter vote of the legislature.                                                                               
Mr.  Henderson  continued  to  page  39,  Section  29  which                                                                    
contained contingency  language. Section 29(a)  outlined the                                                                    
three-quarter vote  requirement by  the legislature  for the                                                                    
appropriations  made through  Sections  1-6 of  the act.  He                                                                    
relayed  that Section  26(b) contained  contingency language                                                                    
for  DOC   on  the  reopening  of   Palmer  or  out-of-state                                                                    
contracts.  It  provided  funding  of $6  million  when  the                                                                    
inmate population  exceeded 5,130 on or  before December 31,                                                                    
2019.   The   following   section  [Section   26(c)]   added                                                                    
additional  funding   of  $10.7  million  when   the  inmate                                                                    
population exceeded 5,500 or more  before March 31, 2020. He                                                                    
clarified  that  he   was  discussing  contingency  language                                                                    
rather than  a supplemental  appropriation. The  funds would                                                                    
be available immediately upon reaching the target levels.                                                                       
Mr.   Henderson   summarized    that   the   bill   required                                                                    
approximately  $1.4 billion  in  funding,  $1.26 billion  in                                                                    
federal  receipts,  $162.5  million in  CBR  funding,  $51.7                                                                    
million in DGF,  and $93.2 million in other  state funds. He                                                                    
was available to entertain questions.                                                                                           
Co-Chair Foster  WITHDREW his OBJECTION  to the  adoption of                                                                    
the work draft.                                                                                                                 
There being NO OBJECTION, it was so ordered.                                                                                    
10:16:38 AM                                                                                                                   
Representative Josephson  referred to  page 4,  lines 24-31.                                                                    
He thought  the monies  in the section  were supposed  to be                                                                    
for  the benefit  of the  Alaska Marine  Highway System.  He                                                                    
asked if  AMHS could  still apply for  the monies  slated to                                                                    
meet its laundry needs.                                                                                                         
Co-Chair  Wilson  explained   that  the  contingencies  were                                                                    
placed into the  bill because the fate of  AMHS was unknown.                                                                    
The  legislature  did  not  want  to  invest  an  additional                                                                    
$420,000  unless  a contract  with  a  vendor was  in  place                                                                    
moving forward.                                                                                                                 
Representative  Tilton asked  Mr.  Henderson  to review  the                                                                    
funding sources.                                                                                                                
Mr.  Henderson responded  that there  was  $1.26 billion  in                                                                    
federal  receipts,  $162.5  million in  CBR  funding,  $51.7                                                                    
million in DGF, and $93.2 million in other state funds.                                                                         
Representative Tilton referred to  page 2, line 27 regarding                                                                    
intent language  with the statewide addiction  treatment. It                                                                    
appeared the  money would  go out as  a grant  through DCCED                                                                    
that  complied  with  the  1115  waiver.  She  had  received                                                                    
feedback thanking her  for putting things in  the budget she                                                                    
was not aware  of. In the community she was  from there were                                                                    
questions  about   how  people   could  apply   for  funding                                                                    
statewide.  There were  some  specific  projects the  Mat-Su                                                                    
Health  Foundation brought  forward that  equaled a  smaller                                                                    
amount of funds. She wanted to  make sure the funds would be                                                                    
available on a statewide basis.                                                                                                 
Co-Chair Wilson  intended for the  funding to  be accessible                                                                    
statewide. The  funding would  pay for  additional treatment                                                                    
beds but  did not  cover operating costs.  The appropriation                                                                    
was not contingent  on the 1115 waiver.  However, there were                                                                    
9  regions  identified  by  the  waiver  which  helped  with                                                                    
dispersing  the funds.  She noted  that treatment  beds were                                                                    
lacking  throughout the  state. She  recalled during  public                                                                    
testimony  that  receiving dollar-for-dollar  federal  funds                                                                    
would help to keep the program going.                                                                                           
Representative  Knopp  referred  to  page  4,  line  24.  He                                                                    
wondered  if  the legislature  had  reached  out to  DOC  to                                                                    
discuss  the laundry  contracts.  It  was his  understanding                                                                    
that DOC already had contracts  with the cruise industry for                                                                    
laundry services.                                                                                                               
10:20:46 AM                                                                                                                   
Co-Chair Wilson  indicated she  had reached  out to  DOC but                                                                    
did not receive a response.  She suggested that if contracts                                                                    
were in  place, the intent  language would be  satisfied and                                                                    
$420,000 would be available to upgrade the facility.                                                                            
Representative Knopp  surmised that if DOC  was already into                                                                    
the  contracts, it  should  have  receipt authority  without                                                                    
Co-Chair Wilson  understood that they had  receipt authority                                                                    
and a  contract with AMHS.  However, she thought  an upgrade                                                                    
was needed.                                                                                                                     
Representative  Knopp stated,  "But we  never got  an answer                                                                    
from  DOC  is  what  you're  telling  me."  Co-Chair  Wilson                                                                    
responded that he was correct.                                                                                                  
Representative  Sullivan-Leonard  queried  the  grants  that                                                                    
might come through DCCED. She  asked if a provision would be                                                                    
included for projects under  consideration requiring them to                                                                    
be shovel-ready  or far  enough along  that the  state could                                                                    
simply finish the project. She  was looking for shovel-ready                                                                    
Co-Chair  Wilson preferred  shovel-ready  projects as  well.                                                                    
Beds  were needed  immediately rather  than 4  years in  the                                                                    
future. She  agreed with the  idea of funding  projects that                                                                    
were nearly ready.  She relayed that the funds had  to go to                                                                    
the capital portion of a project.                                                                                               
Representative Josephson referred to  page 6. He asked about                                                                    
the $16  million reduction.  In the other  body there  was a                                                                    
recommended  change where  the Department  of Transportation                                                                    
and Public  Facilities would coordinate  with the  Office of                                                                    
the  Governor   and  deferred  maintenance.  He   asked  the                                                                    
co-chair to remind members of  what the committee substitute                                                                    
did and the change.                                                                                                             
Co-Chair  Wilson responded  that it  reduced the  amount the                                                                    
legislature  would  be  giving to  the  administration.  The                                                                    
committee  had the  administration before  the committee  to                                                                    
discuss deferred  maintenance. The  presenters did  not know                                                                    
who  owned the  Capitol Building  which raised  concern. The                                                                    
legislature  had  been asking  for  a  priority list  for  a                                                                    
significant  period.  Meanwhile,  the legislature  had  been                                                                    
appropriating  a significant  amount of  money. She  thought                                                                    
that in  lean times,  the legislature  needed to  fund items                                                                    
that  rose to  the top  of  the priority  list. She  thought                                                                    
additional accountability was necessary.                                                                                        
Representative Josephson  asked if  the appropriation  was a                                                                    
separate appropriation for which  the Office of the Governor                                                                    
could not use  except for deferred maintenance.  He asked if                                                                    
he was  correct. Co-Chair Wilson  clarified that it  was her                                                                    
intention for the funds to  be used for deferred maintenance                                                                    
rather than operating costs.                                                                                                    
10:24:10 AM                                                                                                                   
Vice-Chair Johnston  MOVED to report HCS  CSSSSB 19(FIN) out                                                                    
of Committee with individual recommendations.                                                                                   
Representative Josephson  OBJECTED. He was pleased  with the                                                                    
committee  substitute.  He  was  concerned  about  the  PFAS                                                                    
appropriation. He  explored Title  46 and Title  29 relative                                                                    
to  the response  fund. The  Prince  William Sound  Regional                                                                    
Citizens  Advisory Council,  created through  the Oil  Spill                                                                    
Prevention Act  of 1990, had  an appreciation and  a concern                                                                    
for PFAS.  However, the council  did not like the  fact that                                                                    
the  legislature  was  draining response  funds  for  things                                                                    
other than sudden releases. In  looking at Title 29, DCCED's                                                                    
code, there  was a section  that specified  incidences where                                                                    
there  were sudden  releases. Other  sections clarified  the                                                                    
use of the  funds for sudden releases. There  was concern in                                                                    
the prior  year about  how the  remediation of  the Wrangell                                                                    
junk yard dump  was being funded. He  reiterated his concern                                                                    
about the account  and thought the issue  should be examined                                                                    
further  in  2020. Co-Chair  Wilson  agreed  that the  issue                                                                    
should be on the following year's agenda.                                                                                       
Representative  Sullivan-Leonard asked  if amendments  would                                                                    
be allowed.                                                                                                                     
Co-Chair Wilson  asked if  the representative  currently had                                                                    
any amendments to offer.                                                                                                        
Representative Sullivan-Leonard  did not have  one presently                                                                    
but had one coming.                                                                                                             
Co-Chair Wilson suggested  that it would have to  be in time                                                                    
to move it.                                                                                                                     
10:26:50 AM                                                                                                                   
AT EASE                                                                                                                         
10:29:07 AM                                                                                                                   
Representative Josephson WITHDREW his OBJECTION.                                                                                
Representative Carpenter OBJECTED.                                                                                              
Representative   Carpenter  spoke   to  his   objection.  He                                                                    
indicated he was given a period  of 10 minutes to review the                                                                    
committee substitute.  He objected  to several items  in the                                                                    
legislation.  He  did   not  like  the  idea   of  taking  a                                                                    
significant amount of money out  of the CBR or writing blank                                                                    
checks  for addiction  treatment without  a plan.  He wanted                                                                    
more  information to  make a  good decision.  He thought  he                                                                    
would want to offer some  amendments. He could not presently                                                                    
support the bill.                                                                                                               
Representative Carpenter MAINTAINED his OBJECTION.                                                                              
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Ortiz,   Josephson,    Johnston,   Knopp,   LeBon,                                                                    
Merrick, Foster, Wilson                                                                                                         
OPPOSED: Sullivan-Leonard, Tilton, Carpenter                                                                                    
The MOTION PASSED (8/3).                                                                                                        
HCSSSSB 19(FIN)  was REPORTED  out of  committee with  a "do                                                                    
pass" recommendation.                                                                                                           

Document Name Date/Time Subjects
SB 19 HCS WORKDRAFT v.N.pdf HFIN 6/11/2019 9:00:00 AM
SB 19