The Alaska House Finance Committee voted Thursday to advance legislation requiring faster payment of state contracts, though concerns remain about costs and potential harm to small nonprofits.

House Bill 133 would require state agencies to pay contractors, tribal organizations, municipalities, and nonprofits within the same timeframe already required for private contractors on public works projects. The bill passed on a 7-4 vote after members adopted an amendment requiring departments to report payment timelines to the Legislature.

The amendment adds a reporting requirement for state departments to document how long they take to pay contractors. That report would be due to the Legislature in January, with an immediate effective date starting in the new fiscal year. The compliance requirements and penalties would not take effect until July 1, 2027.

Representative Rebecca Himschoot, the bill's sponsor, called the legislation a good governance measure. The bill seeks to set a payment standard to match the standard already in statute for private contractors, she said.

The fiscal notes attached to the bill drew sharp criticism from some committee members. Representative Allard objected to the bill's advancement, citing the high costs shown in the fiscal notes. Representative Stapp expressed concern that departments might prioritize large contracts over smaller nonprofits if the bill passes, potentially delaying payments to organizations like Meals on Wheels even further.

Other members argued the bill would push departments to address systemic payment problems. Representative Galvin noted that the bill prompted at least one department to examine its payment processes for the first time. The department acknowledged the problem and began investigating why it exists, she said.

The committee discussed whether fiscal notes for fiscal year 2027 should be adjusted given the delayed implementation. Members noted that when the bill reaches Senate Finance, departments would be required to update fiscal notes to reflect the amended version with its delayed effective date.

Representative Hannan questioned whether the committee could separate fiscal notes for different years. She noted that some departments are receiving additional accounting positions that could change their capacity to meet the bill's requirements. She pointed to the Department of Health, which is expected to receive seven additional positions for accounts payable if the budget moves forward.

Brodie Anderson, staff to the committee, explained that the committee has several options for handling fiscal notes. It can move the bill with attached notes, hold the bill to draft House Finance fiscal notes, or allow the conference committee to reconcile fiscal notes with the operating budget. He confirmed that departments would be required to update fiscal notes when the bill is scheduled in the next committee.

Representative Tomaszewski argued against adding more positions to departments with existing vacancies. The bill adds seven full-time employees and over one million dollars in costs, he said. Departments should be held accountable for doing the work they are already supposed to do.

Himschoot defended the bill. The delayed implementation gives departments time to organize themselves and request additional resources if needed, she said. Delaying the remedy for two years is unnecessary because departments are already aware of the situation.

The bill now moves to the Senate with its attached fiscal notes. Senate Finance will have the opportunity to request updated fiscal notes reflecting the amended version's delayed implementation.

Representatives Hannan, Galvin, Josephson, Jimmy, Bainum, Schrage, and Foster voted yes. Representatives Allard, Tomaszewski, Moore, and Stapp voted no, citing concerns about costs and the potential for unintended consequences.