Legislature(2015 - 2016)JNUCAP519

05/31/2015 01:13 PM Senate FINANCE

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01:13:06 PM Start
01:13:23 PM HB2001
07:15:22 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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."                                                                         
1:13:23 PM                                                                                                                    
Co-Chair MacKinnon  MOVED to ADOPT Committee  Substitute for                                                                    
CSHB   2001(FIN)am,   Work  Draft   29-LS0960\G,   (Wallace,                                                                    
5/30/15). There being NO OBJECTION, it was so ordered.                                                                          
1:14:07 PM                                                                                                                    
AT EASE                                                                                                                         
1:17:41 PM                                                                                                                    
JAMES ARMSTRONG, STAFF, SENATOR  PETE KELLY, stated that the                                                                    
committee substitute (CS) was identical  to SB 2001 that was                                                                    
considered by the committee the  previous week. He explained                                                                    
that the  new bill  restored the vetoes  of items  that were                                                                    
contained in  HB 72,  and the combination  of the  two bills                                                                    
within  the  CS  would  restore funding  to  the  conference                                                                    
committee levels.                                                                                                               
Mr. Armstrong  referred to the document  "2015 Legislature -                                                                    
Operating  Budget;  Agency  Summary   -  FY  16  Post-CC  St                                                                    
Structure" (copy on file), which  depicted agency totals but                                                                    
not statewide provisions.                                                                                                       
1:18:59 PM                                                                                                                    
Co-Chair  Kelly stated  that the  CS  was a  product of  the                                                                    
entire  budget process,  including the  conference committee                                                                    
as  well  as  adjustments  after the  governor's  vetoes  of                                                                    
certain  line items.  He specified  that  the committee  cut                                                                    
about  $900  million  from  the  budget.  He  discussed  the                                                                    
nuances  of  the  previous  vote on  using  funds  from  the                                                                    
Constitutional  Budget  Reserve   (CBR).  He  discussed  the                                                                    
budget  process and  mentioned a  forthcoming amendment.  He                                                                    
opined that  the three-quarters vote  engendered dysfunction                                                                    
within the  process and allowed  a small group of  people to                                                                    
stop a constitutionally mandated process.                                                                                       
1:23:06 PM                                                                                                                    
Co-Chair  Kelly mentioned  Amendment 1.  He spoke  to future                                                                    
challenges   that  would   come,   and   thought  that   the                                                                    
significant  cut  that  was  made   would  be  difficult  to                                                                    
duplicate  in future  years. He  spoke to  the significantly                                                                    
reduced  capital budget.  He stated  that the  committee had                                                                    
tried  to protect  education, and  characterized  it as  the                                                                    
most widely distributed benefit that  came from the state as                                                                    
well as a constitutional  mandate. He discussed the changing                                                                    
fiscal  environment in  Alaska and  emphasized the  need for                                                                    
"buy-in" from public and from  the committee. He remarked on                                                                    
upcoming  bipartisan  work  and  compromise  that  would  be                                                                    
needed in  conference committee.  He pointed out  that state                                                                    
employee pay increases were not included in the budget.                                                                         
1:27:13 PM                                                                                                                    
Co-Chair MacKinnon  commented that  the State of  Alaska was                                                                    
facing its largest  deficit in history. She  referred to the                                                                    
state's   dependence   on   oil  revenues.   She   expressed                                                                    
appreciation for  attendance at  the committee  meeting. She                                                                    
discussed  the compromise  needed  to pass  a  budget and  a                                                                    
three-quarters  vote  to  access   the  CBR.  She  discussed                                                                    
priorities of  the committee to include  establishing goals,                                                                    
setting  education  as  the highest  priority,  prioritizing                                                                    
state   employees,  and   negotiating  in   good  faith   in                                                                    
conference  committee.  She  discussed the  state's  savings                                                                    
account  and expenditures,  and stressed  the importance  of                                                                    
Co-Chair   MacKinnon  continued   to   discuss  the   fiscal                                                                    
situation.  She  referred  to  the  Alaska  Cost  of  Living                                                                    
Allowance  (COLA)   for  state   employees  and   noted  the                                                                    
contention  of the  issue. She  thanked  Co-Chair Kelly  for                                                                    
bringing  forward a  Committee  Substitute  to work  through                                                                    
budgetary challenges.                                                                                                           
1:31:21 PM                                                                                                                    
Vice-Chair   Micciche  acknowledged   the   people  in   the                                                                    
audience. He  discussed the budget process  and CBR funding.                                                                    
He  reminded Alaskans  of  the $4  billion  fiscal gap,  and                                                                    
asserted that  the state would  run out of savings  in 2017.                                                                    
He expressed that  the members valued the work  of the other                                                                    
body  and   were  looking  toward  working   out  issues  in                                                                    
conference  committee. He  noted that  he valued  compromise                                                                    
and thanked the committee for its hard work.                                                                                    
Senator Olson  stated that he  saw the CS as  an opportunity                                                                    
to move forward  from what could be  considered a stalemate.                                                                    
He used a  football analogy to illustrate  the importance of                                                                    
making appropriate choices.                                                                                                     
Co-Chair Kelly spoke  to the importance of  the narrative in                                                                    
the press.  He expressed that the  CS was a strategy  to get                                                                    
to  conference   committee,  where  all  options   would  be                                                                    
1:36:53 PM                                                                                                                    
AT EASE                                                                                                                         
1:39:03 PM                                                                                                                    
Co-Chair  Kelly stated  that there  was an  amendment before                                                                    
the committee to consider, and  noted that Senator Olson was                                                                    
a co-sponsor of the amendment.                                                                                                  
Co-Chair  MacKinnon   MOVED  to   ADOPT  Amendment   1,  29-                                                                    
LS0960\G.1 (Wallace, 5/30/15):                                                                                                  
     Page 30, following line 28:                                                                                                
     Insert a new bill section to read:                                                                                         
     "*Sec.   10.   DEPARTMENT   OF  EDUCATION   AND   EARLY                                                                    
     DEVELOPMENT.  The sum  of  $16,121,850 is  appropriated                                                                    
     from the  general fund to  the Department  of Education                                                                    
     and Early  Development to be  distributed as  state aid                                                                    
     to districts according to  the average daily membership                                                                    
     for each  district adjusted under  AS 14.17.41  O(b )(1                                                                    
     )(A) - (D) for the fiscal year ending June 30, 2016."                                                                      
     Renumber the following bill sections accordingly.                                                                          
     Page 31, line 10:                                                                                                          
     Delete "11" in both places                                                                                                 
     Insert "12" in both places                                                                                                 
     Page 31, line 17:                                                                                                          
     Delete "12, and 13"                                                                                                        
     Insert "13, and 14"                                                                                                        
     Page 31, line 18:                                                                                                          
     Delete "Section 11"                                                                                                        
     Insert "Section 12"                                                                                                        
     Page 31, line 19:                                                                                                          
     Delete "secs. 14 and 15"                                                                                                   
     Insert "secs. 15 and 16"                                                                                                   
Vice-Chair Micciche OBJECTED for discussion.                                                                                    
1:39:38 PM                                                                                                                    
AT EASE                                                                                                                         
1:40:35 PM                                                                                                                    
Mr. Armstrong  discussed Amendment  1. He explained  that HB
278  [education   initiative  legislation  offered   by  the                                                                    
Parnell Administration that passed  in 2014] had established                                                                    
a myriad of  education funding over a  three-year period. He                                                                    
detailed   that  approximately   $32.3   million  had   been                                                                    
established outside of the foundation  formula for FY 16. He                                                                    
elaborated  that Governor  Walker's supplemental  budget had                                                                    
removed $32  million from FY 16  and $19 million for  FY 17.                                                                    
The amendment would  restore half of the  funding outside of                                                                    
the formula for FY 16 in the amount of $16,121,850.                                                                             
1:41:38 PM                                                                                                                    
Co-Chair   MacKinnon  clarified   that   the  members   were                                                                    
preparing  for a  conference committee,  and  her intent  by                                                                    
adding  her  name   to  the  amendment  was   to  allow  the                                                                    
conversation  about education  funding  to  take place.  She                                                                    
referred  to the  problem of  recurring costs  faced by  the                                                                    
state, as  well as  expenses such as  the COLA  increase and                                                                    
the Base Student Allocation (BSA).  She related these issues                                                                    
to accessing  the CBR, and  the need for flexibility  in the                                                                    
conversation about education funding.                                                                                           
1:42:55 PM                                                                                                                    
AT EASE                                                                                                                         
1:43:31 PM                                                                                                                    
Co-Chair MacKinnon  stated that if the  House concurred with                                                                    
the Senate, education would have $32 million.                                                                                   
Vice-Chair Micciche WITHDREW his OBJECTION.                                                                                     
There being NO further OBJECTION, Amendment 1 was ADOPTED.                                                                      
1:44:20 PM                                                                                                                    
AT EASE                                                                                                                         
1:44:45 PM                                                                                                                    
Mr.  Armstrong  made  an  observation   that  he  had  never                                                                    
testified  on  three  different versions  of  the  operating                                                                    
budget  before.  He  thanked   staff  from  the  Legislative                                                                    
Finance   Division  and   Legislative  Legal   and  Research                                                                    
1:45:27 PM                                                                                                                    
Co-Chair MacKinnon MOVED to REPORT  SCS CSHB 2001(FIN)am out                                                                    
of  committee with  individual recommendations.  There being                                                                    
NO OBJECTION, it was so ordered.                                                                                                
SCS CSHB  2001(FIN)am was REPORTED  out of committee  with a                                                                    
"do pass" recommendation.                                                                                                       
1:46:36 PM                                                                                                                    
7:10:31 PM                                                                                                                    

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