Thanks for being here.
We changed the time and you still showed up, so that's a good sign.
This is the 15th day of this legislative session.
And joining me here are Senators Giesle, Wilkowski, Stedlin, Bjorkman, Dunbar, and myself, Stevens.
$272 million in federal funding
through what's called the Rural Health Transformation Program.
And we're closely tracking that,
our clock is closely-tracking in this funding
to ensure that it delivers the real results
that we expect for Alaska's.
As chair of our Health and Social Services Committee,
Senator Dunbar has been focused on understanding
the scope of these funds
and what the administration's plans are for use of them.
Senator Dunbar, could you please briefly outline what these funds are intended for and what did you first so far from the administration and stakeholders?
Thank you, Mr. President, and I should mention the health committee has already held one hearing on this fund and we're likely to hold several more.
But it's important to put the fund in context.
It came out of HR1, which was a broader bill,
that reduced Alaskan's access to Medicaid,
to SNAP benefits that did not extend the ACA tax credits.
So we've seen an 11% decline in enrollment
and health insurance through the Affordable Care Act.
That's from the ADN.
We've see thousands of people potentially lose access
to SNAP, that's number is 4,500 to 6,900
from The Food Bank of Alaska.
And then with Medicaid there's a variety
But it's not clear how they will actually administer that, and it has to be administered
now every six months instead of every year.
And so I think there's a lot of concerns about HR1 and its impact on the health of
Laskins.
Within that context, our sort of consolation prize was this thing called the Rural Health
Transformation Fund.
It's $272 million per year for five years.
But there are rules about how we access it, it is not clearly that we will get all of
I will say we've been working closely with the Department of Health trying to understand this program.
The Department health in their application made certain promises on behalf of Alaska,
including on the behalf the Alaska legislature, and unfortunately did not consult with
the legislators first.
some of that money could get reduced if those policy changes aren't passed.
That being said, of the eight policy
changes that were eight categories of policy
changes, that the administration promised to the federal government,
only two of them come directly to
the legislature. So it's a complicated program.
It also at this point appears to be administered just through the commissioner
of The Health Department, so 200 to 272 million dollars
I think that's going to cause some concerns as well.
So again, we are working well with the Department of Health
trying to understand this.
We're trying work with stakeholders as they are as
well, and I'll say some of the rules that CMS have put out
there about how to access this money and how
to keep access in this, money are pretty opaque.
There is a point-based system, but it's not clear
which the policy changes are equivalent to what kind of points.
So that is the broad framework,
but we're going be working much more on this issue this year.
Well, thank you very much, Senator Dunbar.
This is a very, very big issue, a lot of money involved and could have a major impact
on Alaskans.
Well thank, you.
A lot to work ahead for us and for your committee, caucus will remain engaged in this and focus
on what's best for the state and the people of Alaska.
Senator Bjorkerman is the chair of the Senate Transportation Committee.
A lot of his efforts have been focused on winter road maintenance this year.
Can you give us a brief update of what's going on in your committee, Senator?
Thank you very much, Mr. President.
In Senate transportation, we recently have heard a lot
of whats happening.
on our winter roads relating to recent snowfall events followed by rain that are causing some
pretty hazardous and difficult driving conditions. DOT has been striving to work with the National
Weather Service and really tires on the roadway to predict weather events and then respond to
poor road conditions when they occur so that they can get maintenance crews out there as fast as
Unfortunately, with the freeze thaw cycles that we've been experiencing, conditions have been difficult as we saw last week of a multiple car accident on the Glen highway and then some significant weather causing pretty extreme water on
DOT has significant tools in place to allow folks to see where plows have been on the
road through what they offer on their winter dashboard.
Also, there is a system of cameras called ARWIS or the Road Weather Information System
images of the highways to know what condition they are in in that spot and
Certainly if people don't feel comfortable driving, they should avoid when negative conditions are reported
But DOT really is out there working as hard as they can to mitigate hazards. So one recent way is they're
Improving their deployment of dynamic reader boards to mark four drivers hazards on the roadway like the flooding and water on
The road that I just spoke about so
We do understand, also, through conversations in Senate transportation, that on the Kena Peninsula and other parts around the state, DOT has significant vacancies, specifically if we talk about, again, the Seward Highway, they have three out of five operators in place at Silvertip and their Crown Point stations.
This means they're really running at 60% capacity.
And trying to have those people in place to maintain the roads really means
There are many times that roads aren't getting plowed or maintained because those folks have to sleep
at some point with that type of vacancy factor.
So that's a big deal.
Getting those vacancies filled will go a long way.
Also making sure that DOT has the budgetary tools necessary
to execute their mission is going to be a thing
that we as a legislature I think should come around and support.
We reduced the budget for maintenance and operations
last year.
The governor has five million in his budget request this year
Winter road maintenance plowing snow and making sure our roadways are our free from hazards is not the place to cut the budget
So it's one thing that we're we are going to flag for this year as well
So lots of other impacts happening with DOT if you stay right here in this room
or online and join us for Senate transportation this afternoon.
We'll talk all about their proposed reorganization
and how they intend to kind of redesign
and rethink how the execute projects around the state as well.
So stay right here or tune into a Senate Transportation
online, we'll hear more about that later this
afternoon, thank you, Senator Bjorkle.
So the house, the other body we know is working on the supplemental appropriations bill and we
know that includes $70 million in matching funds for transportation infrastructure.
So to the standpoint, could you update us from the finance committee on discussions with the DOT
and how you're approaching this issue?
I think with an issue with DOT or referring to match money from these issues.
amendments put on the table tomorrow, Senate Finance, and I think if we're not the body
also, by the Office of Management and Budget of the Governor, I would expect that the Finance
Committee look very, very favorable, favorably on, on his budget submissions and include the
supplemental items that was presented in December, December 15th and included him in his
and take swift action to get it on his desk.
It is clearly the, you know, needs of the governor
to facilitate management of this state.
And sooner we could get those appropriations signed
and funded and on this desk the better
because we need to take our concentration to FY 27,
the upcoming budget and not worry so much
about the sunk cost of his current fiscal year.
the governor is not patting his supplemental. We've looked through it, don't be some amendments
tomorrow, we'll look through, but I expect it to be very streamlined. So I'm looking forward,
Mr. Chairman, that we are Mr President, though we take swift and effective action to get the
governor what he needs to run the state. Thank you, Senator Seven. Let's move down to questions
Please go ahead. Hi, Eric Stone with Alaska Public Media. This question, I guess, is mostly for Senator Stedman, and
I just get like
We saw it with the appropriation process last year this sort of shaking out all the couch cushions looking for pennies looking
Reappropriating from old projects and that that has resulted in the situation that we find ourselves in today
I'm curious whether
In retrospect that approach of re-appropriating from old projects is something that you would do again
Or if you know or if this is you, know giving you pause about
You know shaking out the proverbial couch cushions in the future
We
Cheerless we re appropriate money in every budget. That's normal
And as the budgets get tighter now, we start looking deeper into the history of
Expensed appropriations
In fact, I asked the staff this morning when we're talking about the capital budget to
do that very thing again.
I want to know what money is stagnant within the organization and the agencies around the
state and as the budget gets tighter, we are going to make ends meet and we will utilize
those funds.
idea. It was methodically sought out and well researched by
alleged finance and both finance committees. And this year
will be the same. I hope we don't have, I
hope for different results, of course. We all want a lot of
fluency and we want disruptions in our construction projects. But
at the end of the day, we're going to balance the budget and
we'll be out of here on time.
So it's not unusual it is not on usual. In fact, it was normal. It would be very unusual if we didn't reappropriate money and and all
sitting senators wait
impatiently for the list of
Funds that could be reappropriated to come out so they could come talk to the
Finance chairman to redirect it in their district before it redirects into somebody else's districts like the chairman's
Thank you, senator for the question. Yes, please. Yeah current Smith Alaska beacon
I have two questions the first is related to the budget process from my colleague James Brooks who can be here
And he was wondering if you're still continuing to press ahead with fast tracking the supplemental budget bill
Good question senator Sandman. You're working on it. Let's define fast track. Okay fast. Track is you have an early
Reaction
to the submitted budget with an earlier effective date.
So we could take immediate action on it,
have the effective day tomorrow, for instance,
or whatever, it wouldn't be like June 15th,
for example.
And the answer to that previous question,
I guess I didn't make it very clear is
they're gonna put some amendments on the table
tomorrow in finance.
I would expect that the House of the other body is going to take a, you know, very fast action.
And as soon as they could get that to us, the Senate Finance Committee is not going
to let any Moscow under it.
We're going take action on it, we want to get the governor's funds he needs to run the
state for FY26 on his desk so we can take all of our concentration in the FY27, which
is gonna be challenging in and of itself.
So the shorter answer is it can't get done fast enough in a second question.
Thank you.
Yeah, my second is focus on the foster care system and given that the Office of Children's
Services is facing several lawsuits.
One is a federal class action lawsuit that went to trial last summer.
in violation by the court and how are you kind of looking at that on foster care
The chairman of the
the
Operating budget is not here center Hoffman. We have not had discussions at the level yet.
We've been working on other items. I'm sure that issue will come up
So I would ask that question again in the in possibly next week or when he's here, and I'll let him know that it's it
You know the question has been presented. It is an issue and but you know
We're very early in that we're only beginning of the third week. So we haven't got to that that issue yet
Thank you, senator
Jeff hi, Jeff Lane Phil. I also have two questions the first one is a quick one for senator Stedman
I'm not sure if you saw a digital bridge hired
Lobbyist Frank Pickford for $71,000.00. Is I imagine that has to do with your bill about them? I'll be curious for you
If you saw that and when you think about that.
Thank you, Jeff, on Digital Ridge Center.
Well, Mr. President, I think he undersold himself.
The man should have been paid double.
For him to come into this building
and advocate that the Commissioner of Revenue
advocate his fiduciary responsibilities
and overseeing billions at dollars worth of public money
Which was against the statute by the way
To get legal advice to facilitate his breach of fiduciary duty. I
want to see that discussion by
particular lobbyists in the building and if I was him I would ask for double that fee because he
You're not gonna be able to pass the red face test. So I'm looking forward to that. Discussion
Hopefully he got paid in advance
We'll see how it goes
And then my second question, I just published an article about a house bill, 271 that would
directly benefit John Hendricks and Fury, and at one desk, to abuse Senator Giesle and
Senator Bjorkman who introduced legislation previously intended to benefit his company.
He's gotten royalty reduction, 75% from the state.
He started to get his property taxes reduced by 90% for several years.
How is this guy able to keep getting legislation introduced to benefits his business?
Thank you senator diesel. Would you address that? Well, I don't know that he's had legislation passed
He certainly hasn't had a legislation past and that's where it matters. That's with the rubber hits the road
the Department of Natural Resources
did a an assessment of
whether royalty reduction would be appropriate and they made that decision it wasn't a legislative decision
Mark said I have a TA agenda and I would have had a question probably for Senator Stidman and anyone else who wants to answer it.
You seem to support merging the print on principal and earnings reserve, but one of the questions you asked is what is the draw?
The governor's got 5% this plan.
What I'm trying to figure out is, what's your vision of what a sustainable draw in terms of percentage that allows the fund to grow at whatever rate you think it's desirable to growth at?
What amounts does that provide the state and how should that those earnings be divided?
If you're going to divide that between spending and dividends.
Good question, Mark.
We've been dealing with that for some time, Senator Stadman on the draw.
There is no misunderstanding on my position on consolidation of the earnings reserve to the corpus.
The earnings reserved then would go away, and so would the corporast.
The whole thing would be protected from draws from the permanent fund,
funds were allowed, and in this case the governor's put forward and we've talked here for a few years that five percent of a
five-year average over the last six years.
I personally think that's a little high. It doesn't give the permanent fund much growth for future generations
and the future generation, that would materialize a decade out, particularly you start seeing it
I personally would like to see it more at the four and a half, or maybe four-and-a-quarter.
But at, but at end of the day, it's all about compromise, and I'd rather have five percent
and the permanent fund protected from draws from the legislature with a simple majority
vote and signature the governor, then not have it go forward, you know, because you
want to four, half percent or some other number.
And the second question there was on the-
The second questions was
on this point of those earnings.
Yeah, well, that's Senator Giesel.
Well, I wasn't going to answer on
the split.
I was speaking of the percent of market value,
which is 5%.
Make note in that constitutional amendment,
it's up to 5%, so the legislature each year
can determine whether it is 4.5, 4 and 1 quarter,
or 5% remember that is a spending cap.
We can't spend more.
than the 5% of market value.
So it does two things, a savings plan,
a spending cap, and it allows the legislature
to make that decision every year,
depending on what the financial needs are.
And on the governor's bill that really does divide
the earnings into 50% to the dividend,
Government I I just have no idea two billion dollars is it would be the cost maybe more than two million dollars
And how on earth are we going to balance a budget with that type of hole in it?
On on that point I guess I didn't get to the second part of the question
I have never supported putting the con putting a dividend in the Constitution
The dividend should not be in The Constitution should. Not be prioritized over everything else
and the split
we'll have to work that out
on the
on The
on that subject. But clearly, a two and a half percent draw to the dividend would
be extremely difficult to do. Also, I'd like to add just a little bit of history.
Sitka, when they set up their permanent fund, which was very active in back in
the 90s, had a payout of six percent. Yields were higher in the bond market at
the time.
their pulp mill had shut down and there was 30% in their economy.
So we, the administrator at the time wanted a higher payout to make it obligations unlocked it in at 6%.
It ran for a couple of decades or so, a decade and a half at that.
It took a long time to pull that number down.
So whatever number is set, for instance, if it was five,
and we could spend less, but sick to spend 6% every single year.
And ideally, it would be, we need to be careful when we set that rate.
I would not recommend it going anywhere above five, like to see it a little lower, but I'll take what I could get on the solution on that.
But the dividend should not be in the constitution.
Senator Giesel.
Well, and in addition to the percent of market value.
The investments of the permanent fund now make up more than 60% of our UGF, unrestricted general funds, federal, in our full budget, that federal piece is now less than what we're getting out of her investments.
So it's a critical piece of budget funding.
Will Courtney Alaska's news source, Senator Dunbar.
I want to talk a little bit about the Rural Health Transformation Fund.
The plan forward doesn't seem super clear right now.
Obviously, there's still a lot unknown that I know the committee's working on.
But the question I wanna ask is,
who's gonna be putting the plan
forward? Is that gonna the legislature or is that going to be the governor?
Thank you for that question.
It depends on what you mean by the Plan.
And I'll say that the Department of Health has certainly taken the lead on this,
and I believe they're meeting with the CMS administrator tomorrow as well.
a lot during the session and they've been very forthcoming. In terms of the legislation that they
want to pass, they want us to join a number of of compacts and there's a couple other reforms.
Unfortunately, the governor so far has said he is not going to put forward those bills.
And that puts us in a little bit of a bind. So he wants the legislature to
pass these bills so that we can access some of them money, but he himself hasn't put
whether we want to put forward all of those bills, who will put them forward.
There's a chance there could be an omnibus from the health committee itself.
So that is still being discussed.
So again, the legislative part of the plan,
the part where we have to make actual policy changes, unfortunately is not to this point being led by the governor's office.
They've told us what they want, but they haven't actually introduced legislation, and so we're dealing with that right now.
Thank you, senator. Yeah, sorry just a quick follow-up senator
What the what I'm curious what what you think the chances are in the legislature of what the governor wants though
Is there any reason to think that that bill might have some some dissent?
So there are five or six
Excuse me. There are 5 or 6 distinct policy asks from the Department of Health
I
believe that several of them have a good chance and are relatively
uncontroversial, maybe one or two are
relatively uncont reversal. There are some that are more controversial and we
have until December of 2027 to pass them, so it might not be this session.
especially given that this is the second half and we just sort of had this handed to us.
But certainly I think right now there is a good faith discussion happening amongst all the
legislators and amongst the administration about what we want to see go forward. And again, I'll
reiterate the Department of Health themselves don't really know the degree to which Alaska will be
penalizes the wrong word, but
how many points we get or lose based on which of these we pass and don't pass,
it's been very opaque, the scoring system.
And so, and some of them, we donít even have to pass.
We just have show progress.
So, so again, there's an ongoing discussion.
Thank you, Senator Giesel.
Two of the policies that we're asking for,
one of those has to do with community health workers.
This is a seriously helpful.
a group of folks that work in communities to help connect people with services,
not just health care, but food, housing, things like that.
So that actually is a bill that's already out there.
And the second one is pharmacy patient services.
That bill is also already
out they're progressing through both bodies.
We're going to go online to Iris Samuels with the Anchorage Daily News.
Hi, Iris, go ahead.
Hi. Can you hear me?
Yes, we hear you.
I want to ask about the Governor's tax bill.
I'm curious if you plan to schedule it for committee hearing in the coming weeks and
if so when.
And then I also want hear your impressions from the ICER presentation last week.
I am curious, given the information that you got in that presentation, if that helps you
either think more favorably or less favorably of the governor's task proposals.
And if any of you want to share whether you support in general a sales tax or some of the other
Possibilities that I said discussed like an income tax, or an elimination or a significant cut to the dividend. Thank you, Iris
so I think we were all impressed with the ice or
study and
the information they brought to us and the
Studies told us who's gonna be badly affected by a certain
Raising of revenue and who is gonna not not hurt
Senator Wolkowski, can I throw that to you without sure being ready for it?
Well, maybe Senator Giesle can talk a little bit about the timing, but the Senate Resources Committee is having a hearing this Friday on the tax bill.
And as far as ICER goes, the thing that stuck out to me was, I think, probably more of a confirmation than anything else,
In other words, the thing that impacts the people of Alaska
the most, and I'd say a detrimental way,
are things like using the permanent fund
and using things, like the sales tax,
whereas the things that least impacts Alaskans
are the corporate tax changes.
Things like, well, corporate taxes and oil taxes.
So that was a confirmation for me,
in my position, I know different people
have different positions on these things.
I think the focus should be on, um, personally,
tack, uh, finding more revenue from our resources,
our oil and our corporate taxes.
Thank you, Senator Wieckowski.
And Senator Giesel, you have a schedule.
The bill is scheduled this coming Friday,
and we'll be hearing from the Department of Revenue
to go through their fiscal notes.
So we actually see what they anticipate for income.
But, I completely agree with the comments
from Senator Wilakowski
We know that the sales tax is very unpopular with multiple entities, not just the municipal
league, but also the state chamber, just to mention, too.
And it was a – I was gratified to see the confirmation that addressing corporate taxes
is really the least impactful on the average family in Alaska.
It was great report, we learned a lot from ISER.
Any further comments?
I have a question from Corinne Smith with the Alaska Beacon.
Hi, thank you.
I had a follow-up on the Rural Health Transformation Fund, and just like broadly speaking, as the
state moves forward in this process, are you also collaborating or engaging with tribal
health consortium groups and like, what does that look like now?
Thank you for the question.
we are in the legislature. I know I personally have met, I imagine my colleagues have as well
with representatives from tribal health and
I know the department has as well.
And there is an advisory council that was involved in putting this together that includes organizations like ANTHC.
So I do believe that they will be involved.
And I'll certainly say if any of them are listening and are concerned that there won't be, please reach out to me or any member of the committee.
Certainly my vice chair here, Senator Geesele, I believe.
We are.
hopeful that the tribal entities will be able to utilize these funds in an effective way.
And so I want to stress something about these
funds. They cannot be used to backfill Medicaid.
They can not be use to construct new buildings.
There are certain things they can't do, but they're supposed to set up new sustainable projects.
That could be a renovation. It could
the way that it was defined in the federal law, all of Alaska was rural.
So it's projects in The Bush, but also projects
in Anchorage. And of course, we know we have tribal entities
all throughout the state providing services to both tribal members and
non-tribal members, members. Thank you.
Thank You Senator. How are we doing that time? So I really appreciate that.
The health has committees hearing this and taking this issue up, but I think it's important
for the public to understand that we received $272 million through our process, because
this money was received when we were not in session, the administration has pretty much
unfettered discretion to spend that $200 million.
In fact, there's one individual, the commissioner of health, who will be deciding how 200 million
of those dollars will spent.
There's an advisory council and that's a great thing, but we're the appropriating body
and there is definitely some concern that we have zero input on that advisory Council
right now.
We have input certainly through our committee process, we can't direct or that money goes
I'm concerned about that, and I know there's others that are concerned
about it as well.
Thank you, Senator Wilkhouse, who's Senator Bjorkin?
Thank You, Mr. President.
To respond and to your question as
well as what my colleagues are saying, Ms. Smith, is we have a state great
opportunity to also, through this process,
Change the way we can deliver health care to our state employees as well as allow for local governments and school districts to work together to pull their insurance.
that is a situation that we would like to put forward, but I think we all have to be willing to
work together as Alaskans and break out of our traditional silos that people envision really
they're very closely protected health plans in to work to experience cost savings. So we can do
a little bit on the demand side for how we consume health care and what we do in that space,
under GISL and others have put forward to drive down costs in health care.
And how do we deal with pharmacy benefit managers?
How do you deal other pay mandates in the law that in
the past have driven up our cost of our health
care substantially?
It's my hope that the administration
Can take advantage of a financial opportunity like this to truly develop new systems that can save our state money long into the future and
Not develop
New mandates and new programs that are going to require
indefinite payments of cash to continue. That's that's my goal
Thank you, senator Bjorkman, and I appreciate everyone's being here
It was great questions and good answers and if you want to stay around you to be able to participate in transportation committee, right?
Thanks very much.
That's absolutely correct.