I'd like to call this meeting of the House State Affairs Committee to order.
The time is 3.19 on Thursday, January 22nd, 2026, and we're here in room 120.
Please remember to silence your cell phones today.
Members present include Representative St. Clair, welcome to the house state affairs committee.
representative Vance, representative Holland,
representative Hymshoot, Vice Chair Story,
and myself, Chair Kerrick.
Let the record reflect we have a quorum to conduct business.
Additionally, our record secretary today is Cecilia Miller
with Andy Magneson.
Thank you for being here.
And our moderator from the Juno-LIO is Zach Lawhorn.
Our committee aid for today's hearing is Stuart Relay.
So on today's agenda, we have two items we are taking up House Bill 133 on payment of contracts from representative him shoots office and
Following that continuation of last year's work. We will have an introductory hearing today on House bill 124
Related to the Alaska Industrial Development and Export Authority from my office
Which had gotten
Way backlogged on the queue last year, and so we're finally bringing that one up, starting out this session.
So to start out today, our first item is House Bill 133 on payment of contracts from Representative Hymshoot.
The House State Affairs Committee heard this bill twice last
year towards the end of session for members information.
The plan today is to roll out and adopt a committee substitute as our working document,
has just a few technical changes in it and then after that CS has been adopted to do a reintroduction of the bill for the sponsor and staff so just for members info we're going to make a motion to have the committee substitute be adopted as the working document present the summary of changes which are technical in nature and
Vice chair story. Can I get a motion? Thank you, madam chair
I move the house state affairs committee adopt committee substitute for a house bill 133
Also known as three four dash l s 0 1 1 4 backslash l as our working document
And thank you. I sure so I'm going to object to ask our committee aid
Stuart relay to approach the table and present our summary of changes
Thank you, Madam Chair and committee members for the records who were released after Representative Carrick.
Madem Chair, there are two changes in version L of House Bill 133.
This CS deletes what was section two in the.
The previous version of the bill, that was a unnecessary conforming change.
And then it renumbers the sections accordingly.
There are no changes to the other sections, except for the last section, which is the effective date.
It changes it from January 126 to January 127.
And just for clarification, is it January or July?
Sorry, yes, correct.
Thank you, Madam Chair.
July 126, to July 127
Thank you. Do we have any
Questions for the committee substitute. I'm a little rusty at this, so I think we're doing it, right?
Yeah, representative St. Clair
Yes, that's right representative Saint Clair. We're looking at version backslash L
Representative Holland. Great. Thank you through the chair. I wonder I'm quickly trying to
reread the original section too
That has been I understand remove with this CS
can you
Restate or clarify the impact of taking this out. It sounded like maybe it was a technical change
But as I read this section, it's talking about some
I think some interest on that I'm just trying to clarify is this
Technical end and maybe this is picked up someplace else so this was unnecessary or is it making a change?
I've just not completely clear on the impact of removing section two and just want to be a little clearer about it
Yeah, we're bringing up staff for representative him shoot if you want put yourself on their record and address that question
Hi, yeah, thank you, Madam chair for the record Ella Lubin staff to representative can shoot
And through the chair to Representative Holland, thank you for your question.
Section 2, the previous section 2 excuse me, amended current statute,
which regards private contractors for public works projects.
Sorry, sometimes it's a tongue twister for me.
And we have decided not to amend current statue at this time.
Okay, Thank you.
And so I'm going to correct my earlier statement that it's just technical changes
because that is just a little bit of a different policy change.
But are there any other questions regarding the committee substitute from the
committee members? Okay. I am going
to remove my objection to adopting this committee
substitute and hearing no objection. The committee
And so, with the committee substitute now before us, I'd like to offer an opportunity for Representative Hymshoot to reintroduce the bill alongside her staff.
And since we are starting this new session today, thank you.
Thank you, Chair Kerrick.
I'm Rebecca Hymshoot.
I represent House District 2 Yakutat
to Heideberg, 21 communities on the coast of Southeast Alaska.
This bill is a, I am calling it a good governance bill.
What we're doing with this bill
is making the state of Alaska a
good partner to municipalities, tribes, and non-profits
in the same way that we are a
good part to private contractors.
who are working with the state to meet the needs of Alaskans.
So, so much of the work that's done by tribes,
non-profits and municipalities is done to some degree
on behalf of state, some of work
that we can't get to choose not to do,
or work simply that enriches the lives
of Alaska's happens through those entities.
Right now, if the State is late
in the payment of grant funding to those entity's,
There's no harm to the state and a lot of harm
to tribes, the municipalities, and the non-profits.
Those folks often work on a very, very narrow margin.
non-profit says a whole lot right there, right?
So they're using the funds they have to meet their mission,
not to bankroll, not have money set aside.
So when we're late with our payment as a state,
the harm to them can be immense,
including having to close their doors for a period of time,
including to having stop their services for period
of a time.
So to make us a better partner and to
make their work more functional,
the non-profits, the tribes and municipalities, and our private contractors.
And we'll open it up for questions on House Bill 133, Representative Vance.
Thank you, Madam Chair.
Representative Hymshoe, sorry, my.
It's all good.
A little slow on the draw today.
I know that you've had conversations with the administration about how they get shortened
up this timeline.
Do you have any updates on what they can do to meet the subjective?
Through the chair reps in advance, it's different in every agency.
A couple of agencies are on time right now.
A Couple of agency's are in arrears by 60 to 90 days.
It's everything from we need more technology to we
need training on the technology, to
we needed more personnel.
The reasons are different across the board.
For those who are making it on time,
we've looked at what are your practices?
What are you doing that makes this work?
And it often is a low pass-through environment
where they just don't have the volume that you would have,
say, in the Department of Administration
or Department Health.
So that helps.
Okay.
Follow.
Follow?
So vaguely reminding myself about what this policy would do.
Do you feel that this bill would be more effective in getting those changes versus
allocating them more specific to those departments than needs to help them get things moved
along?
What this bill does is give them standing, so to speak.
So every year through our budget process, we attempt to give the agencies what they ask for,
which is not always consistent with what the need.
And we have found that that inconsistency is in this administration or the previous administration, it's in every administration.
And so what we want to do is provide the 10% penalty that we give to private contractors right now.
also to non-profits, tribes, and municipalities,
to give them the standing if they needed to take action.
One more call up.
Follow up?
I can see the mechanism of why.
But the catch here is that this would be the 10% punitive
on the executive branch.
But, the Executive Branch is one who enforces the law.
How do you see this being resolved?
Thank you for the question through the chair,
Representative Vance.
It remains to be seen.
We've asked for examples of this from the private sector,
and as you can imagine, a lot of private-sector folks
are not wanting to talk a whole lot about problems
they've had with the state,
because it might harm their standing
and getting future contracts.
It's been difficult to get the information
for what's happening now.
And so the enforceability of it,
We can't enforce a statute that we don't have so I'm asking to put the statute in place
And then we will see how it gets enforced my my guess
I speculate that a number of groups would come together and bring
Potentially a case to the state rather than an individual like the boys and girls Club of Wasilla
They're not gonna probably
I mean, potentially they could say, hey, you haven't paid us on time and we are now
do this.
And in theory, the state would say you're correct and
we owe you that, whatever amount.
The goal would be that everybody gets paid on
time.
So the idea is, let's figure out what's not happening and make it happen so that this
is never needed.
And then if they had to, as a group, come together and say one voice wasn't enough,
but now we're all going to come
together under this statute.
But right now without a statute, there's nothing they can do.
Thank you.
A representative St. Clair.
Through the chair.
Great to see you
I have a bunch of questions. I asked a couple of you sat down with me for four session this morning and we talked about a
Couple rep rep saying clear really quick. Could you just make sure to talk into the mic for the recording?
Yes, ma'am. Sorry about that. Thank you. Okay, that's okay
We spoke this warning on a coupla things and it just to refer back to
representative Vance's comment
If we don't know how we're going to enforce it
Isn't that kind of bringing the cart before the horse?
We should have some idea on whether we are going to
the interest. Are we going find the executive branch? Are
we gonna find
the department, the Department head? I mean, there's,
you're trying to put teeth in this and I understand and
I respect that. However,
you don't really have a lot of teeth as of right now.
Yeah, the penalty through the chair. Thank you. Representative St. Clair. It's great to have you here
The penalty is assessed from the state of Alaska
So I don't know if that's the agency or the executive branch like the governor
herself or himself
I can't say
Who actually pays it, but the State would be responsible so whoever pays when the States pays is who would have to pay?
Okay, follow up. I'm not sure that answers your question.
It does even it doesn't but it but but gives me a clear picture of
of what we're talking about.
Do we have anyone from grants online or anything like that
that can answer some questions pertaining
to number of grants, total amounts?
Representative St. Clair, we'd see.
We don't today.
Oh, maybe we do today?
Apologies. Can I just clarify as well, Chair Carrick? I apologize. It does say here on page three. I'm a little rusty myself.
It's okay.
If online, it starts on line two. If a nonprofit organization, municipality, or Laskan Native organization is not paid as required by A of the section, the agency shall pay interest on the unpaid amount.
But as you're aware, agency gets their funding from our process here.
Yes, ma'am.
So we're all getting.
Okay, but that does clear it up on who who has to pay and apologize madam chair. I'm trying to
I knew what this okay. We're we're all a little rusty this
And we do have someone here from an agency if that's helpful. Okay. That might actually be helpful
Let's take a very brief it is just to kind of get a sense of what would be
helpful for this conversation at ease
How State Affairs is back on the record. Thank you, Hannah Lager, for hopping in the hot seat here.
If you could put your name on record and if you'd like to respond to Representative St. Clair's question.
Absolutely.
Thank You. My name is Hannah Logger. I'm the Administrative Services Director for the Department of Commerce, Community and Economic Development.
And maybe it would help Representative Saint Clair if could restate that question?
Through the chair.
How many grants annually does the state put out?
Roughly, I know it varies by year, but roughly.
Thank you.
Through the Chair, Representative St. Clair,
I can only speak to the portion
that the Department of Commerce Community Economic
Development issues,
but I would say we are usually in the hundreds range
occasionally in a high year or certainly during
the pandemic, we issued more than more
than hundreds.
But typically it's hundreds I will say the majority of the grants that are issued by the Department of Commerce are fall under
Grants to name recipients or grants to municipalities which are specifically excluded from this legislation
In section two at the intersection two. So it would affect a small portion of our grant portfolio
See oh follow up yes ma'am. I'm sorry through the chair. Can you give me a
ballpark number on how much in grants, and I know you're just DCCED, but how
much and grants and kind of layered because there's a threshold within
this legislation and and want to see if it goes over or under. It mentions or
there it makes reference to another piece of statute that puts a limit and
I don't know if its under or over.
Section Alaska statute 45 45 0 1 0
It says in Bravo, and I don't really understand that it's you're not gonna find it on there
It just makes reference to it
20 that
I'm trying to figure out if this is above or below, it says a contractor alone committed in the principal amount exceeds $25,000 is exempt from the limitations of this subsection.
Does that mean it doesn't apply?
Through the Chair, Representative St. Clair, not having that piece in front of me.
I can't quite interpret that, but what I will say is most of our grants are over $2,500, the vast majority of them,
that we issue, we try to make them substantive going out to communities.
and you said that follow-up follow up apologize followup through the chair
and how many do you how much of DCCEDs grants would be impacted by this legislation roughly
thank you through The Chair Representative St Clair that would very year to year a lot of
They're appropriated by the legislature, so we issue what is appropriated.
Our grant portfolio currently is somewhere just north of a billion dollars.
So we do have a number of grants out there that are receiving regular payments as far as the individual number grants.
I don't have that handy, but we can tell from this that it would apply to National Petroleum Reserve grants,
it will apply two grants to unincorporated communities, and then of course payments to vendors that we make as part of our normal ongoing day-to-day operations.
Through the chair, you made a comment earlier of how many of your grants would be impacted by this legislation.
I didn't catch that number.
Yes, thank you, through the Chair, Representative St. Clair.
I don't have an exact number because it does vary year to year.
But the vast majority of the grants that we issue are under the Grants to Municipalities or grants to name recipients,
which are not affected by the legislation, okay, Thank you.
Do we have additional questions on House Bill 133?
Vice Chair Story.
Thank you.
Through the chair, rep him shoot and Ms. Lieben.
I'm wondering in what you're talking with people would
wish we it's no secret that we are short staffed and all of our agencies.
Have you ever thought about?
And it's no secret that we want to be responsible a state where we pay our bills in a timely manner.
Have you thought about the 30 days was 45 days?
What impact that would have on the recipient and would that make it so that
we are more apt to timely?
Thank you for the question through the chair representative story.
think we have not talked about doing 45 days because the goal is parity. We're
trying to make this a level playing field for both private contractors and for
non-profits, tribes, and municipalities. Through the chair, representative
Story, Ella Lubin, staff to rep him shoot. Additionally, some agencies are already
the deadline of 45 days, it would increase the time for those grants and contracts that are being
reimbursed. Follow-up. Thank you for that information through the chair. So do we have an idea of
the current contracts, that we had the amount of cost, we are paying in interest to the ones
through the chair representative story.
It's been very difficult to get any information on that
from the agency side, which would mostly be DOT
for private contractors, but from that contractor side
once again, a lot of contractors
don't really wanna rock the boat
because that I think concerns them
in terms of future contracts, so competitiveness.
And yeah, they don' t want a black mark on their name.
So we've struggled to get that information follow-up. I would think that in our legislative audit books or in
our agency that documentation would be there that there would
be a category that says arrears payments. So I don't know if anyway that would
be my question for the auditor maybe where we would find that
information. That's a great question. Thank you through the chair.
Representative Holland great. Thank you through the chair
As we begin to learn about the new health care the rural transportation rural health Care Transformation Act
I think I got that almost in the right order
But I hope I'm close enough. I am just curious as you look at that
Significant amount of new funding that I expect will probably show up in form of many new grants and contracts
what we might have learned from the rapid deployment of money during the COVID years
that might teach us something about what is likely to happen with this rural transformation funding
and where I'm really going is as we look at this bill and its effect hopefully to strengthen
Do you have any thoughts, and maybe this is an open-ended question to come back to, about how this can be used to help make sure that that rural health care funding coming through quickly is going to be
challenges in the COVID area. So sorry, I kind of layered on a couple of thoughts there, but if you've got any thoughts
there or maybe we can come back to it. But just watching for our success with this new money and this to me really interacts with that capability.
Thank you, Representative Holland, through the chair. I would just comment that $272 million infusion into rural health as a rural person
funding starts to flow so that we can make sure that the folks who are charged with making
the best use of that funding are able to do it in a timely way, and that
we give those funds that
we have for five years, that
we gives those
funds their best chance of success that
we
can,
and I think having something like this in place gives us a better chance
Thank you.
Representative Vance.
Thank You.
This raises a question and kind of a statement.
You mentioned that Representative Hemshu, you mentioned
that DOT was one of the departments that's not
been as timely, which obviously they have so many
contracts out there.
We know the health department has so
many contracts and we have heard that a lot of
work with the state because they've been so slow in getting payments out there.
In your inquiries about finding out the nexus of the problems,
have you heard anything about the movement of federal money?
Because in both of those departments, it's a large percentage.
It's federal dollars and we know that certain pots of money have to be distributed.
a certain way by certain time and I just want to know are we fully understanding where the
crux of the problem is in these delays and helping get to the the root of
the problems because with this rural health money we want
to make sure that we're doing that adequately and
and help be giving our departments the tools that they need.
This is one component that you're trying to help motivate them internally, but
what else is there? Is the federal side of the dollars
and the timing that that comes that doesn't align with our calendar, is that a part of
the problem?
Through the chair I represent advanced my understanding and I want to be really clear
DOT as far as I know I don't know how much they work with nonprofits the issue there is with private contractors and so
With the Rural Health Transformation Funding Department of Health that kind of thing my
Understanding is nothing is awarded until the state has the funding and then the award is given and
Then the clock ticks
Am I correct about that we can confirm
I remember a conversation where that was my understanding, but I want to make sure that I'm right about that.
You know I'll come back to you if I am not right.
Thank you.
And I put myself in the queue here.
Last session, when we were discussing this bill, we had asked some of the departments what the challenges are to submitting payments within the 30-day time frame right now.
And they cited things like low staffing, high turnover.
Low institutional knowledge just generally in the departments.
There was at least one department that has only one form of grant award software and that was a challenge for them.
And they have an internal need in some of our departments to streamline services.
So I'm just sort of curious. I think I have in opinion on this answer, but
do you see pursuit of prompt payment?
as a way to also improve some of our own internal state governance systems when it comes to
distribution within our departments and a ways to essentially open the door to some cleanup on
how we currently process payments. Thank you for the question, Chair Carrick. I will say,
I think it's Department of Administration who had the most timely, no.
There was one department that was timely and we asked them what are you doing what's working for you?
And how can we replicate that and they had some ideas, but it did seem like
Making one grant payment system that's used in every department is done in other states and could be helpful here
So some standardization would really help
across all agencies and so I think some of those answers are out there and I
I hope a driver for those, what do I want to call it?
It's not extra is what we should be doing with the public dollar.
We should as efficient as we can be with public dollars.
And so it's extra to become efficient and
effective in the delivery of the grants and that kind of thing.
And yes, I think if I'm answering your question correctly,
the idea is this will push us to do a better job.
Thank you for that sort of a loaded question because I
Believe that that's one of the benefits of this legislation
Further questions representative St. Clair
Thank You Madam chair through the chair and we got one or two more left for you representative and then I'm ready if we could we
Could if you go back to DCC ED found a question further down
But through, the Chair represented him shoots. I am a budget guy. Am a fiscal guy
I looked at the broke down DCCED, DOH, and DMVA, how much they anticipated they would have to pay
in their fiscal notes. Breaking that down even further, I broke it down to how
much of it is UGF. But where are we going to find, it's only $1.3 million, but how would you fund this?
On behalf of the municipalities, the tribes, and the non-profits who've been awarded a grant, what are they supposed to do?
So I think we have to figure it out.
If we're the ones giving the money out, we should be on time.
Through the chair.
Follow-up.
I agree wholeheartedly.
However, as a budget person, won't this increase their ask, their budgets?
If it increases their budgets because now they have to pay out and we did to establish that it is the agencies and not the governor.
If the agency has to payout, where's that money going to come from?
They're going come back to the state and ask for it or the administration or whatever.
So how do we increase their budget to cover?
this interest payment. It's not large, it's
not huge. I think they could probably absorb it.
However, well, you're kind of giving the same look on thinking
that the fiscal notes might be off a little bit.
How, and I apologize Madam Chair for
going around in circles, where do we get the money to
give to the agencies to pay out interest?
Through the chair.
The goal is to not have to pay out interest, that's the purpose of the bill.
And then I just want to be really clear, I don't think that the state employees in these agencies are doing their work poorly.
I do not hold the responsibility on the employees.
I hold responsibility in the working conditions that they've been provided.
For example, not having the technology they need,
not have standardized technology,
not the training they needed,
and the high rate of turnover in the state.
So, there's no blame to lay on any of the agencies
or the people in these agencies.
The idea is for us to clean up our act.
So where will the money come from?
My goal is that we do not need to pay any,
not even one cent.
We don't have those anymore,
not one dime of penalty.
Okay. Thank you
Representative Holland. Oh, never mind. It's not in the queue. There's a drink of coffee. Not a
Looking around for additional questions representative St. Clair
I would like to have DCC come back up. I I will get with representative Hymshoot offline
conversation
Welcome back miss logger
And if you'd like to put yourself on the record, but I'll ask Representative St. Clair to ask his question.
Thank you, through the chair.
In one of the responses that came back from DCCED, it's stated that there was software
that you all were trying to get and put in place.
Can you give us a status report on that?
Absolutely.
Thank you.
Through the chair, my name is Hannah Lager.
I'm the Administrative Services Director for the Department of Commerce, Community, and
Economic Development.
Through The Chair to Representative St. Clair, I am very pleased to say that we have rolled
out our new grant software.
So that means that new Grant applications, new applicants, communities applying for grants
in the Division of Community and Regional Affairs can apply online.
Those grant notices are published online and when it gets to processing payments, that
is the status report is uploaded into that system.
documents and it automatically then shoots over into our financial system for
just a last certification and then the payment goes out. Follow-up. Just one.
Do you know of, I know you can only speak for DCCED, do you
know any other agencies that are using similar or the same software?
And if you don't know, just say you're not sure.
I'm not going to hold your feet to the fire on it.
Yeah, through the chair, Representative St. Clair,
I believe there are other agencies
that do have some variety of grant software.
The one that we chose for the department
through a procurement process was pretty specific
for that type of grants.
We do, so I am not familiar with other grant systems.
Okay, thank you.
Thank you, thanks for coming back forward.
Looking around to see if there
are additional questions on House Bill 133.
and seeing none at this time do want to just remind members that we did have a
couple of hearings on this legislation in the previous session and to please
refer back as well to the conversations and the questions that were there. At this
time we are going to set an amendment deadline for House Bill 133 for Wednesday
If any, I know there are potentially a couple amendments being drafted.
If anyone has difficulty meeting that schedule with Ledger Legal, please let our office know as soon as possible.
And at this time, we are setting House Bill 133 aside.
Thank you, Representative Hinshoot and staff.
The next and last item on the agenda today.
Is an introduction of House Bill 124 from my office, just as a note for committee members.
This is just an introductory hearing on House bill 124, also known as the Alaskan Industrial Development and Export Authority or ADA Accountability Act.
This hearing is meant to just provide an intro to the bill itself and offer an opportunity
for members to put initial questions out.
Wanted to note that next week we will be hearing directly from the ADA executive director and
potentially other ADA staff to further answer questions and
offer and opportunity for additional discussion.
So, at this time, we are going to take a brief at ease to turn the gavel over to Vice Chair Story.
At ease.
Back on the record, we are going to be hearing House Bill 124.
It's now before us.
Represent Ellen, welcome.
Rep. McCabe, glad to see you here.
Rep Karik, before you proceed with your presentation,
I just wanted to let committee members know
that Sherry Bowman is over here if we need any assistance.
Well, Mr. Relay is up front.
Thank you, Sherrie, thank you Miss Bowman for doing that.
And I wanted to let people know that I talked to the Bill
sponsor and she's fine to ask questions as we go along.
However, if it gets long, I might just have our get-through
the presentation and make sure we finish that.
So again, please proceed.
Thank you, Vice Chair Storey and members of the State Affairs Committee really pleased to finally be able to bring forward House Bill 124 also known as the ADA Accountability Act or more simply ADA.
Just for the record, Representative Ashley Kerrick, West Fairbanks, House District 35.
have an introductory hearing, just want to introduce what House Bill 124 is
and what it would do, and then again just for members' information and the public listening,
the intention will be to hear from Ada at our very next hearing.
I will note that Ada has also provided a large number of backup documents which are available
for Members and hope that folks have a chance to take a look at those as well.
Just want to offer a very, very brief history of the Alaska Industrial Development and Export Authority or ADA.
ADA has a mission of promoting, developing, and advancing economic growth and diversification in Alaska
by providing various means of financing and investment.
It was established in 1967 to help provide these economic opportunities in our state
and also to provide employment opportunities.
And over the 60 years that ADA has been in existence,
there's been a cumulative economic impact of 55.4 billion dollars
and a creation of over 13,000 jobs.
So one thing that you'll hear me state potentially in response to questions is
is this bill about getting rid of ADA or harming ADA?
Truly, my intent with this legislation is trying to strike a balance between the many constituents and
Alaskans I've heard from that would like to simply get rid of ADA and have them not exist anymore.
And have the current broad brush stroke and large breadth that ADA currently has under its authority as a corporation.
So this bill is attempting to strikes that balance, and I think it's worth recognizing the
real and vast economic impact that ADA has had in our state since its creation in creating economic development.
This next slide shows just a few ADA projects and loans.
There's obviously many, many more, but just wanted to show a small number of projects that are under $10 million,
We can see that some of the under $10 million examples might be ones that many in the public have never heard of before.
They're smaller scale projects, everything ranging from working on the blood bank of Alaska in Anchorage to island air service in Kodiak to the Big Lake Lions Club receiving a small amount of funding there in Big lake.
But these have had some real economic benefits for the communities affected.
The projects listed here over 50 million are also spanning a gambit projects that include the Interior Energy Project which has been hugely impactful to the Fairbanks community and costing approximately $139 million for ADA in Fairbank's.
not listed on here, but WESU access project,
being another major development project
that Ada is pursuing.
So again, the purpose of House Bill 124
is just to strike a balance between Ada's mission
for having economic development in Alaska
while also enhancing legislative and public oversight
of Ada as a...
state corporation. I want to recognize as well that other state corporations in Alaska
don't necessarily have the kind of oversight that is in House Bill 124.
I would also counter that argument why wouldn't they be included with noting that Ada's scope is for
economic development and job creation and has a broader scope and a
broader community impact in a lot of cases than other state
corporations. And so I do see them as a bit fundamentally
different, although the issues may be the same and
To be honest, I would consider legislation on other state owned corporations to the same oversight capacity in the future.
But the goal of this legislation is focused on ADA, and it's to help them focus on especially those smaller and more localized economic development projects.
While still allowing larger projects, the opportunity to move forward once they've included broader stakeholder engagement and potentially legislative authorization.
We've essentially covered what's on slide five, but really we're trying to help juxtapose
the public backlash that has existed in some cases for ADA with the desire to have ADA
move forward and continue to provide the results for Alaskans.
And at this time I wanted to turn it over to my staff Stuart Relay to walk through a
In your packets, members do also have a white paper, which takes the sectional and turns that into a one-pager.
And that's more or less what we will be going over with the Sectional today.
Thank you, Madam Chair.
Vice Chair, story for the records to her relay staff for Representative Kerrick.
The sectionals analysis is as follows.
Excuse me, section one establishes the short title is the ADA Accountability Act.
Section 2 amends AS448030 alpha relating to the ADA board.
It requires legislative confirmation for board members.
It increases the size of the board from 7 to 9 members,
it designates one board seat for someone representing
an environmental advocacy organization.
And that's two board member, one of them appointed
by the Speaker of The House and another one
of those appointed by President of Senate.
Section 3 amends AS448030 Charlie also relating to the ADA board.
It includes conforming language relating
to increased board size.
It increases the length of board terms from two to three years.
It prohibits governors and it prohibits
governors from removing board members.
Section 4 requires the ADA board to establish a personnel policy and minimum qualifications for the executive director.
Section 5 is conforming language relating to section 14.
Section 6 requires ADA to adopt regulations by passing a resolution.
Specifically, it increases public notice requirements requiring 30-day public notices
for board meetings.
It requires the board to give each testifier at least two minutes for their testimony.
It required the Board to publish written responses to public comments.
It was required to establish a written justification when they adopt and amend or repeal regulations.
Section 8 adds a new section, 4488107,
capping the size of the aid revolving fund and all of its sub funds to $500 million.
Section 9 is a larger section.
It adds new sections, AS4488179,
requiring the following actions to be taken for all projects, over $10 million,
approval must from a municipality or borough must be provided if the project is within their boundaries.
The following findings must published relating to a project that it is economically advantageous.
The project applicant is financially responsible, addresses concerns about demand on public roadways and facilities relating
to project, employment projections and data.
that the project is economically and financially feasible and that
the Project is legal.
Additionally, it requires a report to be produced
about projected economic, social, and environmental effects of the
Project, a host of public hearing of The Project.
Submit a Report to the Legislature that includes all the documents
related to findings required by the section,
and gain approval from the legislature by law.
Section 10 prohibits ADA board members from voting on measures in which they have an indirect ownership interest.
Section 11 through 12 update annual reporting requirements to the legislature.
Section 8 is annual report is due to legislature on January 10.
This is a conforming change.
This January tenth date is already in law, section 11 is simply con forming changes.
Section 12 requires aid to develop performance metrics.
And those metrics must be included in the annual report.
The metrics include job creation, industry growth,
financial and technical assistance provided the state businesses,
and private investment increases.
Section 11 also requires an annual
report to include the findings of a decennial audit.
And it requires the Annual Report to
include a summary of all actions taken at all board meetings.
Section 13 requires ADA to be subject to the Alaska Public Records Act.
Section 14 requires the Attorney General to approve all lawsuits pursued by ADA.
If the AG approves a lawsuit, the legislature must be notified.
It's important to note that approval is not required if ADA is sued.
Section 15 repeals AS4488380 providing immunity for aid
and employees for damages for acts done
while performing the duties of their position.
Section 16 are transitional measures relating
to the appointment of new board members.
Specifically, the terms of board
members accepting the two commissioners that are on the board.
Expire when the legislature confirms at least two
of the governor's new appointees.
appointed eight of board members appointed by the governor after the effective date of the Act
are as follows, and it's important to note that these are for the public members.
Two members will get one year terms, two members get two year
terms. One member will be in a three year term.
And it requires the speaker and the president to appoint board
members on or before the 30th day of
the 35th legislature and previous board
members are not prohibited from serving on the board.
And finally, section 17 establishes the
effective day to January 1, 2027.
That madam chair. It's a sectional analysis
Thank you for that presentation. I'm going to turn to committee members and
Do we have any questions today?
McCabe
Thank You vice-chair story
What are they able to do to make you so mad?
this is
I would say that this is not a minor adjustment to ADA.
This rips the guts out of a program that we designed to, and
frankly puts it under the supervision of the legislature.
Why should we be micromanaging ADA from, I mean, we can't even manage our budget half the time.
Why shouldn't we try to micromandage ADA?
Through the chair to Representative McCabe, you know,
you know, essentially dissolving any capacity for ADA
to do their work.
A lot of the reforms in this legislation are broad
and they're sweeping, but a lot
of them are also for the public's benefit,
not just for our benefit as a legislature.
So there's the oversight components,
but there is also components such as having timely public notice
requirements, allowing for public testimony requirements
for regulation changes and submitting the board
In other words, there's components of the legislation that are meant also for the
public's benefit because the work that ADA does is ultimately for
the publics benefit.
Didn't they weren't one of
the only of
the five or six of our public corporations they were the
only one to return a dividend to the state last year.
$20 million, is that right? Through the chair to representative
So I would note that historically over the last number of years they have returned a low dividend considering the range that is available to them for returning a dividend and I don't want to comment on their specific investment decisions and economic factors that led to that distribution but part of the point here too is we want
as effective as it has been and more effective.
So on the one hand, you could look at this as eliminating
their capacity to do the work to produce the dividend.
On the other hand you can look
at it as a mechanism for us to be a little bit more involved
in their governance, therefore allowing
for even more development and better decision making
for communities.
So it's two different ways to kind of approach the same.
Question. Thanks. Yeah, I will probably get all this when when they come to visit us
I'm sure we have a chance to ask them questions and fleshes out a little bit so I won't beat you up anymore
Rep. Holland. Great. Thank you. I have I think
Primarily just a clarifying question for the moment on the sexual analysis and then later
I want to come back to some different questions regarding the the impact of this, but the clarifies question
for a moment through the vice chair is on section nine
Two elements there. I'm just curious if you could expand on a little bit one is easy one. Maybe
Something takes a bit more follow-up
on the findings related to a project.
I'm assuming, but could you clarify
that part of the findings that would be important
through municipalities or boroughs is compliance
with comprehensive plans.
That would applicable to that jurisdiction in there.
I think that's straightforward.
The second clarifying question on section nine
is, I wonder if you could comment on
How you anticipate the impact of the approval required by the legislature on these larger
projects, how might that affect ADA being able to, in a timely manner, be able
to develop projects and seek approval in order to proceed with those projects.
I expect you've thought through that, but you know, we meet once a year.
That might have an effect so compliance. I'm assuming you're there
But just clarify it and then the the process of that legislative approval process how that effect are big projects
Thanks through the chair to representative Holland, you know, I don't see in these points in the
legislation where we're specifically addressing comprehensive
planning efforts from municipalities. I'll also just note that many of our
communities affected by some of Ada's largest projects
don't have municipal governance and so
But when this legislation says, address concerns related to demand on public roadways and facilities, and have economically advantageous, I would hope that whatever the local governance structure is in a community would be consulted for part of having this more involved.
engaged public process, but it would certainly be open to making that language clearer that it
should include those local governance structures in some way as part of the consultation.
The second question you asked you might have to restate, I might've forgotten it already.
Thank you through the chair. I'm just curious about the last bullet that says gain approval
from the legislature by law on these large projects.
impact A to being able to process large projects in a timely manner given the
Process by which we meet once a year and the time frame of our
Due diligence on legislation that could take that how would that thoughts on how that would work?
Yeah through the chair to representative Holland. It's a great question, and I think really
Substantively, it's the biggest
policy question for this piece of legislation is at what threshold do we set
that legislative approval in order to ensure that Ada is able to do its work
in a timely fashion, but that projects over a size that the legislature
determines that we have decided to qualify as quote-unquote large projects
are receiving that additional level of approval and
oversight. So $10 million is where the legislation is currently set at for a quote-unquote large project.
I think there could be a lot of different interpretations of what qualifies as a large
project, and therefore the number of projects that would be captured through that process
in a short time frame. You know, it's my intent that a project the size of West Sioux or
or other very large development projects, even ones that I have a lot of constituents and a
lot strong supporters for, such as the interior gas build out in the Fairbanks area.
That is a $139 million project. In my mind, that is very a large project,
but I think there could be different interpretations of
how we strike a balance between where we require
legislative approval and how it would affect timelines
on AIDA's projects.
We definitely want Aida to be able to strike
while the iron is hot within reason.
Thank you, rep him shoot.
Thank You Vice Chair's story through the chair.
Representative Kerrick, I had a couple of questions
as far as this idea of using the
comprehensive plan of a community on page four of the bill online to it talks
about unless the project is to be located in the unorganized borough obtain a
certified copy of resolution of governing body in my mind if you have a
comprehensive planned it would not be difficult to then also make a resolution
so in mind would that cover that idea of wanting to align with a comprehensive
plan for a project I'm a little bit in weeds here but through the charter
Probably, I think, again, a lot of what's in the legislation is policy calls in terms
of, what our intent is, and therefore, establishing what would actually take place.
But I, you know, think through the existing language in legislation, we would probably
be covering comprehensive planning at the local level.
But perhaps that's an area where we could make it more clear what we're looking for.
Thank you.
Follow-up?
Thanks.
Yeah, and I'm embarrassed to admit, I can't remember if it's only first-class cities that have a comprehensive plan or if also second and third- class cities do.
I don't know, so my next question is about ADA itself has a really long history, has done some great things in our state.
amended or reviewed what you're trying to do here is fairly comprehensive and so
has that been done before I'm gonna ask my staff to try to take a stab at that
but that would probably through the chaired representative him she would
also be a great question for Ada when they're presenting to us next week
Thank you for the records, Stuart.
We're really staff representative Karak.
In my research, I would say that there were some reforms
in the 80s relating to aid abonding.
And they can speak more to those.
But that, per my search, was the last kind of big reform.
And I think that just expanded bonding capacity.
Final follow-up follow up. Thank you vice chair story through the chair. My last question is about the other corporations. I
Have not
Thoroughly read the Ada statute, but it's the only corporation that has to return a dividend or do the Other Corporations have to
As an economic like the the function of Ada is economic development and that is to be shared back with the state
Does the railroad have two share back?
Through the chair to representative him shoot I believe, but I would have to double check that Ada is the only
Corporation state corporation required to share dividend back. Okay. Thank you
But thanks
Thank You
I'm trying to
Understand your
Motivation and the goal of this bill
Because a few years ago there was a bill having to deal with
And the controversy around the public process and always going into executive session and
things like that.
And I see components of that in this bill.
I was supportive of it.
My community has said, hey, we need to do things better.
We're not getting the transparency and the communication with ADA.
So I'm interested in improving that, but I
This bill, to me, gives a perception of wanting to micromanage ADA to where they're no longer an autonomous corporation.
And it makes it look like it's anti-economic development.
And I don't want to assume that I know what your motivation is.
So if you could help me with that and what you're in goal is,
because if it was about creating a clear public process,
and transparency that makes better engagement with ADA.
I can get on board with that.
And I think a lot of people can because they
weren't allowing public testimony, right?
Simple things like that that we've taken for granted here.
So if you could help me see where you're going with this.
And just the level of detail that feels like over regulation to me.
Help me understand the motivation and what your end goal is through this legislative process.
Thank you.
Through the chair to represent advance, I really appreciate that question.
I'm just kind of pulling up my documents again.
When I look at the mission statement of ADA, which I just wanted to pull up again, so I didn't misstate it.
It's promoting developing and advancing economic growth and diversification in Alaska through its
finance and investment mechanisms. And I think the House Bill 124 is, first of all, a starting
point. It is not necessarily my intention that exactly what the legislation says and looks like
today is what it would look like after hearing from my peers and colleagues about how we strike
There certainly has been a lot of public pushback on, in particular, some of those very hot
button issue topics for ADA.
So I'd like to elevate the good, very heavily supported work that ADA does across the state,
while also not ignoring people's concerns about transparency, communication, ability
have an opportunity for some additional scrutiny.
You know, at the end of the day,
the projects that ADA works on impact
a large number of communities in a lot of cases.
One project can touch on seven or eight communities
in one place.
And I think that having a better balance
between allowing some of those projects
to go forward with scrutiny,
And just letting status quo, where there are a lot of executive sessions, there is a lack of ability for the public to really weigh in during their processes.
And there's just kind of a black box of ADAS doing economic development over here.
And the legislature is, on the other hand, considering a lotta the same factors around the SAME projects.
You could call it oversight, but also just accountability to each other.
What is ADA doing for the state of Alaska? What can we be doing
for them? So my intention is to put out a bill
that helps to begin a conversation around better striking the balance.
And in whatever capacity this committee or throughout the legislative process,
we decide that should look like I'm definitely very open to changing
making this even stronger legislation to get to that intent.
How about my game?
Thanks.
Yeah.
So my staff did a little research in this time of budgetary issues
with, I mean, we all know it.
We're dealing with it, and we're going to see it happen in real time
in the next four months.
You and I and everybody in his building.
Ada has returned almost half a billion dollars since 1996
to the state.
We just
Fought a floor fight on a veto override that would be a tenth of that
So we're looking for revenue seems to me we may have found it in Ada
If we just let him alone and let them do their thing. So I guess my question is
Would you be supportive?
I know that Fairbanks is looking for a gas line spur, 43 miles, I think, right?
So, almost nobody in the state would be able, no construction company would
be to build that on their own without some sort of a loan or funding.
And I'm wondering if Ada wouldn't be a good spot for that.
I mean, you had a slide up there.
I used to work for Island Air Service.
Big Lake Lions Club is the big lake.
That's our community center in big Lake.
And I like to drink beer, so Alaska brewing.
I mean, you know.
So it seems to me, Aida funds a lot of projects
that people in Alaska need and like.
And, I'm just wondering if you think that your bill
would prevent AIDA from helping to fund
the spur line that we're discussing that Fairbanks would love to see coming off
of the natural gas pipeline to provide natural
gas to all of Fairbank's and solve all the
EPA problems or some of them. At least some
of him right. Through the chair to Representative McCabe
you know nothing in House Bill 124 says that
these projects wouldn't go forward. It just requires
additional oversight. So with the Fairbanks Spurline, I think ADA could be a
great investment opportunity for making that happen. Should it not have any other
mechanism to go forward? And that is a real
huge community issue. There would be a lot of stakeholders impacted. I think when you look at
these list of projects existing or projected for ADA, you see a lots of extremely beneficial
projects around the state. So again, it I, think, goes back to Representative Holland's earlier
question of at what threshold when the public is asking for additional legislative oversight
What threshold do we decide is qualifying as a project worth our extra look into?
And 10 million is a starting place, but for a
project the size of the spur line, maybe that's a threshold we want to make sure is
underneath where we require that legislative scrutiny.
That's really a policy call for this committee and the legislature to take a look at.
The other thing that concerns me is the requirements for a person from an environmental organization
on the board.
So, I'm wondering if that...
I'm not sure what's driving that, because every ADA project that they have done so far
to date has followed every single environmental protection, whether it be an environmental assessment
or a full-blown NEPA.
They follow all of those laws, so I guess I am unclear of why we would put an Environmental
designated as that on the board to further hamstring ADA or to provide some sort of a board level
oversight for environmental when it's already in regulation. I'm just curious what the thinking is
on that. Through the chair to Representative McCabe that addition was at the direct request of
a lot of constituents to make sure that that was a part of this kind of reform package but you know
to the assertion that the addition of an environmental stakeholder would automatically
be a hamstring mechanism. I mean, it's very possible that there's many projects in the state
that are not going forward because you don't have that additional breadth of experience. It could
the Delta Wind Farm, it had a whole lot of other extenuating circumstances.
It was finally approved just this last fall for work from Golden Valley Electric Association.
There's a power purchase agreement that's finally in place.
I wonder if having an environmental advocacy organization person
wouldn't help to spur additional energy investment in areas maybe we're not taking a look at right now.
And as we heard today at a lunch, I think many of us were at,
energy is additive in this state.
We do need to have folks looking at
a variety of different industries
and innovation opportunities in projects.
And so, you know, that is my perspective
on why it would be beneficial.
Thank you, Rep. Holland.
Great. Thanks.
two areas I wanted to touch on. I suspect one or both of maybe things just to kind of get started on
and come back to later or perhaps next week. The first one is, you know, I think we've recognized
and you've recognised in your presentation the important fiscal contribution that ADA has made
through their dividends over the years, i think a half a billion dollars or so. And at this point
assets total about $1.7 billion on their balance sheet right now, and if we were to look at
ADA in a percent of market value type of lens that we now use when we look
at our other major investment, a percentage of
5%, which would be about $70 million, and I think this year it's planned to be a little
under $20 million.
And I believe the statutes right now give the ADA Board a range that they can decide
how much of their net profit they would issue as a dividend to the state between, I
think, 25% and 50% of the net income.
substantially less than what a percent of market value amounts might be, about a third.
And so that's a roundabout way of asking, but maybe posing for later exploration.
What do you see in the process of that dividend decision-making process?
improved on with this look at the aid of management.
And is that an opportunity we should be looking at,
given the financial situation of the state right now,
and we need, as fiduciaries of state,
be kind of diligent in looking
at all the places we've got money squirreled away
and putting to work and asking the question,
you know, is the current dividend decision-making process
serving us the way it can?
for the balance that we need to strike between them using their $1.7 billion.
And it's been growing versus a little more of that money flowing into the state for its use.
Any thoughts on the dividend as a component of this look at ADA that you're proposing?
Through the Chair to Representative Holland, definitely very open to considering it.
The one thing that is important to me though is just making sure that
It is a sustainable draw.
We are going to look at the dividend through ADA
and consider changing how that works.
Same as we have with the current
percent of market value draw
and the permanent fund corporation.
Just want to make sure that that's something
that sustainable to continuing to have
the same level of investment going forward.
Great, thanks that follow up then.
Follow up?
Great.
So,
I'd like to explore that later. I want to go off, though, in a slightly different direction
for my last area of beginning this discussion that we'll have the
Bill, at this point, suggests a fairly substantial divestment by ADA of its current assets.
I believe right now, again, it's about 1.7 billion in assets, I
believe the bill would limit that to a half a billion or 500 million, which means they
will be potentially asked to divest of two-thirds of their current portfolio, a
some more clarity on what is in that portfolio,
what projects are involved,
how is that money currently obligated?
How is it deployed and invested?
What is its liquidity?
What does its maturity?
So that we could begin to kind of understand what's there
because I guess from some standpoint,
there's two sides of my.
interest. One is if we are going to go down this path of
divesting it, we should be able to know what it is we might be
asking to divest. And in doing that we
might decide well maybe they should keep it and it may be more
valuable for them to continue that investment.
On the other hand I'm interested in some more clarity on where are those
investments going because as somebody who works very actively in the early
ecosystem of starting businesses we have a grave problem of not having access to
money and I thoroughly appreciate some of the programs we
have for loan guarantees but that makes the huge assumption that there's
somebody willing to write the loan in order to guarantee it and we don't have
enough money at the early stage for getting out there so I'm kind of interested
in understanding what is this portfolio what would be the impact of asking them
And maybe in seeing what's in there, we might also have some more clarity on the impact that it's having and maybe some of the opportunities that we
might look at some their statutory funds and programs to decide are those still the right ones.
And I'm looking at areas in housing, energy and climate community resilience that
we need to find ways to support that work.
The ADA assets are funded and they're do we have access to the information? Maybe we can get more
Thank you through the chair to representative Holland again great questions for when Ada is before us
This is not information. That's just easily readily available
and it would be really great to have them talk to us here in committee, but also to through the
discussion process on the legislation provide perhaps some additional information for committee
members. So we'll definitely take a note of those questions. Great. Thank you for that. Sorry for
That was not a follow-up, sorry, through the chair I've sometimes been accused of asking
CHI questions.
I think it's a derogatory comment when it is made, but I was making it for myself to
cut off anybody.
Well, I just wanted to comment and didn't have questions right now to share but,
I wanted comment, thank you, Rep. Carrick, for bringing this bill before us because I
All of you, we want to make sure that all the entities that we work with are sound,
and there's public confidence in them, and like Rep. Vance and Rep Carrick,
I have had comments and emails from people concerned about the lack of public process
and how can that be improved.
In recent years, the jobs that are being created are not as many as people thought they were
to be.
There's been some economic reports on it, and I know Ahamudi downgraded Ada's credit
rating due to what they said was a lack of transparency in 2019.
I think it's good to look at this process and see what we might want to do for oversight
and just good questions to ask because we want
to work closely with Ada.
And I do think about the Board of Directors, I
think in building public confidence in this entity, it might be good
to expand who was on the board because you have various backgrounds on
I mean, I just think that, again,
building public confidence in our entities
is something that it's always good to strive for
in whatever agency we're working with.
So I thought there were great questions today
and I appreciate that.
And I look forward to the building before us again.
And so let's see, we are going to...
Take a brief at ease and then I'll hand the gavel back to up carry Carrick and Mr. Relay
Affairs is back on the record.
This, thank you, Vice Chair Story, for chairing.
This concludes our business today.
Our next meeting is on Tuesday, January 27 at 3.15 PM.
The agenda for the hearing on Thursday is as follows.
We will take up the ADA Accountability Act,
House Bill 124 from my office again for a second hearing.
Just for members' information,
my intention is to hear this bill twice next week.
We won't be setting an amendment deadline at the next hearing, but we will be hearing from ADA.
We will also be having a reintroduction of representative Nelson, David Nelson's,
marijuana conviction records bill, House Bill 81, and having
a first hearing on House bill 202 from Representative Johnson on establishing a state vegetable.
With no other business before the committee state of fairs is adjourned at