Okay, I'm going to call this meeting in the House Finance Committee to order let the record
reflect that the time is currently 132 p.m. on Thursday, January 29, 2026. Looks like we
Rips in of Hennen, Ripson of Moore,
Ruppson to Bynum, Kuchar Rupsin of Schruggie,
Kochar ripsin Josephson,
Rupson Galvin,
Rippson Tom Schifsky,
Ritzin O'Step,
and myself Kouchar Foster.
Before we start,
just to remind our folks could mute their cell phones.
We have one bill before the committee this afternoon.
If we have time,
we will end in the,
I believe that Mr. Alexey painters
We've got another engagement, but if he gets out early and we have time later he'll come back to finish up with his presentation on the governor's FY27 budget and his assessment of that budget.
So with that, we've one bill for us right now and that Senate bill 64, it's the elections bill.
We are going to adopt a new version.
Hear the changes made to the bill.
Take questions and then we'll set the Bill aside.
So what I'd like to start with first is maybe just,
if we could have committee substitute
for a Senate Bill 64 co-chair Schraghi,
if I could.
Ask you to maybe introduce the motion just to put before us the CS
Kuchar Schruggi. Yeah, happy to chair foster
I move that the house finance committee adopt committee substitute for Senate bill 64 work draft 34 dash
Ls 0 1 5 3 backslash you
dated 128 26 is our working document. Thank you. I'm going to object and I'll also object for the purposes
of getting the explanation and ask my staff,
Mr. Brody Anderson, if you could come up
and explain the changes.
And I think if we could maybe just get through
the explanations of changes
between the prior version of this bill and this new CS
and then we'll go to questions.
So with that, Mr Anderson if
put yourself on the record. Also, looks like maybe I'd like to invite Mr.
David Dunsmore to the table to also maybe be available to take questions.
I see him right there. And so with that, Mr Anderson, if you could go
ahead and kick us off here.
Thank you, Culture Foster for the Record. My name is Brody Anderson.
This CS has more sections and items removed from the bill than added.
The co-chair office has provided every member with a red line version of the Bill from
the current version in front of committee which is version L dot A to this new version, which
is Version U. I will try to reference both the old sections that have been removed,
and also have been struck through, then I will also try to explain the current sections
that have only been changed from previous sections. So if I don't reference a section
in my walk through that is because there is, it's the
current language that you have seen throughout every iteration of this bill.
So beginning, the title has changed to reflect the changes made in this version of the bill
has been remunerated to reflect the removal of those old sections.
So jumping right in, old section number one has
been removed.
This was the section that had made changes to the
residence requirements.
Jumping down to new section four.
This changes the timeline.
to 28 months, which in previous versions
had either been reflected as two general elections
in some places and also, or two years.
It also removes the hunting and fishing license,
out of state tuition and physical residence
from the disqualifier list for voter maintenance efforts
and cleaning up roles.
We're hoping that we can get through the summary of changes.
But if you've got a quick technical erupts in a binum.
Thank you, Coach here.
I did have a question about a technical question
about how we're walking through
the information you're trying to provide us.
So initially you said section one has been removed,
old section 1, that would be from working draft LA.
Section has been removed then you said skipping to section 4 and you set new so I'm not sure if you mean under
I am looking at it. I have a through four items in front of me.
I had two
sectional analysis and then I
Have two bills one is the working draft bill that has the red lines one as the final version of the bill
Then I've the old la version to the Bill so as we're skipping through this
We went from old section one removed to new section four
So when I'm looking at the sectional analysis, I skip down, so I just want to understand like how you're walking through the bill when we're actually going through this so that I can follow along without having to interrupt.
That's a great question, Robson and Biden.
Thank you, Mr. Anderson.
If you could maybe slow down a little bit, make sure that if you were referring to different documents, if could point that out.
Thank you through the chair representative the best way I think the committee could follow along is to reference the red line version of the bill
That will probably be the easiest way to track
I will make sure my tempo is not rushed and allow you to find some of those new sections
Many of The redline version Of the Bill you will see whole entire pages that are
Blue and struck through and then you'll see off to the side on the right
the left side you'll see sometimes where a section number has a strike through and
then the new section numbers is there. So I will try to pause long enough for
you all to find those sections. And if folks do need us to kind of point
something up, feel free to jump right in and ask for that clarification.
So Mr. Anderson? Starting again at new
two 28 months from what was either referenced
as two general elections or two years.
Then further along in that new section,
it removes the hunting and fishing licenses,
out of state tuition and physical residents
from the disqualifiers,
a disqualifier for the voter list maintenance efforts
when division of elections is cleaning up voter rolls.
And then,
You're going to see throughout much of this or almost the entire new version of the CS that all of
the references to hunting and out-of-state hunting of fishing licenses have been removed from a
disqualifier. Jumping down to new section six. New section 6 changes the time requirement
which in the previous version had been fourth calendar year.
Jumping down to new section eight,
this adds further requirements for review when division of elections are updating their master
registry, and the review of information will include now the systemic alien verification entitlement
Whether or not they've served on a jury in another state or have benefited in some other way from another State
It also here removes the out of State hunting and fishing licensing and then this also allows the division to make
a determination if they can reasonably prove that the person has been out of state this
section before in previous versions had been the authority of the director and now has
been pushed to a division of election rather than the Director.
Next we're going to examine the removal of old section number 10.
The new section 10 now retains the previous version of the addition of what we call the rural community liaisons
Looking at the next two sections that were removed from the old section 13
This removed earlier editions of poll workers and observers for ballot counting in a facility
And then also old section 14 was removed and this was referencing the Alaska Public
Office Commission or APOC to have an office in every Senate district
Looking at new section 11
This section is often referred to as the true source clarification section
And you're going to notice in later on in the bill. There will be a section later that
makes the effective date for this clause directly January 1,
2027.
We have also removed old section number 18.
This section was the posting of notices of language assistance.
And then in new section 14,
this section is amended to also remove the
current utility bills, bank statements, or government checks from the list of acceptable
identifications.
Old section 20 is removed, and then we're also amending what would be new section 15,
the combination of the removal of that old section and the amendment of new sections.
removes references to rank choice voting and preserves the current regulations for
observers by removing additional requirements made in previous editions of this bill.
New section 17 adds a requirement that all absentee ballots include a postage paid return envelope.
And it also, and I'll say this slowly, removes the repeal.
of witness signature, so witness
signature will still be of requirement moving forward.
Old section 23 and section 24 are removed.
These removed the previous changes to
candidate and campaign observers and also
the removal of risk limiting audits.
Old Section, and this is going to be a
Old sections 26 through 30, all of those sections are removed and that removes the sections
regarding security measures for special need ballots.
Section 18 amends, excuse me, this section is to amend the current
To remove all current utility bills bank statements and governments from the list of acceptable identifications in section 18
Mr. Chairman
Representative Henning thank you just real quick mr. Anderson what page is that on because I'm not finding a section
18 I am on page 18 former section 31. I was with you until there
And it might be helpful if you just give us pages when you're given us that section when there's a lot of drops.
So through the chair, it is very unique the way this.
it is drafted. If you'll see on page 15, you will see online 22, the word sex, SCC dot,
and then everything is struck through until you get to page 17.
and then starting at page 17 line 26 you'll see a hanging chat of 18 that is
your section 18 start they continue to remove all items that were previously
mentioned in that removal of that section until we get down to line 16 of
for the record, Mr. Coachear.
I actually, that's where I followed you two,
and then I thought, am I missing section 18?
No, it's just that it is a hanging Chad earlier.
Okay, so section eighteen starts on page eighteen,
line sixteen for all of its content,
but its titling is spread over two pages.
We love ledge legal.
This hanging chad is very apropos to the discussion.
Thank you, co-chair foster starting on page 19 of your red line oh
Excuse me. This is where I will go a little sideways. We can jump to
Trying to line up page numbers we will jump back excuse me if we can
jump Back to page nineteen the removal of
Section 33 on line 13 that section removed essentially
Removes the section that allowed voters to register to continue to receive absent tea by mail ballots as long as the voters had cast
A ballot every four year
Once every for years, so that's section has been removed
Looking ahead to pages
through page 22.
We have two new sections, section 22 and 23,
before I refer to the sections that have been removed.
New section, 22, and 20, 3,
maintains what is known as ballot curie.
In your blue line, you will see a red line.
You'll see, a bunch of sections removed,
36 and 37, which removes the tracking barcode requirement for witness signature
and regulation requirements for challenging ballot review.
Also jumping ahead to page 24, what is known as old section 41 starting at line 16,
Removing old section 41 removes the requirement to adopt regulation for
security standards of drop boxes, which essentially preserves what is currently in regulation.
Now, starting at page.
Starting at the bottom of page 26, line 31 of your red line.
sections old sections 45 through 50 are removed and by removing these sections
it removes the requirement that Lieutenant Governor develop a cyber
security program and the prohibition of undisclosed use of synthetic media it
also removes a codification of the settlement of ACLU of Alaska versus the
And finally, it removes all portions previously listed of APOC's reporting requirements.
So collectively, those sections remove those things from the previous version of the bill.
Starting on page 31
Down towards the bottom on line 27. We have a new section 29 and
these
This new Section in conjunction with old sections 51
52 and 55
The removal of those three sections removes all pfd application requirements
Except for what's listed in section 20 29
which requires the Department of Revenue to share voter information gathered from the
PFD applications. There were quite a bit of regulations and new requirements for the PPD
applications regarding voting and those have been removed with this final thing remaining.
We have a new section 31 starting on page 32, line 26. This section is amended to remove
Conforming repeals related to poll watcher provisions that are removed from this.
So previous iterations had poll Watcher regulation provisions in there and this is removed that.
New section 34, which begins at page 33, line 21.
This makes sections 23 and 24 of the new version of
conditional on both sections taking effect so their conditional language to
connect those two sections together for the passage of the bill. New section 35
which is page 33 line 27. This is the effective date mentioned earlier for
Finally, new section 36 is the effective date of July 1st,
2026 for the remainder of the bill.
There are also technical and conforming languages that are done to clean up the
bill through the different iterations.
And then Mr. Chairman, this completes the statement of changes for CS version U.
postage paid what page was that on 14 it was new section 17 which is found I
And so I like to kind of try to simplify things
as much as possible and especially for folks
maybe watching who have not had a chance
to actually look at the bill in detail
or just seeing this for the first time.
And I guess if I was a person on the street
just telling somebody the 10 second version
of what this bill does and so feel free
I actually haven't asked my staff this.
I would probably say what this bill does, the big things are it's ballot curing.
It allows people to fix their vote if through some technicality they're.
vote. Another ballot got thrown out, they can fix it. The witness signature stays in, that's a
requirement. Postage is paid and as a rural guy, I like having a real liaison. So just kind of a
real high level, like this is kind what the big things of the bill are. Would you add anything
else? Do I have that correct in terms of what's in there and is there anything else that you might
Through the chair, I think that is a very high-level synopsis of of the major changes that have happened
It does remove some of things that that had been
debated in previous iterations
Observer powers and things like that poll workers and thing like
That but overall that's a good summary and I might ask mr. Dunsmore maybe the same question. I know you've
Put a lot of time into this and is there if you're trying to just tell somebody what the 10 second version of what this bill is
Would you how would you describe it?
Mr. Chairman for the record David Dunsmore staff to Senator Wilkowski
as
You can tell from mr. Anderson's explanation of the changes this version is
Paired down a bit from the version that passed the Senate and was heard by this committee previously
But kind of the top-level things are focusing, provisions focused on improving election integrity
with the ballot here in ballot tracking, expediting the process for cleaning up our voter rolls
and adding more indicators of resinsing in another state to trigger the voter roll cleanup process,
as well as provisions to speed up the certification and release of election results.
Great, thank you very much.
So with that, I would invite the members of the committee
if you have questions, Rep. Navellard.
Thank you.
I don't really have a question.
Can I just make a statement or do you want me to wait
since I was one of them who objected to it?
You know, well, yeah, no,
I'm doing this correctly.
I thought I were skipping a skip here.
Go ahead and ask question,
Rep, did you ever have the next question?
I think, okay, so Rep's Nivellord.
Okay, Chair,
I wanted you to know it's more of a
Sure.
OK.
So I appreciate this coming forward.
And I appreciated it for numerous reasons.
One of the reasons is because I really
think that the public would enjoy me going line by line
destroying this bill.
Because it absolutely violates what I would consider people's constitutional rights.
It discriminates against individuals who don't live in the rural communities.
I will also say that it is something that if you vote for it or support the CS,
that is somebody saying that I support ranked choice voting, and that's what this bill does.
I also would add that this hurts, doesn't fix elections.
or the voter roll because it doesn't go far enough.
There are many things that I do agree on that
I will compromise on, and I'll work with other members
of my body and of the other body,
and elections isn't one of them.
And I'm not going to really say anything further.
Other than I really want this to go forward, so that we can get all our amendments in.
And that the public can really understand what this bill means, line item by line items.
Thank you.
Thank You.
Representative.
May I say with that?
Sure.
Can I withdraw my objection at this moment, or would you like me to hold off?
Um, you can object my objection will still be right. So I would draw mine and okay. Thank you. Great. Thanks
So we'll we will do questions and then once we're through questions, and folks feel like they've got a good understanding of just
The bill in general not that we are approving it at this point, but once. We go through that process then
We will
put it to a vote as to whether or not we're adopting the CS.
And so we are going to go to Repson of Bynum.
And again, the C.S. is just putting it on the table
so that we can continue with the process
with public testimony and so forth.
Repon of bynam, Rep son of stap.
Was anybody else in the queue,
Rep on a bineum?
Thank you, Coach Airfoster.
And this is more of a procedural question.
We obviously have the c.s. in front of us.
We have an explanation on it.
There's many items within the, within
The bill is a whole that I'd like to get a little bit further questions into and
and how the mechanisms of the bill will work.
But I'm assuming that at this time is not the time to do that.
I mean, I am assuming I can, but we will have another opportunity,
if I've not mistaken, to actually come back and go through each section of this bill.
Once the clean up version of bill meaning adopting a CS, if that happens.
dive into some of these things.
Is that accurate?
You're absolutely correct.
All right, so with that,
I'm not going to be asking any additional questions
at this time.
Appreciate the opportunity to clarify.
Great, thank you.
Representative Stapp,
and then Tom Shutsky.
Representative Staapp.
Yeah, my question's super immaterial.
Chair, I was just gonna say my red line version
is primarily blue rather than red.
And I've just never seen that before.
And that's it.
So, thanks.
Thank you.
Representative Tom Chefsky.
Thank You.
Go Chair Foster to the Chair.
Question to co-chair actually.
Now, I believe you said that the postage was left in there, but I thought Mr. Anderson
said the Postage was taken out, so I just wanted to clarify what I heard.
Mr Anderson.
Through the chair, thank you, Representative.
The paid postage is still in there if I misspoke, I apologize to the committee for that.
The pay postage portion of it is found on page 15 starting at lines two through essentially
line 21 where you see the paid postage there listed, so it's still currently in the bill.
Okay, does the committee have any further questions? And again, this is SB 64 or on version you I
Don't see any for the questions
Mr. Anderson am I missing anything other than adopting the CS?
Miss code chairman. No, that that's the next I
Will go ahead and remove my objection
Are there any farther objections to adopting version u of SB?
Seeing none, version U is adopted.
And so with that, thank you very much for the roll out and the introduction of the new version of a bill, Mr. Dunsmore and Mr Anderson.
So it looks like we may have time for Mr Alexey Painter to finish his presentation regarding the assessment of his analysis of
the governor's bill.
However, I think he may not be ready yet.
It's possible we might come back later.
Oh, we're upset about them?
Yep, brief.
It is.
On Thursday, the 29th, which occurred and set aside, SB 64.
We're now resuming a hearing that started on Wednesday the 27th.
We were on slide 16, I think, Mr. Painter.
The subject before us is the Legislative Finance Division,
overview of the Governor's FY27 budget.
Mr. Chairman, thank you for the record,
Alexi Painter, Legislative Finance Division.
I think we had gone through the adjusted base items,
we did the formula adjustments,
and did we talk about slide 17,
or did leave off before talking about it?
I don't remember, covered briefly anyway.
So we're continuing going through what's in the
adjusted based, which is the kind of our clean starting
point for next year's budget.
And in the adjusted base this year, the last series of changes are salary and benefits adjustments.
And one thing I'd note is that we put these in adjusted based because you can't pick and choose salary adjustments,
you have an up or down decision, but they are a decision of the legislature.
It's been decades since the legislators rejected one,
but it is a policy choice of legislature to accept these.
This year, right now, we have about $55 million
of unrestricted general funds in salary adjustments,
but there are five unions remaining still negotiating.
The largest of these items is the health insurance rate,
both for Alaska Care and for certain union trusts.
There's also the PERS rate change,
and that is that the state as an employer
pays the full actuarial cost.
of the purrs, unlike other employers that have a cap.
And so as that rate goes up,
we have to pay more for state employees.
There's also a series of cost of living adjustments
that were negotiated.
Note that a lot of these are based on
an inflationary figure, two and a half,
and one is 3%.
The reason for that is that several of
the contracts that we're negotiated
that are under right now, specifically tied.
the COLA in FY27 to inflation rates.
So a lot of them said if inflation is between certain amounts
that will give you a COLa of a certain amount
and a lotta them hit that threshold to hit
that two and 1.5%, which matches
roughly our inflation assumption.
The total fund impact is $111 million, and again, there's five unions still outstanding.
They're not particularly large unions unlike last year, but they do include the correctional
officers and public safety state troopers and wildlife troopers that sometimes have gotten
higher than inflationary increases due to recruitment concerns.
Mr. Painter, so I met with some staff at the university system today.
And they said that, I think the regents are calling for tell me if they're wrong or I'm wrong,
that $15 million increases for salary adjustments, and the governor was funding like six.
Does those numbers, are they about accurate?
Mr. Chairman, that's correct.
The governor did not include funding in his budget for the non-covered employees,
which the legislature also didn't include for last year.
continues so the governor did not include that that amount and
So you see that there's about seven million dollars in total funds
But there is nothing for the non-covered employees and then there are three unions that are still negotiating as well
Okay
So
The governor recommends we authorize
Whatever the university system wants and it find the resources to bring parity to those uncovered
Mr. Chairman correct and the legislature last year chose to not fund those and not give the increases to the
uncovered amounts
employees and I
Guess the governor is saying we should do the same for a second year
Yes, represent Hannah. Thank you coach
You're just on that same point because of those dollar ratios of the Regents asking for 15 the budget only having six
it related to the non-unionized staff, can we conclude that there are more non unionized
employees at the university than there is in all of their unionize units because it's
less than half? Mr. Payne, through the chair, Representative Hannon, I may be,
I'm not confident the numbers off the top of my head and I'll get back to committee with them
Answer it may be that I included the health insurance for the University in this top bucket and so the the real totals higher
But I'll have to verify it. I don't want to speculate on the record
so I go back to the follow-up rooms in hand and thank you cuz I
heard the same numbers as co-chair Josephson this morning and what struck me is I
Certainly don t think of those staff of being the lowest every I know think them as the highest paid
employees at the university
And so I was trying to figure out why it was so disparate if we were paying all of their unionized staff
Unless it includes all their administration also
Representative Bynum. Thank you, co-chair
Justice, and I think my hand came up after
Representative Tamashevsky, so to defer to him if that's okay with you fine with me
Representative Thomas Shevski
Thank you, Coach Anderson, through the chair.
On that same group of folks that did they not get
a increase in salary last year,
I think the university did come through
with something for that particular non-unionized group
of employees.
Did they, or am I wrong in that assumption?
Mr. Pate.
Through the Chair of Raphson and Thomas Hopkins,
I'm trying to remember our answer in the.
that we got in the mid-year status report.
I believe they did manage to find the funds,
but I will verify and get back to the committee.
Thank you.
Representative Biden.
Thank You, co-chair Josephson and through the chair.
This, before we move on to slide,
I just wanted to kind of ask this question,
because I get the question a lot about how we deal
with the budget and what funds we are approving
and which funds are not.
Well, we ultimately approve that we have control over so as you indicated earlier we
have these union contracts that are going through the from the executive in the
university they negotiate those contracts and then they approve those
contracts. And ultimately those those dollar amounts are being put into the
budget and we then have non-represented folks that
fully dependent upon the legislature, including those additional dollars upon request of the
executive and the university to make those funds available so that they can adjust wages.
So can you just clarify specifically that process for the union contracts? Those contracts being
approved and then the obligation that we have to then fund those contracts versus non-represented?
Mr. Painter. Through the chair, Representative Bynum, so for covered employees, the legislature
has delegated the power to negotiate the contracts to the Department of Administration
and then the University for its unions. And those are brought to legislature. The court
Well, when if we try to partially fund them, it's the same as defunding them
So there's language in the budget that says that by including the funding for this contract
We are approving the contract if We did not want to approve a contract
We could not have the money and remove them from that language section
for non-covered employees of the
Executive legislative and judicial branches. There is a statutory salary schedule
The current salary schedule is set to match the supervisor unit
for the three-year period that is the length of their contract.
So that as in statute, we, if we defund it, I suppose the agencies would just have
to come up with the money because it is a statutory pay scale.
For the university, it's a little bit different.
And for state corporations, that's little but different, they're not in statutes.
the boards and the Board of Regents or the board of HFC or whatever can make the decisions
about the salaries, but if they don't have the resources, they often will not include
the increases.
So for HBC, for example, when we passed the bill for non-covered employees, the
board chose to make increases as well, and we provided them with an appropriation to do
so, it wasn't automatic that that would happen, so it is a little bit disconnected and there's
Is it a quick follow-up? Yes, quick, follow us. So for clarity when you have those situations where
an agreement has been reached and then the funding isn't provided,
it's effectively saying that an Agreement hasn't been
reached. What does that do for the collective bargaining process?
Through the Chair, Representative Biden, it essentially sends them back to the negotiating table.
Thank you. Before I hear from Representative Galvin, real quickly,
With the uncovered cohorts, for example, the University,
as a matter of policy, we could identify what number they assert,
or even the university asserts they would get
where they give in parity with the bargaining units.
There's less compulsion to do it,
but there's nothing as matter
of legislative prerogative that stops us from doing it.
Right, we don't need a CBA or a contract to fund those increases.
Mr. Chairman, that's right.
You can look in the university's red book and see those amounts, which is, the red
book is their budget request, and you can see this amount.
Representative Galvin.
Thank you, co-chair Josephson and I just wanted to add to the conversation because I too heard
Some reporting about how the University was having to manage when they did not receive the funds last year
And so I wanted, to, add and put on to record if I may that
When I asked well then how, did you make it happen when you wanted?
To make sure that the university employees who were not under contract
Were able to stay and what they, didn't
in, this is the University of Alaska Anchorage System which is approximately 60% of all of
UA students.
They had funds set aside to improve a large number of classrooms that needed it because
seat the number of students that they wanted to and they couldn't do it
appropriately, they set that project aside. They also did not fill approximately 50
positions that were vacant. And what that looks like to the student life is that
means fewer class offerings that also meant they're concerned about their
when the university had to shift funds in order to make that happen.
I just wanted to be sure we're aware of that, as I know we all care
about the student experience at the University.
Thank you.
Thank You for the comments.
Let's go to slide 18.
Okay Mr. Chairman, this brings us to the fiscal summary
of the Governor's FY27 budget and FY26 budget as well.
So starting with FY 26, we talked about yesterday the post transfer
deficit before any supplementals in FY26 is about $51 million.
The governor's supplement is released on December 11th total just shy of $240 million in addition,
we are aware of a $55 million of fire suppression disasters that have been declared not yet in a bill.
Post transfer deficit of $345.9 million and FY26 note that that does include the $129.6 million
to repay the higher ed fund. That is part of the post transfer deficits because that's
Other items that we are expecting in the governor's supplemental bill when it's released next week
Including the Medicaid amount that
We mentioned earlier and potentially other smaller items
So we would expect that that number will grow when we get the Governor's full supplemental Bill
in FY 27
You can see that agency operations are virtually flat statewide items are also pretty similar
capital budget is also virtually flat where the growth is between the years is
that the governor is using is appropriating a full statutory dividend.
This estimate is a little dated now.
There's a slightly higher estimate that
the APFC has come out based on actual revenue through I think December
where they're running a littler head of the forecast.
So they are currently projecting a slight higher number,
but this is what's in the Governor's bill.
So that's what we're using here.
The deficit of just over $1.5 billion in FY27, very similar to the governor's proposal last year,
and the Governor proposes to fill both the FY26 and 27 deficits by drawing from the
Constitutional Budget Reserve. He balanced at the beginning of FY 26, is estimated to be about
$3.3 billion. When you add new settlements and investment revenue, we'd project that to
So combined these two draws are about half of the value of constitutional budget reserve
Okay
Mr. Painter on the subject of The fire suppression disasters
if if the governor's position and maybe I hope this is just an academic matter and not one
That gets into separation of powers and and therefore is relevant for generations to come one of those debates
But the governor's position was there was a disaster declaration and therefore he could spend
beyond what was appropriated. I don't think anyone objects because they're disaster declarations.
And our position, I think, although we haven't approved a budget or adopted this version even,
but our decision is no, we need to appropriate that. It strikes me that it literally comes down
dollars to the same amount? Is there some reason beyond that that we should engage in a debate
over semantics? Mr. Chairman, I don't view the terminology
debate as particularly important, as I suppose. I think the total is important and making sure that
we account for the proper total. And I thank the governor by including the $55 million in their
fiscal summary but not their bill the the intent is to try to have an as accurate a
fiscal summaries possible and we appreciate that even though it wasn't in
their Bill and if they bring forward a refined number that treats the fifty
five million as a ratification or treats as supplemental it doesn't really
matter as long as the money goes into the fund either way I think we all
everybody agrees that money can't be spent without an appropriation or
ratification is just kind of a term for an
you're putting it in.
Historically, there were some ratifications
for fire suppression 10, 12 years ago
that were in the current year,
but more recently we've tried to do appropriations.
So it's not, I wouldn't view it as hugely important.
My bigger complaints about the fire
suppression disaster process was that they declared
a disaster in November when there are no fires burning.
I don't think that quite matches what the statute says.
But that's more of a legal than a fiscal issue.
Okay, let's go to slide 19.
So the next couple of slides are a couple visual representations of the governor's budget
The first one is often called the swoop graph
It compares on the left the size of agency budgets in the FY26 management plan and on
the right the
size-of-those-budget and the FY27 governor s budget and
Couple of notes on here one most of these items are fairly similar from year to year
second
We do treat
capital budget and statewide items as an agency for this purpose just to try to
keep this a little tighter so the capital
budget here of $157 million is is reflected around the middle of the page
another notice that we include the Department of Agriculture in this because
it's part of The Governor's budget, and the amount for FY26 is the
amount that was in the division of agriculture in FY 26 so just try
and happy to answer any questions or just keep moving.
Let's go to slide 20.
Okay, so slide twenty is another visual representation
of the budget.
This is showing UGF only comparing the sources
of a revenue in FY27 to the places they go.
our largest source of revenue in FY27 is that POMV draw of nearly four billion dollars.
The next largest in the governor's budget is actually the deficit draw from the CBR,
then patrolling revenue, non-patrolling revenue. I think sometimes it can be useful to look at
this with a relative size to get kind of an idea of just the relative
size of the contributions of these things. Sometimes people underestimate
how important petroleum revenue still is compared to non petroleum
revenue that you know it's even with these low prices it still twice as
much as all of our non- petroleum revenues in UGF.
Then on the right you can see the agency operations by far the largest part
of the UGF budget at 4.77 billion and then the governor's
slide 21. Okay, going on to agency operations. So the
governor's agency, operations are very close to adjusted base
$11 million over. The largest decrease that we see is in
Medicaid, the
FY26 budget included a temporary increment for FY 26 and 27 of 10 million dollars for
Behavioral health rates the governor removed that from the FY 27 budget. So terminated that temporary inclement one year early
In the Department of Transportation, we have six and a half million of UGF to replace one-time fund sources that were used in the
FY, 26 budget
And there's another 1.4 million that we expect to come and
govern men because it appears to have just been a technical error to not replace that one.
There's $5.2 million of UGF to replace restorative justice funds that are unavailable.
The restort of justice fund are used to be called the PFD Fallon funds.
They're the amount of the pfd that would go to people who are convicted of a felony.
So they're not eligible.
Instead, that's used in a number of various state of state government.
In some of those areas, it's replacement funding for UGF.
So when the restorative justice amount goes up, UDF goes down and vice versa.
In this case, because of the lower PFD last year, that means less restorative justice funds
available this year and therefore adding UGF.
Finally, the other large item on here is the IT class study that was initiated a number
of years ago and is in a draft form now.
amounts all across state agencies for that for classified employees not for exempt employees so
we may see future adjustments for for IT employees in the legislature judiciary governor's office
corporations etc that are not classified in place they're not included yet but for parity they will
have these increases in the future.
And I'm highlighting it here mostly
because every single subcommittee you'll have
other than the governor's legislature and judiciary
are going to have this item in front of you.
Agency operations up but cuts in other items
and net were a million dollars apart
from the previous year.
Mr. Chairman, that's correct.
Have you ever had or seen in your career
You know absence of a gap. I guess I mean I think that's the closest we've seen to a flat budget in terms of within a million dollars now
All right, let's go to slide 22
Slide 22 moves on to the statewide items.
These are actually below the adjusted base.
And remember for statewide,
items the adjust to base adjust formulas
for the new amounts.
The biggest difference between the
adjusted based and the governor's proposal
is in the PERS and TERS contributions,
the public employees retirement system
and teachers retirement systems.
The governor is not fully funding the amount recommended
by the Alaska retirement management board.
When I had the slide earlier about the PERS rates for state employees, he is fully funding the
arm board's recommendation for the state as an employer but is not fully
funding it for um the amount the State pays on behalf of other employers.
The result of this essentially there were
the armed board was looking at four different ways that they could actually
I think they had six options of ways to fund the retirement system they chose
one the governor chose a different one than what the
armed boards recommended and it results in a lower funding
amount and if we followed the path that the
governor has in mind
We would have lower payments now, but higher payments in the future because we eventually do have to make those payments
The armed board had recommended trying to front-load a bit more of those payment because
We result in lower total payments if we put more up front
Okay, the governor fully sorry. I was there a question before I move on
Representative Tomy Chefsky
You go chair Josephson through the chair. So what was the recommended total?
Of the on board I recommend through the service on top steps. I don't remember the total the difference is 37.7 million
But I remember that total amount off top my head. Thank you back to the committee of that. Okay, thank you
Something like $250 million or something in that range
So let's talk about school bond at reimbursed. Sure. So the governor fully funds school Bond at reimbursement and the REA fund
last through the legislature and
The governor through a veto funded those at 75% roughly of their estimated amount the Governor is fully funding them
One thing to note in that is that in the government's budget. It's an estimated
amount there's some municipalities that plan to go out for debt if they
go out for that debt, likely that does not change the FY 27 amount because there's a bit of a delay
between when they vote on the debt and when the start having to make payments. So that's probably
not going to move around, but there is some potential that new debt could change that number.
So even though one could argue times are tougher now than they were 12 months ago,
The governor vetoed down to seventy five percent this coming year. He wants a hundred percent
Mr. Chairman, he actually only vetoed the REA fund. So this the legislature funded the
school debt at 75% but fully funded the REAA fund and the statute is a little
ambiguous about the timing of that because the
REA fund is supposed to be tied to the trailing year of school
debt so the legislature fully funded the
REAF fund last year I guess with the intention to
partially fund it this year the governor instead vetoed last
year to match the match in the same year
that's been a more typical way to do that
The statute's the other way, subject to appropriations.
So it's kind of an academic debate about which is which.
All right, let's look at the third item.
So the next item is the Community Assistance Fund.
Last year, the legislature funded the amount needed
to make a $20 million payment.
The governor this year is putting in $14 million
from the PCE fund and no unrestricted general funds.
That amount would result in an 18 million dollar payments
communities that's less than the amount of the base payments.
So those would be pro rated and no per capita payments
because those
would come above that amount as well.
When I first got to the legislature the well the previous
year's payments I think 2012 were 90 million.
And now we're looking at 18
million of that sound from the Sherman.
That's correct.
Co-chairman Foster. Thank you chair josephson mr.. Painter so you've got 14 million here from the PCE fund
So this is a non-standard thing correct
This is because normally what happens the pce fund
Spits off earnings which go to pay PC E benefits throughout the state and roll alaska
And I think I'm guessing that's like 15 million a year or something like that this amount this 14, million is to go too
Community assistance is that what this is doing here through the chair of storm posture, so there is a statutory waterfall allowing
PC funds to go to community assistance based on available earnings
there's
A bit of disagreement between us and office management budget how much that statutory water fall would pay out when the pce fund was moved to the
permanent fund corporation
There probably should have been a statutory adjustment to that waterfall calculation because of the different way the permanent fund deals with investment management fees versus treasury
So we would say
To get to meet the spirit of this statute
We should deduct management fee and the true numbers should be like 12.6 million versus the 14 they have
But again, it's a subject to appropriation thing you can't get an attorney to weigh in on it because they'll say you
Can do whatever you want
but
It is statutory allowable, we're just we don't quite agree on the exact amount and it's not a huge difference
Thank you, mr. Painter
Okay, good. That's good to know I was aware of the waterfall
I just thought this was something that was outside the water fall sounds like the amount is still something
That' s up for debate, which is new to me, and I didn't know that and i'll look more into that so thank you very much
representative by
Thank you, co-chair Josephson and through the chair.
I appreciate you bringing up this term waterfall again
and the mechanisms that we use to have
that were using to cascade, you know,
unspend dollars into other areas
where we spend dollars or transfer dollars.
And so I look forward to the opportunity
to get with you outside of this venue here
to really talk about those statutory structures
that allow those things to happen.
You know my I would say that maybe I'm wrong and assume in in this assessment
But it feels like we've put these statutory mechanisms in place for these waterfalls that basically take
appropriating controls out of our hands to just say well let the system just take care of itself and
We may or may not see that those things are happening unless we really pay attention. So
Appreciate the opportunity to talk further about that outside of here
Through the Chair, Representative Biden, one comment I'll make is the last two of the legislature did not follow the statutory waterfall.
We funded less than the full amount from PCE to be able to free up those funds for other purposes essentially.
Yeah, thank you.
Okay, and then the less two items.
So the two last items on here are items that there is not a statutory formula.
for how much we should put in.
Those are the fire suppression fund.
The governor's figure here matches the post veto
pre-supplemental FY26 amount
and the disaster relief fund amount
that is larger than the
post-veto pre supplemental amount
very close to the legislature's pre veto number
for FY 26.
I think the OMB director mentioned
that it's based on a 10 year average.
We haven't seen their calculations to know if that's.
if that we agree with the average or not.
But again, there's no statutory formulas.
They're just a submission item.
And is that because we're waiting on final numbers for FY 26?
Or we couldn't be waiting for that.
Mr. Chairman, for fire suppression,
it's difficult to know what fires will burn.
Legislative finances generally.
advocated for funding somewhere close to the average amount of fire costs to try
to reduce supplementals. But this amount is a bit below the
average. We don't really know at this point whether this looks like an above
average or below average fire season. Last year I think the legislature was
concerned that due to low snowpack we were looking at a above average
fire system which was indeed the case. This year, I don t think we know yet.
For disaster relief, we don't know what disasters
are going to happen next year.
The supplemental kind of takes care
of the known disasters that have already occurred.
So using some sort of average for the future,
unknown disasters is probably a reasonable approach
for that as well.
Okay.
Representative Handen, for Mr. Painter.
Thank you, co-chair.
Mr, Painter, let me just, in my mind,
it's not the, are we funding the average
or 50% of that average?
Mr. Painter through the chair three supplemental
Through the chairman from him for the disaster relief fund the
OMB asserts that it's the tenure average. I
Think we just haven't verified that calculation to know
Fire suppression were at about twenty seven million dollars under the average
It's not a fixed percentage. Okay. Thank you
All right slide 23. Ok moving on to the capital budget
So, the governor's capital budget is largely matching funds and not a whole lot of unrestricted
general funds projects that are kind of state priorities, I suppose.
So about 81% of it is general fund match being used to match federal dollars.
Primarily, that's in federal highways and aviation. And then the.
DC's village safe water program. There's 22.9 million dollars of HFC dividends going back to their own projects
That's a little bit less than their board recommendation of 28.7 million
I would note that they had a
above an above average year of dividends, so their total dividend is 50 something million
So the remainder of the unspent dividend just goes back. To the general fund is UGF revenue
the governor's mental health capital budget which
is in the mental health bill not in
the capital bill, just so it travels
with the operating budget, has $1.9 million
of UGF, GF mental Health, that compares
to $6.5 million recommended by the
mental-health trust.
There are two UGF projects that are not
either HFC Dividends match or Gf mental
health, they're both in Fish and Game and
both who are continuations of prior year
projects relating to salmon.
There's no funding in the governor's budget for school construction or major maintenance and there's 26 million dollars from the Alaska capital income fund for deferred maintenance in state facilities to give you an idea of the scale of that.
And 2% of that, which is sort of a conservative number
for how much ongoing maintenance and operations you'd need,
would be 292 million.
So we're at something like 10%
of of the that.
So, you know, 0.2%
of our facility value and school construction
and major maintenance, some of
that will be handled through the school debt reimbursement
program.
schools go, districts go out to bond, some will be handled through the REA fund, but
there's no additional funds on top of those for those projects.
So I was thought of the school construction major maintenance.
When I think of bonding, I thing of new stuff, and
you're saying that the governor's funding none of
Up to I guess the the requirements of the new items that are bonded
Represented by them. Thank you coach your justice and through the chair
you know this is obviously a very concerning number that I see every year that
I've been here which isn't very long but I know that it's been going on much
longer as this idea that we aren't making investment in our capital
outside of match and I do believe that this number
does reflect all the available match that
we are trying to get is that correct through the
sheriff's on bottom yes or let me rephrase that not that
With that being said, though, I see here that we do have some of the agencies and institutions
have recommendations for what they'd like to see in investment for capital, specifically
non-match capital.
That's not being funded or is this just a general rule of thumb that we know that
We need to be making more capital investment, but you know given
Priorities of the budget that were not making this a priority
We essentially only know
But the agency requests when there's an independent board or something like that that's giving
the request.
So we know, for example, the judiciary had a couple of capital projects that they put
forward that are not included in the governor's capital budget and that the university had
a number of capitol projects, that their Board of Regents put forward, they're not in
the Governor's Capital budget.
I highlighted these two because they are kind of partially funded, but there are those
other items that were put forth by their respective boards or the Supreme Court in
the case of the Judiciary that aren't funded at all as well.
When they come from state agencies, we don't know what request they might make of the office
management budget that don�t come to us.
But when they�re independent and public, you can at least highlight them for you.
Appreciate that.
I mostly just want to say thank you for the opportunity to speak on that, Mr. Chairman.
But I hope that we as a committee and then we, as the body in the house, will take a stronger
because I believe that we are woefully underfunding
what we need to be doing in capital
and it has a negative impact
not only on my community and District 1,
but I'm a certain it
has the negative effect on all of our communities
throughout the state.
So I challenge us, Mr. Chairman,
that that's something that
we take a strong focus and effort to look on
and I know the co-chair next to me here
is gonna be heading that process.
So, I look forward to the strong debate about that.
Well, the government is recommending appropriating 10% of two percent of deferred maintenance.
That strikes me as dire.
On the question of the judiciary and its request, both the operating and capital.
So I have a memo that's got addenda to it from the Hickel era,
the first governor Hackel-era, I think it is, that says, when a governor, any governor
receives a judiciary's budget,
Hit the green button and put whatever is on that paper into his budget as a preliminary matter
Just a preliminary matter. Did that happen this year?
Mr.. Chairman, this has not happened for the last couple of years and and on the capital side that hasn't happened
Consistently, it's really the operating budget without agreement has held over the years
But the past two years that agreement is not held and so, you know, we
When we received the governor's budget at lunch finance, we reached out to the judiciary and say,
are there any items, you know,
we asked this year, are they any item that weren't put forward?
They gave us the list and they're included in our subcommittee book for the Judiciary.
On the capital side,
we made the request there included
in a capital overview of the Jewish area so you can see those items.
But again, they didn't come through OMB this here.
I have a question about your second bullet here in the HFC dividend.
we recommend spending more dividends on its recommendations.
What do we glean from the fact that they're proposing
to spend less than the board wanted?
I don't understand.
There's an underlying message here I'm not getting.
Mr. Chairman, HFC dividends do count as unrestricted general funds.
They can be used for any purpose.
That's kind of a matter of course.
We often appropriate them.
in the capital budget back to HFC so that they can control the cash flow rather than if they're
transferred to the general fund, you know, they don't get to bond on that or anything.
It's just a cost savings. I mean, the largest item of reduction is the Home Assistance Program,
for example. But it's, there's a series of those items we highlighted in our
capital overview for DOR that the governor just shows not to fund to save money, I suppose.
Okay, slide 24
So another item thing to highlight is what's not yet in the budget and the items here are things that are kind of known
I tried to make a Donald Rumsfeld
reference in the other body and they did not understand it so I do this committee
case it but these are these sort of the known knowns these
are the things that we know are coming it's a matter of when so the first is
Medicaid on December 15th the Medicaid projection came from the Department of
Health that
It anticipates an additional $47.4 million of UGF has needed for FY27 to make up the Medicaid
program.
That's not in the governor's budget because of timing concerns.
That has been the case for the last few years.
They used to put in a preliminary number and true it up later.
This way they don't put anything in but then provide the good number at the same time.
really matters as long as we know what number we're getting to in my opinion, but we do know
that $47.4 million is coming. That does not include any increases related to rate rebalancing studies.
So I think some of you probably have heard about this already but the Department of Health has
been working with a contractor to look at their rates more holistically because a lot of their rate
Methodologies have required pretty blunt tools for adjusting their rates.
So there may be a particular service that has a low rate relative to others,
but they haven't had the ability to raise just that rate.
They'd have to have raised an entire class of rates, so for example,
the contractor pointed out that the rates for autism services in Alaska are too low
to having sufficient provision of those services.
Right now if the Department of Health wanted to adjust that they'd have to just all behavioral health rates up
But not all of them need the same level
So the contractor went and looked at those in a more granular way and said how could we rebuild the rates from the ground up?
What would be a process for that and what amount would we need it?
And so there's these four studies that have recommendations. They don't necessarily need to be
implemented now or all at once, but
They do have a series of recommendations that I think are worthy of the committee's time to
to see those recommendations, and that's not included in this 47.4 million or in the governor's
budget at all right now. And those amounts are in tens of millions of general funds for this year
alone. So again, putting it on people's radar, but that is a little unknown what exactly you would
want to do if we had the funds available. Let me interrupt you real fast on that.
My sense from talking to the Department of Health is that in FY27 we may not see that work yet.
Do you have any sense of that Mr.. I'm on the rate rebalancing. We do have the studies
Right, we have to guide how studies right, but but no
final regs or or rulemaking has been done. Is that right? Mr. Chairman, right and the the question would be
based on The likely timing
would some portion of that need to be in the FY27 budget,
like starting the next calendar year, for example.
It's unclear they're still working through that process
and that's why it's not in a budget anywhere.
But again, somebody to sort of look at,
I think through the legislative process this year
about whether you'd like to push for that and how much.
Let's go into the ongoing employee work.
As I mentioned earlier, there's five unions
still negotiating, so that that something
to keep in mind, not.
particularly a huge one, so last year I think we had a pretty large place holder
for ongoing negotiations.
This year, if we made one up, it'd be significantly lower.
Another one to put on your radar would be the SNAP administrative cost match.
So in the HR1 or the One Big Beautiful Bill Act.
there are two provisions related to SNAP, one is sort of this known item that for every state,
the state's match share for administrative costs for SNAP is going to increase in federal
fiscal year 27 from 25 to 50 percent. The Department of Health estimates that that would cost an
additional 10.7 million. That's not in the governor's budget right now. Maybe we'd only need three
quarters of a year because of the timing offset. But again, that's here now, we may see it in
They may not address it for now.
Related to that, there are other provisions in that bill that may increase the workload for the
for the Division of Public Assistance.
There's not additional positions there right now.
In the current year, the department has used
their cross appropriation transfer authority
to bring money into the public assistance division,
but that's now reflected on an ongoing basis.
So there may need to be budget adjustments there
if you want to ensure there's sufficient staffing,
but again, that is not yet really in the budget.
It may be coming in government, but I can't be sure.
Another item to put on the committee's radar that
Smaller, so it's not on the slide relating to the Department of Health is the
TANF program the temporary assistance for needy families that we've in the past had a multi-year language item to provide
additional maintenance of effort funding if needed the last time we had it in was three million dollars and
Those funds are all completely expended now, and they're not being replaced in The Governor's budget
and
We had asked about that whether that was
necessary or forthcoming, and it's unclear if it is forthcoming or not, but it likely
is necessary to keep that program meeting its maintenance of effort.
And just as a general note, over the last six years, the governor's amended budget is
on average about $100 million higher than the December release.
This year, Medicaid will be about half of that, so that seems like a reasonable enough
placeholder if you're trying to figure out what might come and govern end.
That's just been the historical norm, it was important when we're in this phase in January
Representative step. Thank you co-chair Justin to the chair to director Peter
So regarding the admin cost and and can we can get into the payment error rate?
I know it's on the next side later
So a couple years ago legislature passed a bill that had dramatically increased eligibility for SNAP
It was supposed to be followed with a broad-based category eligibility
for administration
The second part, the BC did not come to fruition
getting changes in the federal guidelines.
So, is there any way that we could potentially look
at what our administrative cost increase would be
in event that if the eligibility increase was unwound?
So rather than $10.7 million if we can determine that.
And also proportional with the potential fine
for payment error rate, if you took proportionately that,
and second half of that request is going to be what is the minimum eligibility for the program
that were required by federal law? I know it's probably a health department too, so thanks.
Mr. Painter, through the share of representers, do you want me to get back to the committee,
or is that something you're just putting on the radar? Just if you could get
back, I don't know your not going know the answer, but at some point thank you.
Representative Galvin.
Mr. Painter this is the I think most concerning page in your deck although we're still got all the ways to go
Didn't we or didn't the governor asked for 15 eligibility texts for snap and and isn't that you were talking about how
There's no more personnel or something out in paraphrasing, but but isn there some cavalry coming there?
Mr. Chairman, there's some being transferred,
not using new money, but moving from elsewhere
within the department there, transferring more in there.
A lot of that is to replace the defunding
by the legislature last year of the virtual call center.
So it's not necessarily additional staff
over what they had previously.
It's hiring staff to replaced the contractor
that they have with the VCC fire.
Okay.
Okay
So the the
You've identified that that if expected supplementals are paid for we
We're out of balance with our normal cash flow and the draw in FY 27 and and these are on top of that
Deficit mr. Chairman so in FY 27. We have the 1.5 billion dollar deficit. These are come on Top of That, but I
I'm setting that aside for now
So, I guess I'm talking about an adjusted base budget.
Yeah.
And these expenditures on slide 24 are on top of those.
Mr. Chairman, yes.
All right.
Slide 25.
Okay.
So now we're moving on to the, no, non-nones.
These are things that are other items to put on your radar that I don't know if they're something to worry about or not.
I'm making sure you're aware of potential fiscal issues.
So one of those is the federal disparity test
with the K-12 formula.
The governor's budget assumes that we pass the disparity
test for both FY26 and 27.
Currently we have failed the FY 26 test,
but we are appealing that.
It's unclear when that appeal will be resolved
and if we will successful.
For FY 27, we've not yet submitted the test.
If we fail, the additional amount would be about 79 million FY26 and 71 million
FY27. The appropriation language and the governor's bill and in the enacted FY 26
budget automatically would increase for that amount. So I want to put it on your
radar because there's no action that would need it, but if we failed the
disparity test the budget would go up by those amounts without us taking any
need from the CBR and FY 26 potentially
That item would just go up without any action so you could end up where you funded
Enough for the projected items and if there's a cap on that amount it might defund that
But that would to just lead to a shortfall
So I want to put that on your radar or something to keep in mind as you're you were trying to balance the budgets for
the next two years
Another would be the Alaska marine highway system. So for last three years that budget has
relied on federal trans administration's rural ferry program.
Typically that grant application goes out in the spring and we know our award by the fall.
That grant applications for the award that we are relying on for
the calendar year 26 budget has not yet gone out. Typically, that would have gone
out last spring. We don't know why the Department of Transportation does not know
why. It takes several months to process so we may not
know during this session how much of that
We have $5 million of UJF backs up for calendar year 26 but we're still relying on nearly $78 million
of federal funding for AMHS in calendar 26 and it's not necessarily guaranteed that we are going
to get it if that grant application does not come out because this federal administration has been
The governor is proposing to change to a multi-year approach for the AMHS budget.
So instead of continuing with the calendar years, he has multi years on the fiscal year basis.
His FY 2728 calendar year budget or fiscal your budget
relies on 83.3 million dollars from this fund because it doesn't have any
backs up. And so those could become budget holes in FY26 and 27 or really
given the timing of that calendar year 26 item they would run out of money if
they don't get the grant more into FY27 but part of the calendar, excuse me,
calendar your 26 budget that we appropriated last year. So the time he gets a
little confusing about when we pay for that.
One piece of good news with that though is that the
testimony and replacement that was appropriated, the last funds of which
were appropriated last year, was relying on already awarded capital funds. So
that is not at risk. That is out to bid. We have that money in hand so that's not
at-risk. It's really just those remaining two years of funds that are
unknown at this point. And even if we get those funds when we're building
Those funds are expiring.
There's Congress is expected to take up a transportation bill
as soon as this falls.
So perhaps we'll know if that's going to continue
in some form or not.
But right now it's just something to put
on your radar building the budget next year
that we may have a whole, even if those grants do come out
for FY26 and 27.
Finally, as Representative Stapp alluded to,
there's the SNAP match for the program itself.
that is based on our error rate and would likely begin an FY28, although it could be delayed based
on a waiver process. The amount could vary. It could
be between $15 and $46 million, according to the department.
And again, it won't hit until next year, so it's not really a
issue to think about as much this year, although you may want to make sure we can get the error rate
down by fully staffing that division, but we don't need to appropriate funds now. I just want
to makes sure it's on that race radar and knowing kind of the scope of that or the scale of
that amount based on the Department of Health's previous projections.
But the fact that we're not preparing for FY28, other than what you've noted about
There's no set aside.
There is no bucket to prepare for FY28.
It's more reflection of our position.
Yeah, Mr. Chairman, one comment I'd make before you,
yeah, if I can, is, you know, on one of the slides
that we covered yesterday or the day before,
whenever it was, the...
I noted that the POMV draw this year went up by 200 million.
That's an unusually large amount.
That is not going to be the case in FY28.
So if we think this here, it's tough to balance the budget.
FY 28, where we have more of these budgetary headwinds
and don't have that 200-million dollar increase
to the PMOM V draw, will likely be more difficult.
And so I just want to keep that in mind
that we may be able to make things work this
year more easily than next year.
The weed that's interesting for me.
Representative Galvin.
Thank you, co-chair Josephson.
I wasn't going to comment on this because I know that representative staff has already asked questions.
But I just want to make sure that we note that for 28, my understanding is we need to reduce down to 6% error rate.
We're presently at 24 error rates.
We are doing a lot better than we were.
We were at 51 or so and part of that was.
Consciously decided in order to make sure we're feeding Alaskans and so I appreciate all of that
But when I hear that you're saying that there are no more
New opportunities to or at least new
Employees in that doing that work and snap that's a concern and I
Appreciate our thinking about investing now so that we can be ready for what's to come and lessen the impact of
That's sort of a fine
Redston staff. Did you have a question? Sorry?
Go ahead
You need to answer
Thank you through the co-chair to
director painter
Image funding FY 26 assuming we use multi-year
like received authority language to kind of stretch this kind
of what is our drop that date here for FY26 because obviously
they're in a October year, we're on a June, June 1 if we do not
have the money on hand by June one, what happens in FY 26 to
the operations of the ferry system?
Mr. Painter.
Through the chair for the staff.
So they have I think about 58% of their budget right now.
If the department is trying to make management decisions about do they need to
make their budget stretch or not, I'm not sure at what point they
need make those decisions. That's really a management and policy call that I can't
answer what the Department will do. Because if they do nothing and we get no
grant they'll be out of money and what's 58 percent of the year like
August something like that.
So they could reduce operations to try to make up that whole or we could provide funds or they
could count on the grant, but then potentially we'd just stop sailing at some point.
So it really is a management question of how would DOT choose to react to that, and I really
and sign in with our thinking.
Okay, follow up Mr. Walker.
You're absent, staff.
Yep, thank you, Justin,
through the chair to Director Pinner.
So you'd mentioned the fact that there's a delay
in the application and the award process.
So if we were guesstimating, obviously your budgets
generally done around May here.
And what would be, like if there is no, let's say news
by let say April 15th or April 20th
or something like that,
like then should we think of
Legislative action basically on this item in your opinion to the chair mr.
Painter through the chairman of the staff
I mean I think at this point if unless the grant comes out within the next few weeks
We it would be unlikely that we would know before the budget's already in the conference committee, so
You know how you handle that is is a
Big policy question
you know put an item and as a placeholder and maybe we can take it out later or not put it in and
you
essentially starts the next year on July 1st.
We actually don't really have a hole yet,
but it would leave a very large hole next
year because instead of a two year multi-year,
you're going to use up a lot of that in the current year
rather than sort of operating on a delay.
So, you know, following the governor's budget,
it's not necessarily an immediate hole,
but would be a much larger hole
next-tier if we didn't get the grant.
You know, that makes sense. There's a number of kind of layered decisions here
So it's not as easy of an answer as I wish it could be last fall
So through the chair to direct opinion. Yeah, obviously
So I guess the only thing that I don't quite get about the executive's proposal is how you're basically stretching
FY 26 dollars so far out. I mean, I know that we can do interesting things with multi-year
Language, but it kind feels like
Mathematically they get a half a run out of money
the funding and just because if we slide that in FY28 through multi-year
language that doesn't necessarily mean they actually get the money right I mean
like to the chair through the share of those stops the advantage in this case
of starting with the multi years that instead of the new year starting on you
know January 1st next year we'd be bumping it up so we when we switch to
calendar year. We had one year where we had a lot of federal funds for COVID that could only be used
for a few things. So we pushed out, we have a year in the budget, and we're at an 18 month
marine highway budget. And essentially, in this case,
we could be using that and pushing back. Um, so using
that advantage that we gained, you know, four years ago or five years
ago and kind of pushing that back, that would be the advantage of going to that proposal. But again,
28 it would be funding just 27. So
Thank you
Represented and then by them
We're hard stop at 315
For thank you coach air, and I was just gonna remind the committee on this AMHS issue that we did move them to a calendar year
so
We were saying fy 26, but they have calendar 26. They have authorization to spend through December but
the grant
that's not in place and hasn't been advertised and believe you me when I got the budget books and did my meet as the subcommittee chair we
pressured them on this issue
the
higher-ups from
DOT expect to be in DC the first week of March they're hoping to have an answer but the
advertisement period for the grant had been a three to four month process so even if it
came out that week that they're there,
we are unlikely to know before we adjourn.
And if we went to a multi-year beyond calendar year,
it's the, you know, always sort of our concern here last year
was we're just potentially stretch,
digging a bigger hole right now and pushing it off.
I have deep concerns about how we going to keep
sailing to communities if don't get this grant.
If the grant doesn't materialize representative Bynum, thank you kuchare or justice and given the time constraints
I'll take my question offline, okay
Mr. Paner just on the AMHS issue if the monies are with held for some unknown reason
What we see with our sister states is that they litigate
But I don't see how that would happen
In Alaska, I mean who who could challenge?
the failure to deliver the grant.
Mr. Chairman, that's a really good question.
Okay, I'm sorry.
Representative Hannon.
Co-chair, believe in the cases you're reflecting on,
the grants have been awarded and not given.
This grant is not even advertised.
This is what we thought we would get in a grant if it's-
advertised and we compete for it.
It's still a competitive grant, so maybe we got 50 million.
That'd be great in this scenario, because right now we've got 80 million that we're
hoping for, and there isn't even a grant program out there.
So we haven't been awarded it, it wouldn't seem that
we could litigate on money that was never advertised, we didn't get.
Thank you, that's helpful to me.
All right, let's go on to slide 26.
This graph goes back to FY14 because this kind of defines our current fiscal era when oil prices declined starting in
FY15 our revenue
Decreased significantly, but we were actually already running a bit of a deficit in FY 14 even with price as well over a hundred dollars a barrel
and
When we adopted the percent of market value draw on FY 19
We went from having you know a three billion dollar a year deficit to smaller deficits for a couple of years
And then have run roughly balanced budgets from FY 21 through 26 on average. We've had a a few years with surpluses
in 22 and 24 and then a Few years of deficits
But on the whole, we've sort of made things work from year to year.
You know, I've called it the muddle through fiscal plan reach year we sort
of see well what's our available revenue what how much does that mean we can
afford for a capital budget and PFD. Obviously that has some long-term costs
our agency operations are in an inflation adjusted
manner 16.6 percent below our peak year of FY 15
and we have not funded deferred maintenance at anything approaching a
it's been quite a few years of underfunding and we have not funded the statutory
PFD amount in a decade now so obviously there's a lot of uncertainty which I
think ISER talked about uncertainty a little bit in their presentation this
morning. The Model Through Fiscal Plan has a
lot uncertainty because it it kind of very we're gonna have years where we
have a large dividend and you know energy rebate and large capital budget and
then years when we've a very small dividend like this year and that's
five years or so where we just make things work from year-to-year.
One advantage of making it work is that we've gone from the time where
we were drawing through our savings accounts to starting to rebuild a balance slowly but surely.
So we started in FY14 with nearly $16 billion in our two main savings
accounts, the constitutional assessment budget reserves.
By FY20, those were down below $2 billion.
We had drawn quite a bit there.
And now they're up above $3 billion,
so we're starting to go in the positive direction
just because investment earnings are outpacing
the draws when we do have deficits and deposits.
We've had a couple of years with significant deposits
as well because of the surpluses.
So we are heading in right direction now
on those savings balances, but again,
that's because we were sort of just managing year by year
a comprehensive fiscal plan.
Okay.
Next slide.
Another item that we've talked about a few times has given that the POMB draws our largest
source of revenue now.
Will there be enough money in the earnings reserve account to make sure that
we can make that payment each year?
and there's a bit of a structural issue in that the statutory net income projection is 6.2% compared
to inflation of 2.5% and a POMV draw of 5%. You add those together, that's 7.4% but we're getting
6,2%, right? So there is, as you see, a convergence of the lines. This graph on the bottom compares
the year-end realized ERA balance. That's the spendable balance as of June 30 to the following
permit fund owes the general fund the next day, July 1st.
And you don't want to see the red bar below the blue bar,
because that means you can't make your obligation
until you've realized some more money.
And we see that right now in FY26,
it's actually the ERA is looking pretty healthy,
about $12 billion.
Part of that is because we did not inflation-proof in
FY 26.
Part is that the fund performed better than projected
in FY25.
But we still see that convergence over time.
Our probabilistic modeling shows a 33% chance
of having any insufficient ERA balance.
to make the full POV draw over the next decade,
assuming full inflation proofing.
We suspended inflationproofing when the ERA drops below
the Nexus POMV draw.
That percentage drops is 24%.
That's actually quite a bit better
than when we ran this a year ago.
Those percentages were 46 and 33%, respectively.
The improvement is because of no inflation
proof and the strong earnings now by 25.
So if you accuse me of having no good news,
this is good News, things are better
looking at revenue over the long term the Department of revenues fall forecast
projects that oil prices will rise slightly slower than inflation over
the next decade although the last few days have looked very positive because of
geopolitical issues oil production is projected to actually increase from a
bit over 500,000 barrels a day in FY 27 to 659.9 thousand barrels
Oil revenue as a whole is not projected to grow that fast
and
So we end up with sort of revenue just growing basically at the rate of inflation
And the reason for that is that we're losing production from our legacy fields adding production to new fields
That don't earn as much tax revenue so royalties do go up
But the production tax revenues actually declines over this period in the revenue forecast
The permanent fund is projected to earn 7.3% per year,
and just note that this does,
we're using figures that match APFC's projections
that came out a little bit after the revenue sources book,
so they're slightly higher than the Revenue Sources book.
And then we also were adjusting the NPRA of royalties
that we talked about the other day
to remove the amounts from the general fund
that in large legal's view are still federal funds.
The takeaway from the side is that revenue is projected to grow roughly with inflation.
That means if you cannot make the budget balance this year, there's no reason to think things
are going to change without any structural changes.
You know, it's pretty obvious that if you have one and a half billion dollar deficit and make no changes
That's not going to improve again. We've been making things work from a year on a Year-to-Year basis by making
by not fully fully funding the PFD and
By not funding a sustainable capital budget for example
The governor's 10-year plan did not make significant policy changes. So it kind of kept this deficit in place
When I made this slide a few days ago, we hadn't had time to analyze the governor fiscal plan
I don't have anything built in, but I will say that in very rough numbers, the governor's fiscal plan
brings in about $900 million of new revenue at its peak, reduces the statutory PFD to the 5050,
which is about 400 million a year. That adds up to about 1.3 billion dollars a
year, that still does leave a deficit. So it's about two to 400
the, some of the taxes starting to go away so it increases in the out years.
The governor also has a spending limit that limits the growth of government to 1%, so that's
also incorporated into that 200 to 400 million dollar gap that remains based on our modelling
of it.
We haven't seen modelling from them of their full fiscal plan, that is just based
on the statutory pieces that he's introduced so far.
Can you take one last question?
Yes.
Okay.
All right.
Then I'll make mine the last question just to confirm and I haven't seen you make an error maybe ever
So far so I just want to come from on slide 24 snap administrative costs
I thought we could forego that for a year with a pretty pleased letter
Perhaps that's just the match itself not the administrative cost Mr.. Chairman my understanding is that the matched
For the program not to the administrator costs, but I can double check okay
Any other last minute questions? Seeing none, I'd like to thank Mr. Tainter for his presentation.
I'm quite concerned about it. Our next House Finance Committee meeting is scheduled for
tomorrow, January 30th, 2026 at 1.30. At that meeting, the Department of Revenue will present on the
state savings, reserves, and investments. With that, we'll adjourn this meeting at 3.16. Thank you.