Call the Senate Finance Committee meeting to order two minutes after 9 a.m. We're in state capital Senate finance room
Please silence all your cell phones
We have with us Senator Stedman, Senator Olson and keel are on their way
Senator Merrick, senator Kauffman senator crock
Today's agenda.
We had one item which is the overview of the governor's FY 26
budget vetoes, we are going to have a presentation from the Office of Management Director Lacey
Sanders.
Please come to the table, introduce any guests that you might want to assist you, and begin
with your presentation.
Good morning, everyone.
of the Office of Management and Budget for the Governor.
Today, for The Committee, we were asked to walk through the FY26
vetoes that were enacted into law last session when the legislature,
after the Legislature passed their versions
of operating capital and mental health bill.
I don't have a presentation today.
We do have three spreadsheets that are in the committee's packet
I do have with me here in the room today Commissioner Anderson and his team from the Department of Transportation and Public Facilities
happy to walk through
some slides that they prepared on the the veto related to the state
Transportation Improvement Plan or excuse me statewide
For the step
So with that senator or chair Hoffman, I'm happy
To start with the spreadsheets that we have in The committee's packet
I'll provide a brief overview and then let allow the committee to ask questions, please great. Thank you
So I'm going to start with the spreadsheet that is titled office of management and budget fy
2026 budget bill hb-53
See if I can I apologize
Did he aid showed me how to do this and I am not going to be able to get to the full screen, so
I'll just I just start from here. It's a reference to very small anyways, yeah, okay,
so
As we spoke about yesterday when I provided an update on the governor's proposed budget for fiscal year
2027 when we left session last year
the budget was balanced and we were working closely with the Department of
Revenue on the trending downward revenue for the price per barrel. Thank you. At
that point we we're seeing significant reductions from the $68 per
which really framed the conversation for the Governor
regarding what to continue moving forward in the budget.
Each year, we go through a confidential
and deliberative process of reviewing the items
that are included in a budget
and determining the governor determines
which items that he would like to veto.
So the veto is totaled about $122 million.
in total
The budget at that point as the budget was signed into law had approximately
141 million dollar surplus
As we discussed yesterday the price boil continued to decline
If we were looking at the Budget that was enacted into Law
Without any supplemental additions
There would be a current deficit of about 50 million dollars
So, with that, the operating budgets are in front of, excuse me,
the Operating VEDOs are on the summary that I referenced, and
I'm happy to take questions on specific items if members have certain items that they would like to look at.
meeting back to order. I wonder if you might address items that were that we
had deleted and you vetoed them I think that that's a very important topic I
think those are lines 1920 or two of them yes we repeal those items and I
By you vetoing them. What is your position?
chair Hoffman. Thank you for that question the two items that you're revealed refer referring to are
Appropriations that were included in the bill that would repeal prior year
Appropriations and the administration's standpoint is that those items were subject to the line item veto
I understand that there is potentially a disagreement
by the legislative legal division.
I have shared that information with our attorney general
who is looking into the statements by legislative
legal.
Further from that, I'm not an expert
when it comes to the Department of Law,
but we do stand by those items being vetoed.
My opinion and I've been on this committee for many years that the legislature has the power to appropriate
Do you argue with that position?
Sure Hoffman. No, the Legislature does have the Power of Appropriation
So we originally appropriated
those funds and
We felt that because of the budgetary concerns we could no longer afford those
appropriations
So we sent them in and we repealed them.
So the position, I think, that the legislature has,
if we repeal those, those dollars are no longer appropriated.
So, the governor's position is that they can re-appropriate those
by repealing them,
the governor's office does not have the power to appropriate.
In essence, that is what you're telling me,
that the administration has the
power appropriate by repealing a reduction
that legislature made.
I would request that those dollars not be spent
until this issue is clarified.
If that can be at least accomplished, it would be a show, a good sign of faith between the executive branch and the legislative branch, not to spend those dollars until this issue is clarified.
I know you probably have to run that up the poll, but that is the request of Nia's chairman of the operating budget.
Thank you for those remarks chair Hoffman noted for the team over at the Department of Law, and I will have a
conversation with the governor as well
Are there questions of other members of the committee center statement? Thank You
Mr. Chairman, I think on that subject it'd be nice if it was a fairly timely response
so
the legislature isn't
put in a position where it has to have
because this is a serious issue dealing with the inability of the governor to increase appropriations.
Yeah, through the chair, Senator Stedman will follow up for the committee on that item.
Further questions on those vetoes?
Seeing none, please proceed.
So, the second large spreadsheet in the committee members packets is specific to the capital budget.
Again, with a focus on retaining general funds across the state.
Looking forward based on what the revenue projections were looking like
I think I will note it a note as well and ask commissioner Anderson to join me at the table at this time
I believe that there are committee questions regarding
the
Reappropriations that were vetoed in the capital bill and so I'm going to sorry
Commissioner Anderson welcome to finance please proceed
Okay
For the record my name is Ryan Anderson
I'm the commissioner of the Alaska Department of Transportation and public facilities and yeah
Thank you for for having us here today
for the Senate finance committee we
a lot of interest
out there on
our statewide transportation improvement program.
I mean really all of our construction programs
and the match for those programs, the federal dollars.
And so we wanted to put together a short timeline
hopefully to answer questions ahead of time
that both have, that we have heard,
and then offer up that opportunity to ask questions.
So with that, we could go to the first slide.
Now we've put together a timeline just of the sequencing of events for the DOT programs.
One thing just to note here is as we're working through the budgets, we have federal fiscal
years, state fiscal years and calendar years that all kind of play into how we do things.
During this one starts back in, at the beginning we were working to our step amendment two
and that was where we were, you know,
we have to have a fiscally constrained step.
And so that includes,
you the match that's available to match federal dollars.
And as we're working through this one over last year,
you we originally had a step that showed,
you what we thought was possible
in terms of construction dollars on the street for 2026.
And then, subsequent to the re-appropriations and the vetoes.
We hadn't gotten through finishing finalizing our step.
And so, you know, based on what we've heard
from the Federal Highway Administration,
we had to finalize our steps showing that the actual match
that exists at that time.
And, so that was one thing, there's a lot of questions
out there about what is possible versus what
is currently in our statewide transportation improvement
program, and it's really that difference
between the public notice.
step from amendment to to the final is how it's laid out and then we just wanted
to give a brief summary of the different actions that that went on over the past year.
If it is okay I would like to call up Mr. Dom Pannon just to go through some of
For the record, Domp and Own, Alaska DOT, Director of Program Management and Administration.
So this slide outlines the, how the match funds
transform throughout the budget process.
Originally, the Governor proposed 115 million of match,
90 million for surface transportation, 23 million, for the airport improvement program, and then a couple other various pots of Match.
budget moved through the legislative process, what eventually what was enacted was a 45 million
dollars of match, so roughly a 60% reduction and a 58 million reduction in our surface transportation
program match. So the reason that those were reduced ultimately as the budget
Through the process in the other body the request was reduced by six million and as it moved to the final stages
the G UGF was replaced with re-appropriations of
existing projects and older match pots and
The table at the bottom outlines what those matchpots were and what these reappropriation were
Roughly 37 million from the Juno Access Project, some funds from Earthquake Relief,
some emergency funds, funds form Fairview Loop, and then about 20 million
from airport improvement and surface transportation match.
Next slide.
So the way that those were injected into the budget was likely
You know, looking at the capital appropriation status report, so this slide outlines kind of how the numbers change over time and out.
One point I'd like to make is that the match that DOT has,
we account for that in our annual request to the legislature for additional match.
So, also the match balances are not static.
As projects close out, they release match that had been encumbered and obligated.
They release both match and federal funds, and we reuse that in the current year.
So match balance is fluctuate.
And then when we're looking at our balances, we also account for how much we'll need for
August redistribution and advanced construction projects in this step.
So when requested the matching,
we were requesting additional match.
In October prior to the budget, the department works with OMB to assemble the capital appropriation status report.
In February of last year, that report was released.
And in March, we started working on August redistribution and
gearing up for a record breaking 183 million federal funds captured for August redistribution.
In April, ledge finance did request the balance of our older appropriations from the CASR.
And then immediately after that, sent a letter advising and
articulating what these balances are for and how we use them.
Advising not to re-appropriate and advocating that we retain the funds.
Later in session, we provided testimony to the legislature on reappropriation for
specific projects that were on the prior slide.
Senator Stidman, just for clarifications, maybe he can define what an encumbered
Monies are in allocated monies and if there's a difference between them
Through the chair senator stedman
encumbered funds is a
Status of funds in our state accounting system in which there is A valid obligation to
Expend those funds, so if we have a contract with a contractor
That's an obligation to pay if
We have an authorization from the federal government to proceed on a project we encumber and obligate those
Funds
So that that would be the distinction
Allocation what's in allocation
Through the chair senator stedman allocations are
They could be multiple things, and typically allocations are suballocations of an appropriation.
So, depending on the context.
Senator Stidman.
So you could, can you move encumbered money,
and can move allocated money?
If we're talking about suballocations of an appropriation, money can be moved within an
appropriation through a revised program.
That is true.
When money is encumbered and obligated, it cannot be move.
It is frozen until expended.
So if we encumber and obligate funds on a project, that money stays with that project
until it's complete.
If the project is closed out, we release those funds and then re-encumber, and obligate on
a different project.
Just trying to figure this out.
So was the Juno access money frozen?
Through the Chair, Senator Stedman, the appropriations for
Juno Access for which there were two had active projects with parts of the funds encumbered.
Later, as we moved through that project, and we do have a slide on it, we could talk more about that.
Eventually, it was encumbered and obligated, once we had a valid contract, the remaining funds were encumbered and
obligated.
And that valid contact was dated when?
Through the chair, Senator Stedman,
the contract for the Cascade Point project was signed July 8th, I believe.
And when was the budget signed by the governor?
Through the chair, Senator Stemmon might defer to.
I don't have that before.
Before July 1, was that safe to say?
Before july 1?
Yeah.
Through to the Chair of St Emmon, so yes, I'm told that.
And the veto would have been part of that
Okay, I just want to make it clear because we're going to walk through this.
I think Mr. Chairman with alleged finance because I
think we have a disagreement on fungibility of monies and we
have the ability here at the finance table and
we exercise every year looking out over old projects and loose unused money,
unencumbered money that we could re-appropriate for projects.
And we actually have a list that's produced every year.
And just for those watching at home, this list was created and worked on with ledge finance.
It wasn't somebody that the cocktail lounge at the bar on an napkin just dreaming up numbers
to put in the budget.
because they were continually asked to rescrub these numbers and go back and look at it,
look and clear until the end. Because the budget was significantly restrained
from a financial perspective and we had to have a balanced budget and
we have to move forward with our step or our match projects. And I think these
walked away from 90-10 match, 10 cents on the dollar to move forward a project, that was 100%
general funds. So we're going to, we need to have some
additional clarity, I guess, as we go through this. And I'm just using general access because
it's the biggest dollar amounts here. I recognize, you know,
that project has some significance in the transportation system of the marine highway.
But that those monies do you remember when those moneys were initially appropriated to this project?
Through the chair of senator stedman the original appropriations for those funds
Which were which had been re-scoped a number of times began in 2006
That's a long time mr. Chairman to have loose change floating around nine years
from 25. We're not going to get in the math here too deep.
19 years. It's a long time. So we have a difference of opinion.
We'll just work through this, but we'll continue. I'll have some more questions, Mr. Chairman.
But for the general public, what Senator Stedman is describing is he is the chairman of the
among other funding sources, the $21 million
for the Juno Access Road, which he's allowed to do so,
which was used as a match to get our federal dollars
for construction year upcoming by the governor vetoing
no match for the, for all the projects that were included
in the budget that was submitted to the governor.
That started chain reaction of contractors
and concerned citizens that projects
would not go forward until that issue is addressed.
And that is where we stand today.
There is further action that the legislature has to take
in order to capitalize on those federal dollars.
We, the state of Alaska, have been notorious in capturing
other states' inability to spend federal dollar.
the tables have been reversed upon us and if we don't come up with adequate funding sources,
other states can grab those dollars and spend them leaving us without those
dollars. People in this building, legislators have
been contacted by contractors, by many individuals that want those projects completed.
There is potentially the time to do that, but as everyone is well aware, there are hiccups
along the way and there is no guarantees that we will come up with an adequate solution
stalling and potentially not having these projects completed. I would say that the
times of the essence I know we can kick this can down the road until May but
contractors, by people in the public, until this issue is resolved.
So I would say that the sooner we can do so, if additional issues can be addressed, we
accomplished behind us so that the general public and know that those
projects are going to be completed and the contractors will know
that they will have those projects on their books to proceed and do the
necessary planning in order to get those project done.
Thank you Mr. Chairman I've got a couple more on this slide if I if i could on the March 25th day
this is initial planning for the August redistribution begins that sounds good but when does when do
you know about the 183 million award for redistribution is that in August or
When do you actually get notified that you need to come up with additional match to whatever amount that
You may get access to in this case happens to be a hundred and eighty three million
Yeah, if I could chair for the record Ryan Anderson
Yeah
Yeah through the chair senator stedman
On the next slide we try to put a timeline because we knew this question about august redistribution
I mean we absolutely last year was that record year of one hundred eighty-three and a half
million, you know, we're going to push again this year for another good solid year.
And what you can see is that we are already talking to Fedhighways just this month.
They gave us our initial estimate for this
year, and that was around 66 million.
And that typically is how it goes.
They start out with kind of a lower estimate,
and then we come back to them with what we think is possible.
And so that's, that is important.
January 13th was the 66 million when they released that number.
As we go forward, they've told us by April 15th,
they want us to come forward with kind of a preliminary plan.
And then as we forward May 15 is when the draft, official draft plan is due to FED highways.
And that our final official August redistribution AR on the slide is August
redistribution and that's due FHWA on July 14th.
You can also see on this timeline how our statewide transportation improvement program works into this
Because what we try to do is make sure that we're maximizing
Our different fun types and things and that takes the statewide
Transportation Improvement Program and how we you know include projects and what's ready based on you
Know what projects are ready to deliver
So that factors into the two as we work through the year to make Sure that you Know both August for distribution
and our statewide transportation improvement program are up-to-date to maximize that.
The reason I asked is
it takes match money.
So where did the match, if there was no match for the normal
step of that fiscal year, where
did match the money come from to secure the
August distribution and what fund sources did you use?
For the record don't be known through the chair senator stedman good question. Thank you
So the August redistribution last year was for federal fiscal year 25
So we were using funds we had a balance of for the federal Fiscal Year and prior year
including
some of the funds that were
In the re-appropriation back to the department so
Every year we calculate based on that and so
The vetoed amount is affecting the current federal fiscal year
2026 in the Current August redistribution upcoming
It didn't impact that that year where we were able to accomplish that
So can we get a breakdown of those funds?
I didnít quite hear what the fun sources were you can get back to the committee if you need to for the
We'll have to have some consideration on the upcoming years so we don't have
to repeat this meeting in a year from now.
But I would like to congratulate the department.
Let's not lose sight of positive things here at the table, 183 million.
It's a very good job for the Department.
We can have our discussions over the capital budget issue.
But the departments did a really good good
on that, and we're not, we are just curious where the mechanics and the funding of the
83, 100 and 83 were, don't conclude in any way, shape or form, were going to terminate
that. That's not going happen, you know, so we just want to make sure we understand
the movement of money and time. And hopefully we get the 60 coming up or more.
Further questions of the department senator keel
Thank you, mr. Chairman looking at this timeline you have here for this
the present year
I guess I
Assume that first one's October 1, 2025 right
But as I look at, this I'm just trying to figure out when you need this this hole
Created with the vetoes filled commissioner
You came to the transportation committee the other day and and said any time
Before July 1 June 30 be fine
But at what point do you need to identify?
The the match dollars to The feds it's it s not in that draft
doom a 15
Yeah through the chair senator keel yeah, we're in discussions with Fed highways about that
Typically, you know, what they want to see is that there's a reasonable
That we can reasonably say that the matches will be available
Right now we have a supplemental budget request in and and so we're hopeful that that you now
They will see that as reasonable as we go through
Our final AR plan our August redistribution plan is due July 14th
And so that's where the rubber meets the road on that front
Mr.. Chairman, I just I was asked because we were still in session after me 15th
And there's this tendency for the budget to pass kind of last, so I'm trying to figure
out if there is any room for, if you're going to be up against the wall, I wouldn't say
room forever, but if we're gonna have you so pinched that if anything goes wrong legislatively,
Yeah, through the chair, Senator Keill, yeah, I don't disagree with that
There's definitely, you know, there's a lot of in project delivery world. I mean we want certainty
I mean, that's what drives projects, when you look at how much is invested in these
projects as they go forward and then the time and the momentum it takes to get these projects
across the finish line, absolutely the certainty is a great thing.
What we're trying to show here, because there's a lot of questions about numbers, is when
we were projecting the numbers of the match that we have available now, and what we need
Based on those numbers, you know, we believe that you we can get through July 1. We're not saying we don't need the match
We absolutely need to match this year
It's just that based on our projections of project delivery when these things are going off the door to construction plus our other obligations
There's design there's right away. There're utilities. Um, there're program obligations and authorizations as well
But we do believe you don based upon the current dollars that we have July one was we could make it through july 1
Let me state that Senator Stedman and I worked with this committee and with the other body
to come up with, the revenue measures including the funds for the general access road because
the source of revenue for the match, everyone knows that the other source funding is probably
going to have to come from the constitutional budget reserve account. This gives concern,
What are the requirements for accessing the constitutional budget reserve account?
You have to have a three-quarter vote
So you need
15 votes of the Senate and 30 votes
of The House
These are super majorities in our very very, very difficult to come by
so
hopefully we can work with the
The third floor and the third
floor can work with the minority
members to get these things
accomplished.
My experience in
accessing the
Constitutional Budget Reserve
account, because I've
been there as a minority
member, there's a price to pay.
In the past,
there was the
funds in order to
get that accomplished, but
fiscal condition there is very limited amount to be utilized from the
constitutional budget to serve account. We have a fiduciary responsibility to
protect that fund for rainy days and not for for non-recurring expenditures.
So that is one of the reasons that we utilize these funds because the capital budget is a one-time
Budget and it's going to require a lot of sacrifice from members to
come to the table and
submit their vote to access that fund without
Costing the state of Alaska additional funds
Could you comment upon that senator Stidman?
Yes, I was going to point that out to the public that this triggers the three-quarter vote when we put the budget on the table and made it balanced, which is very difficult last year, with $1,000 dividend.
The fund sources were pretty much dried up in all directions.
Now, when we fast forward, as mentioned earlier, by the OMB director,
you know, oil's shifted down a couple of bucks, but that put us into deficit.
And when you have a deficit, you'd have to backfill it.
And that one savings account, the statutory budget reserve is empty.
That takes a simple majority vote.
So the other account the Constitution budget reserved takes
a three-quarter vote
So, I would suggest that the administration work with the minorities groups and come up
with a solution because the capital budget is going to be even further constrained this
year than last year.
I'd also like to add, Mr. Chairman, in the event that this did not happen and those funds
were shifted from Juno access, there was no discussion or interest in killing that concept.
It was utilization of these old monies all we have to do or what I had to
do is appropriate in the capital budget the same amount or more whatever it took to
move that project forward in
the following year which would be this budget year we're in and we would have
to try to balance that budget in that component part and work that out and the
release of the notification from DOT to advance cascade point fair terminal was dated May 23rd.
And, you know, it just didn't, unfortunately, didn t work in the time frame. It was after the
fact when the budget was done and wrapped up. So I d also suggest, Mr. Chairman, if the department
or the administration has issues with the Budget, that they have some dialogue with us.
Because we are going to balance the budget this year come hell or high water
So
Now we're gonna do it. I don't know
Group here at the table's got to figure it out and I got confidence with our experience all of us will figure out
I would like to state that I believe it's possible
to balance the FY27 budget without using the constitutional budget
reserve account.
It is not possible to address the supplementals
without losing the Constitutional Budget Reserve
account, so the programs that we have
for public education, public health,
public safety.
the citizens of the state of Alaska can be assured that in 2027, as it was in
2026, are going to be accomplished. What is in question is the the capital
projects and some of
the other requirements that we will be spending the constitutional budget
The largest item is the capital budget and the projects that the senator from Sitka mentioned
in utilizing those funds for that project put all the other projects in jeopardy.
Senator Steadman, do you have comments upon that?
No, Mr. Chairman. I think you stated it well.
Please proceed
With your miracle presentation
Okay, thank you chair
We did want to provide a timeline for cascade point understanding that there are a lot of questions. There's a lotta history
And so you know we laid out all the you all of the actions all
The briefings our work and hiring contractors and which actually which started in 2023
You can see you can you describe the
for the general public what Cascade Point project is.
Oh, thank you, Chair.
Yeah, so Cascade point is a ferry terminal
that's proposed at the end of the Glacier Highway,
which is out of Juneau.
It's about, I think, mile one of
the glacier highway starts here in downtown Juneaux,
and it ends,
I mean, Cascade is about a mile 41 of
the glacial highway,
so it's 41 miles from downtown.
And it a new ferry, terminal that is proposed.
To shorten the length of the run to for the Northland Canal run, to Skagway and Haines
Reduce time reduce our operating costs of The fairies
And and yeah, that's that really the the overall purpose of it in a year ago today
What what priority was that on the DOT's construction list?
Yeah, it's your Hoffman. Yeah. It was a priority. I mean
The number one priority
We balance a lot of priorities.
I couldn't say any project was number one.
I mean, we have a list of,
I'm mean we did,
we secured over $1.3 billion in projects last year.
Those were all priorities last
year, so this is a project that we've been investing in
since 2023 pretty heavily with detailed engineering,
feasibility studies.
You know, and we had all that work
that was leading us to a construction contract.
Please proceed.
Just for further clarification, I'd like you to talk a little bit about the mine access
and the further development of very terminal or whatever, so the public can get a more
of a holistic view of what we're talking about with Cascade Point because it's been
in the Public Arena for years and we even built a couple of ships for it, if you could
Yeah, through the chair, Senator Stedman, thank you for that.
So Cascade point, the DOT proposal is to build a public ferry terminal.
Not so different than you would see at any of our ferry terminals across the state.
The way it's being looked at is a design for the Alaska class fairies, which are they've been known as the dayboats.
But it is like the Hubbard or the Tazlina.
And really, it would just provide that daily service
on North Lynn Canal.
When we initiated this, a gold belt approached us,
the Native Corporation.
And we had similar interests.
They wanted development at that site as well.
They owned land there.
And they have a current operation where they're
shuttling mine workers over to the Kensington mine,
I believe it is, and back and forth.
And so there's a bigger economic
look at that area as well and so but then that and that's where you'll see on the
timeline there's the governor signed an MOU with gold belts on March 9th in
2023 that kind of kicked this off.
It's interesting.
Yes and the Laskerman Highway Board were they aware or unaware of this project
moving forward less spring.
Yeah through the chair.
Senator Steadman, as you can see, we provided the dates that the AMHOB, the
Alaska Green Highway Operations Board, has was briefed on the project, which
went all the way through. We went back to May through July of 2022, March and
May of 2024. I mean, there were regular briefings as we went through the
project. Senator Stidman. My understanding that they were surprised by this. At least
And I'm caught off guard so there must be some confusion
Yeah through the chair senator stedman. Yeah, it
I am trying to remember if there was a formal briefing on the construction there may not have been as we moved that project forward
from that the outside of things
Senator statement no, thank you senator Stegman, please proceed
Yeah, that was really the slides. There was some, you know, just going back to I know there was
some discussion earlier about you, know the genome access appropriation and when that
was. And so we tried to lay out kind of some of the history here with you
know that the early appropriations, when,
when the Glacier Highway was extended to that point that
was back in 2011 to 2013,
when they actually built the road where it ends now where there's you
know it, ends at a point where
It's just land, you know, there's there is no actual wayside. There's no facility there the road just ends
And then and then we went through that you now the amhs the reshaping report
I think that was early 2020, You know that identified cascade points
And and just trying to give that, ya know
We've had that cascade point project in our statewide transportation improvement program
Man since since the new 2024 to 2027
Program came out
So that's that has been several years as well that it's been carrying forward just like many other projects
And so this just goes through that
Thank you
Questions of the commissioner senator keel. Thank You mr. Chairman
So this is a design-built contract for 28 and a half million dollars what how much of The project is that with that built?
Through the chair senator kiel
Yeah, this is a first phase, and so what this allows us to do is to get the groundwork done,
the uplands work at the site, you know, really create the footprints. So then when we get to the
sub- and we're going to produce a lot of rock for the erosion and the wave protection for this
facility. And it really creates that area so that when you go to next phase to actually build the
There's a place to stage, it's not uncommon for us to
stage a project like that.
Senator Keel.
Thank you.
In terms of, there are a lot of outstanding questions
about this project.
In times of when that design comes in, are there
stage gates in this contract?
If the design come in and we say, oh my god,
Do we have off-ramps?
Through the chair, Senator Keel. I mean for a design build, so right now
They're going through this design process and what they've committed to is a twenty-eight and a half million dollar project and so the I
mean
In terms of off ramps, I'm mean there's legal off ramps, you know when it comes to termination clauses and things like that
But they're bound by a contract. So this you now this project doesn't have a
Clause where if they decide they aren't interested in the project anymore, they could bow out if that's the question. Thank you
Senator statement
what else I don't want to hog the questions here, but
so I think the
Several weeks ago there was a notification in my office that we've had some projects that were a hundred percent
over the cost of bidding or something of a surprise.
And can you kind of give us an update on that?
And we'll just, for the watch in the home,
that's one of the issues when we get into the capital budget
we're going to talk about is escalation of projects,
which are out of our control, and your guys is controlled.
But with limited monies, it just means
we can get less projects is what it boils down to.
And can you give us kind of a update on on those cost projections or bids that you're seeing around the state?
And I don't have that email in front of me, but we were put on notice.
Yeah, through the chair, Senator Stedman, I'm not familiar with the email.
I'll find out and make sure you get a formal response.
But, yeah, what we're doing and what you see, this is where it's important, you know,
for folks, especially in the public, the statewide transportation improvement program.
Every time we update that, we are getting updated cost estimates from our engineers.
And what, if you go back and look through the record of the state-wide transportation
improvement programs, is you'll see that.
that cost increase on all these projects and so that's really a great record for us.
In terms of the actual inflation right now, it does seem to be stabilizing at least over
the past year is what we're seeing.
We still have, you know, Western Alaska still sees some pretty extraordinary costs just because
the cost of transport out there.
And so you know those we have to factor in and so it it's a bit geographic focused
But when you look at you, know the cost of steel and some of the things that are more commodity driven those those are stabilizing
Senator stand just a follow up. Could you when? You have time and it is not
Supertime sensitive because we've got the capital budget coming later
Month or so later, but it'd be nice if you could you give us a heads up on what you
trends you've seen in the last five years or four years kind of pick your time frame so when we have
the dialogue here at the table you know we we got to try to factor that into account what's coming
what do we think in our best guess is coming at us over the next year or two so we get as many
Yeah, that that's the end of my presentation chair. Thank you
Further vetoes in the capital budget
Chair Hoffman happy to address any further questions on specific items in The capital Budget if the committee has
items that they would like to touch on can you give us a highlight of
Projects that have been vetoed
we're particularly interested in
deferred maintenance
I think the legislature spent a lot of time and effort
on deferred maintenance of schools,
of the university, other deferred
maintenance projects that we felt
were needed to be addressed.
Those are crumbling.
In fact, we've had a school in my district
collapse in Antioch.
We don't want these types of things to be happening.
We need a preventive maintenance program.
We understand that there is nothing in this budget
to address that issue.
But can you go over those projects
that were in that category that we're vetoed?
Chair Hoffman, yes, I can briefly touch on some of those items that that you have referred to
Notably, i'll I'll speak to item or excuse me line number five on the spreadsheet, which was the major maintenance grant fund
This is the
appropriation that the legislature included in the budget last year
To address school deferred maintenance
The mechanism that was used last Year was proposed to be lapsing funds from the
operating budget that would go through what we refer to as a waterfall.
So there are several provisions in the operating
budget.
That lapsed funding at the end of the year would
go to, for example, our cat-a-urific
cat fund, Catastrophic Reserve Fund, or Group Health Group Life,
which is our life insurance premium fund.
And there's an order of operations that those lapsing appropriations would go through
our office provides the legislature with a projection of what is expected to potentially lapse in a year and
the number that was
VDODE was 25 million dollars that would have gone to the major school major
Maintenance grant fund
It was projected that that funding would not be available and would NOT be there to lapse meaning there would be no money
go into that fund to address the schools.
The elapsed amount was a record low amount this year
and primarily went to our group health group life
which is our health insurance fund.
I don't have the number off the top of my head.
Apologies.
But.
that was the bucket that
was filled when we go through those waterfalls.
There was some funding remaining to
address the top three projects on the list,
and I don't have the number for that,
but it did touch on
the Top Three projects.
specific to line 30 for the University, there was just about $10 million added
by the legislature last session. The budget did retain $6.75 million to
address university projects. There was approximately a $3.25 million veto
associated. So the university did get funding to address deferred maintenance
I'm just not the entirety of the amount.
What I will say is that there is no disagreement that deferred maintenance is a priority for
the administration as well.
There is one capital project in the capital budget that was proposed.
It is our standard appropriation from what is available from the Amaretta Hess settlement
into the Alaska Capital Income Fund.
I believe it's projected to be upwards of $26 million that would go towards all of our
in the court system and the University of Alaska
to address high priority needs.
Thank you for that.
Further questions, Senator Steadman?
I'd like to get a breakdown of those lapsing appropriations
that didn't materialize on K-12 deferred maintenance.
That'll be helpful.
Yes, through the chair.
Senator
Money's can you touch on the asme money and we were
Well, I'll let you walk through it, and then I might have a follow-up
The Sanders senator said men as asked me on The operating
Through the chair, Senator Sedman, thank you, while I identified that item on the list.
So it is on The Operating Page, and I'm just going to reference it for the public.
It is line number 16.
There was a request that was proposed by the governor totaling $10 million.
The legislature did include that in the budget.
Prepared a comprehensive marketing plan that would span multiple fiscal years
So it was intended that 10 million was in tended to to cover three million or excuse me three fiscal year's
Given the declining revenue that we were facing
The governor vetoed five million dollars from that plan and retained five billion dollars
So that they could continue the work that. They were doing at a scaled-back approach
I think this went even to the previous year you want to touch on that
Through the chair senator stedman. Yes, so this would have covered as this was a supplemental
So it would've covered fiscal year 2025 2026 and then fiscal your 2027 as as
appropriated
And if we went back one year further
Through the chair, Senator Stedman,
off the top of my head,
I don't recall what was provided to the year before.
I recall we had 10 million and the governor vetoed that.
Came forward with a supplemental.
Had the money in the supplemental information I got
from the industry as if anybody bitches about it.
He's going to take the honey out.
Are we increased that he's gonna take money out?
So the last year in a budget process,
we just left it alone.
And he took $5 million out.
So that's certainly his prerogative, the veto pin.
Although I wish you'd use a little one like this instead
of the big fat one he uses.
That gets a bit blunt.
And also the industry was in a significant downturn.
Russia, at the same time, was being forced out of the U.S. market for fish, and there's
a window of opportunity to grab that shelf space.
So we'll have an update on, well, you can't grab the shelf-space if you don't have the
marketing power to, grab it before the next guy does.
So will have Asme, hopefully come forward, Mr. Chairman, talk about the industry.
of the loans out to the fishermen kind of in the entirety and then what has me is proposing,
which has to be approved by the administration. We understand that, who he works for. But
we still need to keep an eye on that. And I think Bristol Bay has got a little bit better,
in other fisheries outside of red salmon that are still significant.
So that is a, you know, doesn't go unnoticed,
and it doesnít go and notice that we had a balanced budget,
and we expected the governor to do some trimming, which they always do,
thatís normal.
But the discussion here at the table
Oil prices to decline a little bit when we released that budget so it didn't come as a surprise to
To I don't think anybody here when when he picked that
$66 number at this table and talked about it being a bit softer and then to the process with the body
We ended up around 68
And you know we sent the budget on the way, but this committee was prepared for a softening of them
of the price structure
Thank You senator stegman do members of The Committee have further questions of administration on the vetoes
Senator stedman before you cut them loose they liked them, which I'm sure they're looking forward to the ending this meeting
I would just encourage the administration to do a couple of things
in your amendments coming to the committee,
put in what you think should be the policy going forward
for deferred maintenance of schools,
the university, and the courts.
And if it's zero, put it in zero.
And, if some other number, just put on the table
and we'll work around those numbers.
That would be extremely helpful.
So we get a whole list,
and there's some others items that are left out.
of the operating and capital needs in front of us
to make not only the policy call
for this current fiscal year budget,
which is 27 starting in July,
but as a starting point if we're gonna have
any fruitful discussions on any sort of fiscal plan
going forward, because if can't agree on K-12 maintenance,
we are not gonna agree anything else,
and it will not be zero.
I'll tell you that.
what number it is, who knows, zero, it won't be.
That would be very helpful.
Not only in the budget, but in their broader dialogue
of the plan that the administration put on the table,
fiscal plan, and then I would encourage
the Administration to work with,
again, work the minority.
to see if it's possible to move forward with a faster track
supplemental. I
Don't think there'd be a lot of resistance to that
Until it starts getting expensive and then it is not going to happen
Because we don't have the flexibility
Thank you senator Sidman, I know we went over this yesterday in the supplemental request, but
the administration vetoed funds for a fire and a disaster and you had mentioned yesterday that
you're looking at a possible 10-year average since it does fall under vetoes. I wonder if you could
Thank you chair Hoffman. Yes, so there were two vidos that we spoke to yesterday or excuse me two
Supplemental's that I spoke with two yesterday. There are corresponding vedos
That were included in the budget. So online 24 of the operating spreadsheet
It's at a $10.3 million veto for the disaster relief fund.
This had retained just at $13 million.
We had worked with the Department of Military and Veteran Affairs to identify that number.
There is you know, we've had several disasters that have occurred as of recent
Most notably the west coast storm with typhoon hollong
The supplemental that's before the committee is for 40 million dollars in the fiscal year 2027 budget. We have provided
An increase to that. I'm going off the top of my head. It's either 24 or 27 million. Dollars
And it was a looking at an average of the last 10 years of disasters which would include the 2018 earthquake as well as the two significant storms with the typhoons among other items that that have occurred over the
The online 28, the deposit into the fund was reduced
by $26 million, retaining approximately $47.5 million.
The administration has transmitted to disaster declarations
related to fires totaling $55 million dollars.
There are no new asks at this time.
We're working with the Department of Natural Resources
to work through what the true-up will look like moving forward.
And I just, you know, both of these funds,
the Disaster Relief Fund and the Fire Suppression Fund,
Disasters and fires that span multiple years.
There are many, for example, in the Department of Natural Resources, cooperative agreements
with other states and federal agencies and partners that we have to work through once
a fire is completed, allocating the costs for those disasters, what becomes a state
cost, What becomes the federal cost or other.
It's very complex and it takes time to
Sometimes what we're seeing is a request is coming to you now that our bills are due
and we need to get money into that fund to ensure that not only one, can we respond to
disasters that are occurring now, but two, we can meet the expenditures in the past that have occurred.
The hope is that by having a fund for both of these,
Decrease the volatility and spikes that we're seeing with requests to supplementals and that it will start to level out as
We deposit funds in and maybe don't have such high disasters that money stays in the fund and can be used moving forward
So those are those. Are the two items that I would know
Thank you for that
I Would ask that you give us the
Calculations on your tenure
average for fire and disaster. We utilized five years and the reason that we proposed a five-year
average is that over the last few years we've seen the larger disasters and more frequent
disasters. And as a result of that, we felt that it was unnecessary to have a higher number than
than a lower number for disasters.
The question that I have on your supplemental request
for the $40 million, how urgent is that
the need for
the legislature to take action on that appropriation?
Chair Hoffman, we'll definitely get to
to you the comparisons between the five year
and the 10 year average,
we've already asked the Department of Military
and Veteran Affairs to get that to us for the committee.
The urgency, we have proposed it as a supplemental,
that's the preference is to
get it before the end of the year.
We have the ability to short-term
or temporarily borrow from other capital projects.
So that is what we are doing.
While
Not ideal we have made it work for the last two years and so when that bill is passed we'll
Make the accounting entry and return those funds to the capital projects that we've been borrowing from
interest statement
In the spirit of goodwill in the past when we borrowed from other
accounts to deal with these issues even though some
times the borrowing was inappropriate and not allowed, we didn't call the departments on the
table for it because we knew they had to meet their obligation and there was no skull doggery
going on. So I'd just like to remind you of that. And I like that Mr. Chairman, it'd be nice if
we could have him calculate their 10-year average for last year so we can compare it to that five year.
And, you know, see how close those numbers are and it may be something that we can agree
on what kind of an average.
We certainly agree on the surplus rolling forward, if there is one, so we could have
less impact on a future budget.
I think we had the same intent with the five-year in the event that it wasn't needed, but it
I'd like to put on the record that Kudos should go out to the administration for their
prompt and professional addressing of the disasters, particularly the one in my district
I traveled out there with the governor and he had more than enough departments and people
those concerned people in the district,
so I would like to state that they are doing a tremendous job
in that regard.
With that, I'd like see if you have any closing comments
before we consider adjournment.
Chair Hoffman and members, thank you for the opportunity today to speak with you all.
We are looking forward to continuing the conversations and working collaboratively together
to put legislation together that meets the needs of Alaskan. So, Thank you.
Thank You very much
With that that concludes the
Agenda today our next meeting will be tomorrow
Wednesday, January the 28th at 9 AM, we will have an overview of the Governor's FY 27 budget
from the Legislative Finance Division.