The House Finance Committee reviewed fiscal notes Tuesday for a bill that would charge state agencies interest when they pay contractors and nonprofits late.

House Bill 133 would require agencies to pay within 30 days or face interest penalties. The committee heard from 10 departments with 15 fiscal notes totaling hundreds of thousands in projected costs.

The Department of Health submitted the largest fiscal notes, requesting three new positions and $356,200 in penalty payments. The department averages 33 to 65 days to pay invoices, depending on the division, Assistant Commissioner Pam Halloran told lawmakers.

"These numbers reflect our reality and they surely do not reflect where we want to be as a department," Halloran said.

Health officials said they chose to request penalty money rather than staff positions when the interest costs were lower than hiring someone. The department will receive five positions from Shared Services Alaska but said those workers need additional training.

Several departments reported they already meet the 30-day deadline. The Department of Family and Community Services averages 10 days for payments, while Commerce averages under 18 days. Public Safety averages about 10 days.

The Department of Labor currently takes 34 days but expects to meet the deadline through internal adjustments and returning Shared Services positions.

Military and Veterans Affairs requested four new grants administrators, citing complex federal disaster response requirements that can delay payments during emergencies.

Committee members questioned why departments would pay penalties rather than hire staff to fix payment delays. Representative Schrage noted that adding up penalty costs across divisions often exceeded the cost of a single position.

The committee set the bill aside after reviewing fiscal notes. Public testimony earlier supported HB 133, with contractors and nonprofits describing cash flow problems from late state payments that force them to seek bridge financing or delay their own vendor payments.