Legislature(2019 - 2020)SENATE FINANCE 532

03/12/2019 09:00 AM FINANCE

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Audio Topic
09:02:11 AM Start
09:03:03 AM SB37
09:21:36 AM SB19
10:11:40 AM Public Testimony
10:42:06 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony <Time Limit May Be Set> --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Moved CSSB 37(FIN) Out of Committee
SENATE BILL NO. 19                                                                                                            
     "An  Act   making  appropriations,   including  capital                                                                    
     appropriations,       supplemental      appropriations,                                                                    
     reappropriations,  and   other  appropriations;  making                                                                    
     appropriations to  capitalize funds; and  providing for                                                                    
     an effective date."                                                                                                        
9:21:36 AM                                                                                                                    
Co-Chair  von  Imhof  declared  a  conflict  concerning  the                                                                    
Capital Budget. She noted that  her husband had a rental car                                                                    
business  that could  benefit  from  Alaska Travel  Industry                                                                    
Association  (ATIA) tourism  advertising  dollars  or a  new                                                                    
visitor's center in Denali.                                                                                                     
Senator Wielechowski declared a  conflict, because he worked                                                                    
for  a labor  organization  that  could potentially  benefit                                                                    
from a changed capital budget.                                                                                                  
9:22:45 AM                                                                                                                    
AT EASE                                                                                                                         
9:23:32 AM                                                                                                                    
9:23:37 AM                                                                                                                    
Senator Bishop declared  a conflict for the  same reasons as                                                                    
Senator Wielechowski.                                                                                                           
9:24:20 AM                                                                                                                    
LACEY  SANDERS, BUDGET  DIRECTOR, OFFICE  OF MANAGEMENT  AND                                                                    
BUDGET,  discussed  the   presentation,  "State  of  Alaska,                                                                    
Office  of Management  and Budget;  SB 19  - FY2020  Capital                                                                    
Overview;  Presentation  to  the Senate  Finance  Committee;                                                                    
March 12, 2019" (copy on file).                                                                                                 
9:24:31 AM                                                                                                                    
LAURA  CRAMER, DEPUTY  DIRECTOR,  OFFICE  OF MANAGEMENT  AND                                                                    
BUDGET, introduced herself.                                                                                                     
9:24:38 AM                                                                                                                    
SHELLY WILHOITE,  BUDGET ANALYST,  OFFICE OF  MANAGEMENT AND                                                                    
BUDGET, introduced herself.                                                                                                     
9:24:49 AM                                                                                                                    
Ms.  Sanders  addressed slide  3,  "FY  2020 Capital  Budget                                                                    
Requests Total ($ Thousands).                                                                                                   
     FY 2020 Capital Project Requests                                                                                           
          -Deferred Maintenance                                                                                                 
          -Meet Federal Matching Requirements                                                                                   
          -Maximize Federal Funding for Project Grants                                                                          
Ms. Sanders  highlighted slide 4, "Historical  Comparison FY                                                                    
2016-FY2020 ($ Thousands).                                                                                                      
Ms.  Sanders  discussed slide  5,  "FY  2020 Capital  Budget                                                                    
Snapshot ($ Thousands).                                                                                                         
Ms.  Sanders  addressed slide  6,  "FY  2020 Capital  Budget                                                                    
Highlights ($ Thousands)":                                                                                                      
    Department of Transportation and Public Facilities                                                                          
          Federal Highway Surface Transportation:                                                                               
               $690,000.0 Federal, $35,000.0 UGF State                                                                          
               Highway Match                                                                                                    
               $25,000.0 Reappropriation from F/V Tustumena                                                                     
               Replacement to Federal-Aid Highway Match.                                                                        
          Airport     Improvement     Program     $198,700.0                                                                    
          ($187,200.0 Fed, $11,500.0 Other)                                                                                     
          Statewide Federal Programs $48,738.3 ($8,500.0                                                                        
          Federal, $10,000.0 Other, $238.3 UGF)                                                                                 
     Department of Commerce, Community, and Economic                                                                            
          National Petroleum Reserve - Alaska Impact Grant                                                                      
          Program $19,000.0 (Fed)                                                                                               
Co-Chair Stedman  looked at  the Tustumena  replacement, and                                                                    
understood that there were  many discussions with Department                                                                    
of Transportation and Public  Facilities (DOT/PF). He looked                                                                    
at the  impact grant,  and asked  that the  grant applicants                                                                    
provide some recent history.                                                                                                    
Ms. Cramer agreed to provide that information.                                                                                  
9:30:06 AM                                                                                                                    
Senator  Olson   noted  the  Alaska  Impact   Grant  Program                                                                    
applications,  and  wondered  where the  grant  applications                                                                    
Ms. Sanders wondered  if Senator Olson was  referring to the                                                                    
North Slope Borough.                                                                                                            
Senator  Olson  wondered  how many  applications  came  from                                                                    
boroughs outside of the North Slope.                                                                                            
Ms. Sanders agreed to provide that information.                                                                                 
Co-Chair  von  Imhof wondered  whether  all  of the  federal                                                                    
dollars for DOT/PF were included in the budget.                                                                                 
Ms. Sanders  stated that  she was  awaiting a  response from                                                                    
DOT/PF, and agreed to provide that information.                                                                                 
Ms.  Sanders  addressed slide  7,  "FY  2020 Capital  Budget                                                                    
Highlights ($ Thousands)":                                                                                                      
     Department of Environmental Conservation                                                                                   
          -Village Safe Water Projects $64,830.0 ($52,250.0                                                                     
          Federal, $12,080.0 UGF, $500.0 Other)                                                                                 
     Department of Natural Resources                                                                                            
          -South Denali Visitor's Center $25,000.0 Alaska                                                                       
          Industrial Development and Export Authority                                                                           
               -Possibility of Federal and private funds                                                                        
     Deferred Maintenance                                                                                                       
          -Administration: Public Building Fund $4,500                                                                          
          -Courts: Statewide $2,783.7 UGF                                                                                       
          -Office of the Governor: Statewide Prioritized                                                                        
          $26,600.0 DGF                                                                                                         
          -Education: K-12 Major Maintenance: $7,400.0 DGF                                                                      
          - University: $5,000.0 DGF                                                                                            
Ms. Sanders noted an error  in the slide. She explained that                                                                    
project  consisted of  $10.2 million  of AIDEA  receipts. In                                                                    
addition  there   was  $10.3  million  of   available  AIDEA                                                                    
dividends,  and  $4.5  million  of  Alaska  Housing  Finance                                                                    
Corporation (AHFC) dividends.                                                                                                   
Senator  Bishop  wondered  when  there  would  be  a  deeper                                                                    
discussion regarding this issue.                                                                                                
Co-Chair von Imhof  replied that she wanted  to continue the                                                                    
slide, and felt that it  was appropriate to get into further                                                                    
Ms. Sanders concluded her discussion of the slide.                                                                              
Senator Bishop  asked for more  information about  the South                                                                    
Denali Visitor  Center, and wondered  whether the  state was                                                                    
getting into the hotel business.                                                                                                
9:37:06 AM                                                                                                                    
Ms. Cramer stated  that it was phase II of  the project, and                                                                    
stressed that it was not a  hotel. She stated that there was                                                                    
projected  revenue of  $1 million  annually after  the fifth                                                                    
year. She  noted that  a small cruise  line was  planning to                                                                    
build  a   hotel  near  South   Denali,  so  there   was  an                                                                    
expectation of increased visitor to the park.                                                                                   
Senator  Bishop   surmised  that  the  visitor   center  was                                                                    
expected to be a revenue generator.                                                                                             
Ms. Cramer replied in the affirmative.                                                                                          
Senator Micciche wondered whether  the $26 million statewide                                                                    
prioritized DGF for  Office of the Governor  was normally in                                                                    
the DOT/PF budget.                                                                                                              
Ms.  Sanders replied  that  it  had been  in  the Office  of                                                                    
Governor for  the previous two  years with the hope  to work                                                                    
together with DOT/PF to analyze  what needs were prioritized                                                                    
and who was prioritizing those lists.                                                                                           
Senator Micciche  asserted that the projects  were typically                                                                    
managed  by DOT/PF,  once it  was determined  where the  $26                                                                    
million was going.                                                                                                              
Ms. Sanders agreed.                                                                                                             
Senator Micciche asked whether  the detail would be included                                                                    
through  the  fiscal  year,  or whether  it  would  be  seen                                                                    
Ms. Cramer agreed to provide that information.                                                                                  
9:40:10 AM                                                                                                                    
Co-Chair  von Imhof  believed that  there had  been previous                                                                    
presentations that included that list.                                                                                          
Senator Wielechowski wondered  whether Department of Natural                                                                    
Resources (DNR) would own the  visitor's center. He wondered                                                                    
whether the 4 percent rate of  return after 5 years would be                                                                    
considered a good return according to AIDEA.                                                                                    
Ms. Cramer  remarked that  the receipts  from AIDEA  were up                                                                    
for  appropriation  by  the   legislature,  and  there  were                                                                    
current conversations about a state partnership.                                                                                
Co-Chair  von Imhof  stated  that there  would  be a  future                                                                    
presentation from AIDEA.                                                                                                        
Senator  Shower   wondered  whether   the  state   would  be                                                                    
obligated to build for the new companies.                                                                                       
Ms.  Cramer   replied  that  there  were   ongoing  deferred                                                                    
maintenance costs. The  park facilities were self-sustaining                                                                    
through  DNR, so  the  revenues from  the  project would  be                                                                    
reinvested in state facilities.                                                                                                 
Senator  Shower  felt  that  there  was  always  a  sneaking                                                                    
suspicion that  the state would  be required to  pay further                                                                    
Ms.  Cramer  stressed  that  the   funding  was  from  AIDEA                                                                    
dividends,  and  it was  anticipated  that  it was  one-time                                                                    
project money.                                                                                                                  
Co-Chair  Stedman  requested   more  information  about  the                                                                    
visitor's center, and the source  of the funds for the major                                                                    
Ms. Cramer  replied that  the legislature  passed SB  107 in                                                                    
the previous  session, which prioritized the  capital income                                                                    
fund specifically for deferred maintenance.                                                                                     
9:45:03 AM                                                                                                                    
Co-Chair  Stedman   asked  for  more  information   on  that                                                                    
Ms. Sanders  stated that the  AIDEA and AHFC  dividends were                                                                    
considered  UGF.  There  was   a  tracking  code  for  those                                                                    
dividends to see the amount coming to the state each year.                                                                      
Co-Chair  Stedman   remarked  that  he  had   several  other                                                                    
9:45:54 AM                                                                                                                    
Senator Bishop  wondered whether  there was  a consideration                                                                    
of having a  long-term lease, and therefore  takes the state                                                                    
of deferred maintenance.                                                                                                        
Ms. Cramer replied in the  affirmative, and agreed to follow                                                                    
up on more information.                                                                                                         
Co-Chair  von Imhof  hoped  for  more of  a  plan about  the                                                                    
visitor center.                                                                                                                 
Co-Chair  Stedman  asked  for   elaboration  on  the  Prince                                                                    
William Sound Science Center.                                                                                                   
Ms.  Sanders  noted the  project  within  the Department  of                                                                    
Commerce,  Community and  Economic Development  (DCCED). The                                                                    
project utilized receipts.                                                                                                      
Co-Chair Stedman asked for a definition of the receipts.                                                                        
Ms. Sanders  replied that the  receipts were from  the Exxon                                                                    
Valdez  oil  spill settlement  funds.  She  stated that  the                                                                    
council approved the resolution  requesting $17.5 million in                                                                    
coordination with DCCED to begin  design and construction on                                                                    
that facility.                                                                                                                  
Ms.  Cramer furthered  that in  the year  prior a  group had                                                                    
brought  forward the  idea  of the  project,  and wanted  to                                                                    
spend approximately $250,000 to  study the potential for the                                                                    
project. That was  not included in the  year prior's capital                                                                    
budget,  and  instead asked  that  they  thoroughly vet  the                                                                    
project. She stated that this was the vetted proposal.                                                                          
9:50:13 AM                                                                                                                    
Co-Chair Stedman  felt that  it would be  a good  subject to                                                                    
have further  hearings. He  looked at  the Cook  Inlet Stock                                                                    
Assessment for $1 million. He  wanted further information on                                                                    
the project.                                                                                                                    
Ms. Sanders  replied that it  was a request  from Department                                                                    
of Fish  and Game  (DGF) asking for  $1 million  to increase                                                                    
their ability  to collect information on  salmon stocks that                                                                    
were bound  for the Susitna  and Kenai River  drainages. She                                                                    
stated that  the information  would be  used in  ensure that                                                                    
the  stocks  were managed  with  the  best interest  of  the                                                                    
economy and the well-being of the state.                                                                                        
Co-Chair  Stedman  recalled  a   reduction  from  the  other                                                                    
submittal  of $2  million down  to $1  million. He  wondered                                                                    
what was  not being  done in the  proposal compared  to what                                                                    
DFG might be interested in earlier in the fall.                                                                                 
Ms. Cramer  explained that in reviewing  the capital budget,                                                                    
departments were asked to determine their own priorities.                                                                       
Co-Chair  Stedman   looked  at   the  sport   fish  hatchery                                                                    
upgrades. He  noted that there were  other hatcheries across                                                                    
the state, so asked for  information about why that hatchery                                                                    
was selected to be included in the budget.                                                                                      
Ms. Sanders  echoed Ms. Cramer's comments  about departments                                                                    
prioritizing their projects.                                                                                                    
Co-Chair  Stedman  asked for  an  examination  of the  other                                                                    
9:54:39 AM                                                                                                                    
Senator  Bishop  looked  at the  Census  Commission  funding                                                                    
removal, and asked  why it was moved into  the Department of                                                                    
Administration  (DOA). He  wanted to  ensure that  the state                                                                    
had a proper census count.                                                                                                      
Ms. Sanders replied  that there was a $1  million request in                                                                    
the  Office  of  the  Governor.   She  stated  that  it  was                                                                    
previously proposed  in the Operating Budget,  and was moved                                                                    
to  the  Capital Budget,  because  of  the timeline  of  the                                                                    
project. The Office of the  Governor would need to begin the                                                                    
census  in FY  20, and  the larger  majority of  the funding                                                                    
would be expended in FY 21.                                                                                                     
Senator Bishop requested  a follow up on  execution of those                                                                    
Ms. Sanders agreed to provide that information.                                                                                 
Co-Chair  von Imhof  agreed that  the census  was important,                                                                    
and understood  that there had  been some changes  since the                                                                    
previous administration.                                                                                                        
Senator Bishop  stressed that the  money in the  budget said                                                                    
that it was for redistricting.                                                                                                  
Ms. Sanders explained  that she understood that  it would be                                                                    
for  redistricting and  the census,  and  agreed to  provide                                                                    
Senator    Micciche   asked    about   the    Arctic   Slope                                                                    
Transportation and  Resources Project (ASTAR). He  noted the                                                                    
$2.5 million for  the studies that would be  completed in FY                                                                    
20. He requested detail on a plan moving forward.                                                                               
Ms. Cramer agreed to provide that information.                                                                                  
9:59:36 AM                                                                                                                    
Senator Wielechowski  queried the number of  nonprofits that                                                                    
were  direct  recipients  general  fund  dollars  under  the                                                                    
capital budget.                                                                                                                 
Ms. Cramer agreed to provide that information.                                                                                  
Senator Wielechowski noted that  there were significant cuts                                                                    
for  Alaska Energy  Authority  (AEA),  and wondered  whether                                                                    
they were transferred or cut.                                                                                                   
10:00:20 AM                                                                                                                   
Ms. Cramer  stated that  those items  had been  removed from                                                                    
the   Capital   Budget.   She   pointed   to   the   capital                                                                    
appropriations  status  report  (CASR), which  had  all  the                                                                    
outstanding  capital projects.  She stated  that there  were                                                                    
significant outstanding  funds for both of  those items. She                                                                    
agreed   to   provide   the   information   about   impacted                                                                    
Senator Wielechowski  noted that the current  budget had $22                                                                    
million  for  divesting  the Alaska  Marine  Highway  System                                                                    
ferries and terminals.                                                                                                          
Ms.  Sanders noted  the capital  project that  would utilize                                                                    
the  balances of  the  Marine Highway  Fund  and the  Marine                                                                    
Highway  System Replacement  Fund into  a single  project to                                                                    
allow for DOT/PF  to work through the  process of divesting,                                                                    
if that is  the direction that the  consultant would advise.                                                                    
The  funding would  be used  in  a manner  that would  allow                                                                    
DOT/PF to  pay back money  that would be owed  on facilities                                                                    
and vessels  that have been built  utilizing federals funds.                                                                    
She  stated it  would also  be used  for maintenance  to the                                                                    
vessels in order to sell them.                                                                                                  
Co-Chair Stedman  stated that there would  be an examination                                                                    
of  each budget  and the  possible fund  source changes.  He                                                                    
suggested a slower approach.                                                                                                    
Co-Chair  von Imhof  noted that  the two  budgets worked  in                                                                    
Co-Chair Stedman  asked for more information  about the $140                                                                    
million for rural airports.                                                                                                     
10:05:17 AM                                                                                                                   
Ms. Sanders stated that she did  not have much detail on the                                                                    
program.  She  remarked  that  there  was  $140  million  of                                                                    
federal  receipts requested  to address  needs at  242 rural                                                                    
airports  in the  system. She  explained  that DOT/PF  would                                                                    
distribute money to enhance airports.                                                                                           
10:06:19 AM                                                                                                                   
Co-Chair  Stedman  wanted  to look  deeper  into  the  rural                                                                    
Co-Chair von  Imhof felt  that there may  be a  meeting with                                                                    
transportation subjects.                                                                                                        
Senator Micciche  noted that there  was only one  project in                                                                    
Department of  Public Safety (DPS).  He recalled  that there                                                                    
was a  request for  improving Alaska Trooper  housing, which                                                                    
was  important to  retaining troopers  in  rural Alaska.  He                                                                    
wondered why that proposal was removed.                                                                                         
Ms.  Sanders felt  that  the item  was  in the  supplemental                                                                    
Senator Micciche  felt that it  might be considered  for the                                                                    
current budget.                                                                                                                 
Ms. Sanders remarked that it was a technical item.                                                                              
Senator   Micciche   noted   that   the   DOT/PF   equipment                                                                    
replacement was  for the same  amount as the year  prior. He                                                                    
wondered  whether   the  $15  million  reflected   the  most                                                                    
efficient use of the equipment.                                                                                                 
Ms.  Cramer replied  that  DOT/PF  originally requested  $25                                                                    
million. She  felt that there  was always  efficiencies that                                                                    
could be found in government.                                                                                                   
Co-Chair  von  Imhof  stated that  there  were  many  people                                                                    
waiting to provide public testimony.                                                                                            
Senator Shower queried the timeline of the ferry study.                                                                         
Ms. Cramer replied that the  marine consultant would provide                                                                    
a report in August of the current year.                                                                                         
^PUBLIC TESTIMONY                                                                                                             
10:11:40 AM                                                                                                                   
Co-Chair von Imhof OPENED public testimony.                                                                                     
10:12:33 AM                                                                                                                   
LESLIE   JACKSON,   KETCHIKAN   GATEWAY   BOROUGH   TRANSIT,                                                                    
KETCHIKAN  (via  teleconference),  spoke  in  opposition  of                                                                    
funding  that   would  provide  state  matching   funds  for                                                                    
transportation assistance.                                                                                                      
10:14:16 AM                                                                                                                   
BRYAN   O'CALLAGHAN,   EXECUTIVE    DIRECTOR,   CENTER   FOR                                                                    
COMMUNITY, SITKA  (via teleconference), spoke  in opposition                                                                    
of  funding  that would  provide  state  matching funds  for                                                                    
transportation assistance.                                                                                                      
10:16:51 AM                                                                                                                   
LYNETTE  CLARK,  SELF,  FOX (via  teleconference),  stressed                                                                    
that the governor  has veto power. She felt  that the budget                                                                    
was past due.  She encouraged to do the will  of the people.                                                                    
She  felt that  Alaska was  the "biggest  and best"  special                                                                    
interest group. She remarked that  it was time to make tough                                                                    
decisions.  She  felt  that  the  governor  had  proposed  a                                                                    
legitimate budget.  She did  not want  money taken  from the                                                                    
Permanent Fund Dividends.                                                                                                       
10:18:42 AM                                                                                                                   
GLENN MILLER, TRANSPORTATION  DIRECTOR, FAIRBANKS NORTH STAR                                                                    
BOROUGH, FAIRBANKS  (via teleconference), spoke  against the                                                                    
removal   of   the   matching   funds   for   transportation                                                                    
10:21:20 AM                                                                                                                   
JOHN  LAMONT,  SELF,  WASILLA  (via  teleconference),  spoke                                                                    
against   the   removal   of    the   matching   funds   for                                                                    
transportation assistance.                                                                                                      
10:24:47 AM                                                                                                                   
FRANK  KELTY,  MAYOR,  UNALASKA (via  teleconference),  felt                                                                    
that it was too early to move the ferry fund.                                                                                   
10:27:51 AM                                                                                                                   
ROBB  ARNOLD, ALASKA  MARINE HIGHWAY  SYSTEM, JUNEAU,  noted                                                                    
that the  money for the  Tustumena was already  approved, so                                                                    
did not understand why that money would be removed.                                                                             
10:30:29 AM                                                                                                                   
TRINA ARNOLD,  ALASKA MARINE  HIGHWAY SYSTEM,  JUNEAU, spoke                                                                    
against removal of money for the Tustumina.                                                                                     
10:32:26 AM                                                                                                                   
NILS  ANDREASSEN,   EXECUTIVE  DIRECTOR,   ALASKA  MUNICIPAL                                                                    
LEAGUE, JUNEAU,  spoke in  support of  deferred maintenance,                                                                    
community  development  block  grants, village  safe  water,                                                                    
fish   and   game  funding,   and   the   state  match   for                                                                    
transportation projects.  He felt  that the funding  for the                                                                    
census  should  include  funding   for  the  Complete  Count                                                                    
10:34:50 AM                                                                                                                   
SUE  STEINACHER,  SELF,  NOME (via  teleconference),  shared                                                                    
that most  of rural  Alaska was  in crisis,  because housing                                                                    
was disgraceful for most rural residents.                                                                                       
10:38:02 AM                                                                                                                   
JOHN ROZZI,  MAT-SU COALITION  ON HOUSING  AND HOMELESSNESS,                                                                    
MAT-SU (via teleconference), spoke to  the budget cut to the                                                                    
grant to find housing for the homeless people.                                                                                  
10:40:57 AM                                                                                                                   
Co-Chair von Imhof CLOSED public testimony.                                                                                     
10:41:43 AM                                                                                                                   
Co-Chair von  Imhof discussed the  agenda for  the following                                                                    
day's meeting.                                                                                                                  
SB  19  was   HEARD  and  HELD  in   committee  for  further                                                                    

Document Name Date/Time Subjects
SB0037 v.U Sectional.pdf SFIN 3/12/2019 9:00:00 AM
SB 37
SB 37 Work Draft Version U.pdf SFIN 3/12/2019 9:00:00 AM
SB 37
031219 SFC SB 19 Capital Budget Overview.pdf SFIN 3/12/2019 9:00:00 AM
SB 19
SB0037 Conceptual Amendment #1 Von Imhof.pdf SFIN 3/12/2019 9:00:00 AM
SB 37