The Alaska House Finance Committee heard testimony Tuesday on agencies requesting $759,200 in fiscal notes to address chronic late payment problems as lawmakers consider House Bill 133, which would establish 30-day payment deadlines.

The Department of Health alone requested $559,200 across six fiscal notes, with some divisions averaging 65 days to pay invoices. The requests include penalty funds and new accounting positions to handle payments that are contractually due within 30 days but consistently run late across multiple state agencies.

Contractors and nonprofits testified that late state payments are forcing business closures and cash flow crises. Sandro Scheibens, CEO of Wassman and Associates, told the committee his IT consulting firm went five months without payment from one agency, forcing him to use fundraising dollars to cover staff expenses. Stephanie Bergland testified that Bright Beginnings childcare cited late state payments as a contributing factor in the decision to close all five of its locations across Alaska.

"About 80% of my cost is staffing cost, so it is very important for us to get timely payment from state agencies," Scheibens said. "When government agencies go 30 days behind on payments, businesses need 2, 3, or 4 months of cash reserves."

Department of Health Assistant Commissioner Pam Halloran acknowledged the fiscal notes "reflect our reality and they surely do not reflect where we want to be as a department." Her agency's Division of Public Assistance averages 65 days to process payments, while Medical Assistance Administration averages 39 days.

However, some agencies demonstrated timely payment is achievable. The Department of Family and Community Services averages 10 days for payments, while Commerce averages under 18 days. Both agencies submitted zero fiscal notes, indicating no additional costs to comply with the 30-day requirement.

Committee members expressed frustration with the agencies' fiscal note requests. The committee will review the bill's fiscal notes before taking action on House Bill 133, which would require state agencies to pay invoices within 30 days and impose interest penalties for late payments.