Legislature(2015 - 2016)Anch LIO BUILDING

06/03/2015 08:30 AM House CONFERENCE COMMITTEE ON HB2001

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08:52:21 AM Start
09:24:04 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 3:00 p.m. on 6/5/15 --
Location: A, B, C Conference Room
Heard & Held
Agenda to be Announced
**Streamed live on AKL.tv**
**Due to construction, streaming available in
Juneau in Capitol Rm 106**
CS FOR HOUSE BILL NO. 2001(FIN) am                                                                                            
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain   programs;  making   appropriations  for   the                                                                    
     operating   expenses   of    the   state's   integrated                                                                    
     comprehensive   mental  health   program;  capitalizing                                                                    
     funds    and     repealing    appropriations;    making                                                                    
     appropriations under art.  IX, sec. 17(c), Constitution                                                                    
     of the State of  Alaska, from the constitutional budget                                                                    
    reserve fund; and providing for an effective date."                                                                         
SENATE CS FOR CS FOR HOUSE BILL NO. 2001(FIN)                                                                                 
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain  programs  and  capitalizing  funds;  repealing                                                                    
     appropriations;  making appropriations  under art.  IX,                                                                    
     sec. 17(c),  Constitution of the State  of Alaska, from                                                                    
     the constitutional  budget reserve fund;  and providing                                                                    
     for an effective date."                                                                                                    
8:53:03 AM                                                                                                                    
Chair Neuman relayed that limited  powers of free Conference                                                                    
were granted by  both the House and the  Senate. He conveyed                                                                    
that the committee  would be addressing open items  1, 6, 7,                                                                    
8,  9,  10,  11,  12  and 15  based  on  the  motion  sheets                                                                    
distributed to members and dated June 2.                                                                                        
Vice-Chair Kelly MOVED to ADOPT the following:                                                                                  
Item 1    House                                                                                                                 
Item 6    House                                                                                                                 
Item 7    House                                                                                                                 
Item 8    House                                                                                                                 
Item 9    House                                                                                                                 
Item 10   House                                                                                                                 
Item 11   House                                                                                                                 
Item 12   House                                                                                                                 
Item 15   House                                                                                                                 
Chair Neuman OBJECTED for the purpose of discussion.                                                                            
Chair  Neuman reviewed  each  of the  action  items. Item  1                                                                    
appropriated  monies for  the K-12  base student  allocation                                                                    
(BSA) in  the amount of  $16.5 equal to $5,880  per student;                                                                    
Item 6 provided  funding in the amount of  $700 thousand for                                                                    
early learning for  the Parents as Teachers  Program; Item 7                                                                    
apportioned  money in  the  amount of  $2  million for  Pre-                                                                    
kindergarten grants;  Item 8 conveyed  $2.5 million  to fund                                                                    
front  line  social  workers within  the  Office  of  Social                                                                    
Services (OCS); Item 9 provided  $2.8 million in funding for                                                                    
the  Senior  Benefits Payment  Program;  Item  10 funded  an                                                                    
additional  $1.75  million  for the  Alaska  Marine  Highway                                                                    
System for  marine vessel operations;  Item 11  supported an                                                                    
additional $5 million to the  University of Alaska's budget;                                                                    
Item 12  subsidized $250 thousand for  Public Communications                                                                    
Services and  Public Broadcasting  Radio. The total  for the                                                                    
listed items  equaled $15 million. He  reported that because                                                                    
of the $2.5 million increase  to OCS's budget for front line                                                                    
social  workers the  state  would  receive federal  matching                                                                    
funds in the amount of $681.7 thousand.                                                                                         
8:55:34 AM                                                                                                                    
Representative  Gara  recognized  that   the  one  item  not                                                                    
addressed in the current committee  hearing was the previous                                                                    
agreement  between the  House Republicans,  House Democrats,                                                                    
and House Independents to  honor the already-negotiated wage                                                                    
contracts. He felt  that the legislature had  moved the goal                                                                    
post backwards. He relayed that  the House had a deal, which                                                                    
he  understood did  not include  the Senate.  However, there                                                                    
was a deal  that crossed party lines within  the House prior                                                                    
to pink slips  being issued. He opined  that the legislature                                                                    
should have had a budget.  He informed the committee that he                                                                    
understood the Senate was a  separate body. He asserted that                                                                    
there was a significant amount  of give and take. He thought                                                                    
that the  current deal in  the legislature was similar  to a                                                                    
home  purchase  agreement  in which  a  purchase  price  was                                                                    
agreed upon and then changed a few days later.                                                                                  
Representative Gara reasoned that  the Senate wanted to save                                                                    
additional money which he  understood. However, he expressed                                                                    
frustration with  being voted down  on his method  of saving                                                                    
state money.  He believed  there were  smarter ways  to save                                                                    
money than to  break a wage agreement  which increased wages                                                                    
by 1 percent the first year,  1 percent the second year, and                                                                    
2.5  percent  the third  year.  He  claimed that  the  total                                                                    
increase  for the  three years  stayed behind  inflation. He                                                                    
furthered that the  state employees did not  get the agreed-                                                                    
to  salary  increases   while  contrastingly  oil  companies                                                                    
received $600  million more than  what was promised  to them                                                                    
under  Alaska's statutes.  He wanted  to attempt  to discuss                                                                    
the issue one more  time in order to see if it  was a way to                                                                    
save money.                                                                                                                     
Chair  Neuman redirected  Representative Gara  to limit  his                                                                    
discussion  to  the  current agenda  items.  He  also  asked                                                                    
Representative  Gara  to  limit  his  comments  to  his  own                                                                    
thoughts rather than the thoughts of others.                                                                                    
Representative Gara  speculated that the state  could easily                                                                    
save $50 million,  $100 million, or $200  million by slowing                                                                    
down the  payment that was  currently an overpayment  of oil                                                                    
tax credits.  He understood  that the  state was  allowed to                                                                    
make overpayments  but did not  feel it was the  right thing                                                                    
to  do in  tight financial  times. He  referenced a  statute                                                                    
limit of $91 million. He  opined that the oil companies were                                                                    
the only entities getting a good deal.                                                                                          
Representative  Gara  commented  on  education  funding.  He                                                                    
reported  that  there  had  been  an  agreement  with  House                                                                    
members made  the previous  Friday about  education dollars.                                                                    
Although  his caucus  was in  favor of  reinstating the  $32                                                                    
million  one-time funding  that  was placed  in statute  the                                                                    
previous year,  he understood the  need for  compromise. His                                                                    
caucus  agreed to  leave  the one-time  funding  out of  the                                                                    
budget. He asserted that he  stood by the agreement made the                                                                    
previous Friday. He  commented that the budget  did not have                                                                    
everything he liked or wanted,  but it was a compromise. His                                                                    
aim was to work together  to reach an agreement and asserted                                                                    
that a budget should have  already passed with the deal made                                                                    
the prior Friday.                                                                                                               
9:00:54 AM                                                                                                                    
Vice-Chair Kelly stated that the  governor signed a bill [HB
72] into law  which rejected the monetary  terms for meeting                                                                    
the state's  collective bargaining  unit agreements  for pay                                                                    
raises;  the cost  of living  adjustments  (COLA) for  union                                                                    
state employees. He  stressed that the language  in the bill                                                                    
survived both bodies [House and  Senate]. He commented that,                                                                    
as far  as working across  party lines, there were  a number                                                                    
of democrats in the House  Majority that negotiated and came                                                                    
to an agreement.  In the Senate there was a  Democrat in the                                                                    
majority and a Democrat on  the finance committee. The labor                                                                    
agreements were  negotiated, talked about, and  discussed in                                                                    
the  open. The  language survived  both bodies  in a  90 day                                                                    
process   laid  out   in   the   state's  constitution.   He                                                                    
acknowledged what  had been agreed upon  across party lines.                                                                    
In  addition, he  reported that  the  statutes required  the                                                                    
contracts  to have  language  in them  that  was subject  to                                                                    
appropriation  by the  legislature. He  reiterated that  the                                                                    
legislature  followed  what  was allowed  in  the  contracts                                                                    
negotiating across  party lines and had  reached the current                                                                    
Vice-Chair  Kelly clarified  that  with  the current  action                                                                    
items the committee  would be giving money  to education, to                                                                    
social workers,  to the University  of Alaska, and  more. He                                                                    
summarized  that the  Senate started  with  $860 million  in                                                                    
reductions  to the  state's operating  budget, lessened  its                                                                    
cuts an additional $50 million  in its negotiations with the                                                                    
House, and currently suggested lowering  cuts by another $31                                                                    
million. All of the negotiations  were being done out in the                                                                    
open.  He remarked  that the  obvious  discussion was  about                                                                    
giving pay raises  at a time when the state  had no business                                                                    
doing so  due to an  $8 billion debt tsunami.  He reiterated                                                                    
that the disagreement was whether  the state should give pay                                                                    
raises  while  facing  an  $8  billion  deficit  or  do  the                                                                    
responsible   thing  by   dispensing  funds   in  the   most                                                                    
distributive way  through education.  He made it  clear that                                                                    
the Senate Majority and the  House Majority felt that it was                                                                    
far  more responsible  and beneficial  to  Alaskans to  give                                                                    
money to  education, social workers,  and to  the university                                                                    
system than to fund pay raises.                                                                                                 
9:05:17 AM                                                                                                                    
Representative   Thompson  asked   if   the  committee   was                                                                    
discussing Item 3 or the open items.                                                                                            
Chair Neuman began to clarify the items being addressed.                                                                        
Representative Thompson  interjected that the  committee was                                                                    
currently discussing Item 3.                                                                                                    
Chair Neuman remarked that the  committee should keep to the                                                                    
open items.                                                                                                                     
9:05:47 AM                                                                                                                    
Senator   MacKinnon  thanked   Chair   Neuman  for   working                                                                    
diligently  and advocating  for the  House's position  as it                                                                    
was  brought  forward  to   the  Conference  Committee.  She                                                                    
reported that  she was elected by  a group of people  from a                                                                    
conservative community  who believed  that the  state needed                                                                    
to take  a hard look in  tough fiscal times at  right sizing                                                                    
government.  She was  elected by  her constituents  who were                                                                    
trusting her to represent all  of Alaska. She mentioned that                                                                    
her co-chairman spoke  to the huge deficit  tsunami that the                                                                    
state was  facing and to trying  to come up with  a solution                                                                    
together without  pointing fingers.  She felt that  what was                                                                    
being  proposed  was  a compromise.  She  relayed  that  the                                                                    
Senate said everything was on  the table. She furthered that                                                                    
the  Senate  planted  $16.1  million  outside  of  the  base                                                                    
student  Allocation (BSA)  for education  to widen  the goal                                                                    
post.  She did  not  support the  characterization that  the                                                                    
Senate brought  less to the  table or that the  Senate moved                                                                    
the goal  post inside. She  believed that the goal  post was                                                                    
planted outside.  She clarified that when  the Senate rolled                                                                    
out  its  compromise  that  it  was  headed  for  Conference                                                                    
Committee.  She pointed  out that  the Senate  offered $16.1                                                                    
million  of  additional spending  in  a  range and  that  it                                                                    
proposed  to accept  $31 million  of new  spending with  the                                                                    
support  of  the Senate  caucus  in  a  time the  state  was                                                                    
drawing funding from savings.                                                                                                   
Senator  MacKinnon restated  that the  Senate's offer  was a                                                                    
compromise and that  every single one of  the spending items                                                                    
that were  conveyed by  the House  were accepted.  She asked                                                                    
Chair  Neuman to  confirm that  the compromise  included $15                                                                    
million in new  spending and all of  the individual requests                                                                    
were included.                                                                                                                  
Chair Neuman agreed that the  $15 million of outside funding                                                                    
was included. He noted that  he felt the offer was presented                                                                    
such that the  $15 million could be spent  at the minority's                                                                    
discretion. He  suggested that  the money  could be  used to                                                                    
fund education outside the BSA  or anywhere the minority saw                                                                    
Senator MacKinnon concurred that  the Senate stepped up with                                                                    
an  additional  $15 million  of  spending  in the  operating                                                                    
budget and  left it up to  the House Minority and  the House                                                                    
Majority  to allocate  the funds.  She stated  that spending                                                                    
was very important in terms  of right sizing government. She                                                                    
felt  that it  was important  to  get the  state's house  in                                                                    
order  and to  make sure  the people  working for  the state                                                                    
received the benefits  promised them. She also  wanted to be                                                                    
sure that promises were sustainable.  She concluded that the                                                                    
problem the Senate  was facing was the  difficulty of taking                                                                    
on recurring spending. She explained  that the Senate placed                                                                    
$16.1 million  for education outside the  foundation formula                                                                    
to  make   sure  everyone  was  involved   in  right  sizing                                                                    
government  with   education  being  the   Senate's  highest                                                                    
priority.  She opined  that it  was really  about jobs.  She                                                                    
suggested that  the people  that will get  laid off  will be                                                                    
new families not  necessarily those that have  been with the                                                                    
state  for 10  to 20  years. She  felt that  the Senate  was                                                                    
compromising  and has  tried  to  accommodate the  agreement                                                                    
reached  in the  House. The  Senate also  had items  that it                                                                    
wanted to negotiate as well.  She specified that, as the co-                                                                    
chairs of both the Senate  and House had already stated, the                                                                    
negotiations needed  to take place  in front of  the general                                                                    
public so  that it would  not be hearsay whether  the Senate                                                                    
was  willing to  compromise. Members  agreed that  education                                                                    
was the  highest priority. However, she  contended that with                                                                    
education  taking   $1.3  billion  and  Health   and  Social                                                                    
Services  taking $1.3  billion  and held  harmless then  the                                                                    
rest of the  state would be picking up all  of the cuts. She                                                                    
reported  that some  departments  were taking  a 30  percent                                                                    
cut. She  stated that it  was not about the  state's highest                                                                    
priority   it  was   about   money   being  available.   She                                                                    
appreciated the  good faith efforts  on behalf of  the House                                                                    
Minority  and  Majority and  wanted  to  demonstrate to  the                                                                    
public that  the Senate was ready  to discuss reconciliation                                                                    
and to put forward a fully-funded budget.                                                                                       
9:11:22 AM                                                                                                                    
Vice-Chair  Kelly clarified  that the  $15 million  could be                                                                    
spent in any  way the minority wanted to  within the context                                                                    
of  what  was  on  the table  in  Conference  Committee.  He                                                                    
pointed out that members were  limited to the topics at hand                                                                    
and with  the caveat  that the  funds be  distributed within                                                                    
the group and not for pay raises.                                                                                               
9:11:57 AM                                                                                                                    
Representative Gara  stated that it was  not about spending.                                                                    
He  wanted the  public  to understand  that the  legislature                                                                    
could go  outside the  confines of  the items  identified by                                                                    
waiving  Uniform Rule  42B and  addressing  other items.  He                                                                    
reiterated  that   it  was  not   about  spending.   As  the                                                                    
legislature  moved  forward,  he  hoped  some  of  the  $250                                                                    
million  worth  of  budget savings  and  spending  cuts  the                                                                    
minority  caucus proposed  would be  considered in  order to                                                                    
change the deal. He indicated that  if he voted "yes" on the                                                                    
open items  he would not  be voting  "yes" on the  deal that                                                                    
was  being proposed.  He  asked if  the  wage agreement  was                                                                    
currently an open item.                                                                                                         
9:13:04 AM                                                                                                                    
Chair Neuman conveyed  that what was being  offered was what                                                                    
was    in    front     of    the    Conference    Committee.                                                                    
The  offer was  to  accept the  open  items currently  being                                                                    
addressed. If  the items  were accepted  he would  close the                                                                    
Conference Committee.                                                                                                           
Representative Gara  asked if a  "yes" vote would  close the                                                                    
Conference Committee.                                                                                                           
Chair  Neuman   responded  affirmatively.  He   stated  that                                                                    
accepting the items would close the Conference Committee.                                                                       
Representative  Gara  responded,  "I  cannot  do  that,  Mr.                                                                    
Chair Neuman stated that his intent  was to put the items on                                                                    
the table.  All of the  members of the  Conference Committee                                                                    
would have  an opportunity  to confer with  their respective                                                                    
caucuses  before  returning  from a  recess.  The  committee                                                                    
would reconvene once a decision  was made. He wanted to make                                                                    
sure  the public  was aware  of the  discussion. He  did not                                                                    
think  the committee  would be  closing  out presently.  His                                                                    
plan was to recess once the discussion was over.                                                                                
9:14:08 AM                                                                                                                    
Representative Thompson clarified that  the only items being                                                                    
discussed were Items 1,  6, 7, 8, 9, 10, 11,  12, and 15. He                                                                    
also wondered if the other  items not being address would be                                                                    
addressed at another time.                                                                                                      
Chair  Neuman responded  that the  items would  be addressed                                                                    
one way or another.                                                                                                             
Vice-Chair Kelly  interjected that  he thought items  had to                                                                    
be addressed with a motion.                                                                                                     
9:14:31 AM                                                                                                                    
Representative Thompson  wanted to make sure  that the other                                                                    
items would  be addressed  because he felt  that a  deal had                                                                    
been made. He suggested that  the House did compromise after                                                                    
30 days of  working many hours, many nights,  and seven days                                                                    
a  week. He  relayed that  he had  not been  home in  over a                                                                    
month. He mentioned  that when the House had come  up with a                                                                    
compromise  agreement  he felt  as  if  it was  a  handshake                                                                    
saying "yes."  He asserted that  he had never been  a person                                                                    
to go  back on  his word. He  did not see  how he  could. He                                                                    
remarked that  his word was  all he  had. He wanted  to make                                                                    
sure that  the other items  would be addressed  because they                                                                    
meant something.                                                                                                                
Chair  Neuman  confirmed  that   the  open  items  would  be                                                                    
addressed first and there would be further discussions.                                                                         
9:15:22 AM                                                                                                                    
Senator Olson asked if the  committee would be taking a vote                                                                    
during the meeting. Chair Neuman responded in the negative.                                                                     
Senator  Olson asked  if they  could  continue a  discussion                                                                    
after   the  meeting   recessed.   Chair  Neuman   responded                                                                    
Senator MacKinnon  wondered if she heard  correctly that the                                                                    
items that the Senate was agreeing to were not enough.                                                                          
9:15:58 AM                                                                                                                    
Representative  Gara thought  that there  was confusion.  He                                                                    
stated  that the  items in  Conference Committee  along with                                                                    
the items agreed upon in  the House would constitute a deal.                                                                    
He was  not going back  on his  word. He furthered  that the                                                                    
bill that  passed the  House was a  compromise and  he would                                                                    
not go  back on his  word. He avowed  that his word  was his                                                                    
bond.  He continued  that it  appeared that  the terms  were                                                                    
changing. He suggested  that there needed to  be clarity. He                                                                    
wanted  to  better  understand  about  agreeing  to  certain                                                                    
9:16:43 AM                                                                                                                    
Chair Neuman  explained that  the open  items were  the only                                                                    
items  being  discussed.  He   further  clarified  that  any                                                                    
previous  compromises were  voted  on and  either passed  or                                                                    
failed just like any other  legislation. He pointed out that                                                                    
the committee  was a different committee  and that committee                                                                    
members   were  only   addressing  what   was  before   them                                                                    
currently. He reiterated that what  was before the committee                                                                    
could be  accepted in full  or in  part, but limited  to the                                                                    
open items.  He stated that the  open items were all  up for                                                                    
discussion. He stressed  that anything voted on  in the past                                                                    
was  in  the  past.  He  asserted  that  the  committee  was                                                                    
starting over again with the current open items.                                                                                
Chair Neuman  affirmed the  importance of  funding education                                                                    
as  heard from  many  Alaskans during  public testimony.  He                                                                    
understood  that the  Senate  compromised  by placing  $16.5                                                                    
million inside the BSA formula  rather than one-time funding                                                                    
outside the  BSA, as originally proposed.  He also addressed                                                                    
the  additional $15  million  that was  being  added to  the                                                                    
budget. He relayed that members  from the minority had asked                                                                    
him if  the $15  million in additional  monies could  be put                                                                    
towards  education  funding  outside  of the  BSA  which  he                                                                    
confirmed was possible.                                                                                                         
Chair  Neuman returned  to what  was mentioned  earlier that                                                                    
the oil credits were currently  due and that the payment was                                                                    
an  overpayment.  He  emphasized  that  the  payment  was  a                                                                    
payment due to the state.  He summarized that the open items                                                                    
on the  motion sheets in front  of the committee made  up an                                                                    
offer brought forward  in good faith. He  specified that the                                                                    
committee  would  continue to  work  [on  a compromise].  He                                                                    
explained   that  what   was   before   the  committee   for                                                                    
consideration was  what was contained in  the motion sheets.                                                                    
He stated  that any one  of the  items could be  accepted or                                                                    
denied.  He pointed  out  that  it was  a  different day,  a                                                                    
different piece  of legislation, and a  different committee.                                                                    
He  reported that  the committee  would continue  to discuss                                                                    
the  items. He  specified  that he  would  be recessing  the                                                                    
meeting  to  the call  of  the  chair  with the  hopes  that                                                                    
following a break the parties  would get together to support                                                                    
the present motion.                                                                                                             
9:19:32 AM                                                                                                                    
Senator  MacKinnon took  a moment  to thank  members of  the                                                                    
legislature,  particularly those  who were  away from  their                                                                    
families or struggling. She also  offered birthday wishes to                                                                    
Senator Kelly.                                                                                                                  
Chair   Neuman  commented   on   some   of  the   sacrifices                                                                    
legislators and staff made in  order to do the state's work.                                                                    
He emphasized  that there was  a significant amount  of work                                                                    
being done by  a number of committed people in  the midst of                                                                    
a state fiscal crisis.                                                                                                          
Vice-Chair  Kelly qualified  his statement  that it  was not                                                                    
about him in particular  but representative of what everyone                                                                    
was going  through. He  informed the  committee that  he had                                                                    
not slept in his own bed  more than 5 times since January 7,                                                                    
2015. He affirmed that it was what he had signed up for.                                                                        
Chair Neuman  added that  he had  had only  4 or  5 personal                                                                    
days off since January 10th.                                                                                                    
9:21:28 AM                                                                                                                    
Representative Thompson  informed the committee that  he had                                                                    
a  legal opinion  from Legislative  Legal  Services that  he                                                                    
could    attend    the   Conference    Committee    meetings                                                                    
telephonically   and   could   vote  on   individual   items                                                                    
telephonically. He also  reported that he had  to be present                                                                    
on  the  final vote  and  would  have  to  sign off  on  the                                                                    
committee report.                                                                                                               
Chair  Neuman   thanked  Representative  Thompson   for  the                                                                    
9:22:30 AM                                                                                                                    
Representative Gara commented  that there were disagreements                                                                    
on the budget of which he  wanted to work through as quickly                                                                    
as possible.  He wanted  to clarify to  the public  that the                                                                    
committee  members liked  each other  and wished  Vice-Chair                                                                    
Kelly a happy birthday. He added  that his heart went out to                                                                    
legislators who  had family issues  and life  struggles like                                                                    
the 700 thousand Alaskans who shared the same experience.                                                                       
9:23:22 AM                                                                                                                    
Senator Olson asked if the  Senate Minority would have a say                                                                    
in the $15 million in funds to be allocated.                                                                                    
Chair Neuman  responded that he  did not have an  answer for                                                                    
Senator  Olson  presently but  possibly  in  the future.  He                                                                    
suggested speaking with Representative Gara.                                                                                    
Chair Neuman  recessed the Conference Committee  to the Call                                                                    
of the Chair.                                                                                                                   
HB 2001 was HEARD and HELD in committee for further                                                                             
9:24:04 AM                                                                                                                    
[Note: The meeting did not reconvene and was rescheduled                                                                        
for a later date.]                                                                                                              

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