House Finance, 3/23/26, 1:30pm

But as opposed to what we think of as typical non-profits, here's a local government that

isn't getting their community assistance that is put in the budget by us, it's in there as a statutory thing, and I am curious as to whether Tuxup Bay's experience is normal, that even though there's been a legislative authorisation, it's a formulaic distribution based on some population figures, do most of our local governments see a substantial delay from the state in transfer

transferring that money that in many of our small local governments is probably a huge piece of their local budget. Um and I don't know if in organising for this bill how much how many of local how many local governments have communicated that data and that kind of delay, so

I'm not sure if the sponsor or the four-acre group could answer that.

Um I

Representative

be happy to take

Rep

a crack, thank

Representative

you.

Representative Himschoot.

Thank you Chair Foster, through the Chair. Niels Andreasen with the Municipal League is online as an invited testifier, and I'm pretty sure he'll be able to help with that.

Okay. Thank you.

Representative Himmy.

Oh, we are in a quick Chair Foster. My question

can

Nearly half of the non-profits profiled surveyed were afraid to put their name on their complaint. What does that say about the current relationship between the state and its partners, and how does this bill fix that?

Representative Himschoot.

Thank

Or

you.

Ms. Wolf.

Let's see Representative Himschoot maybe first.

Thank you, through the chair.

I think Ms. Wolf can speak to that equally as well as I can. I would just offer that that's the kind of the crux of the bill right there. Thank

Yep.

you.

Ms. Wolf, do you have any comments?

Uh, th

through the Chair.

Thank you.

It's an important question,

I think, being asked.

The reason that FOICRO has stepped in as well as AML as our partner is because we have heard, we just heard over and over and over again through our years of trying to make this right,

that our nonprofits were afraid of retribution for speaking out.

So it is the reason that we have stepped up and are protecting our...

speaking about the whole sector and the issues that impact the sector as as NELS is also doing on behalf of local governments we have had some very brave people who have been willing to testify but there are many more voices behind all of those brave voices we hope that this bill fixes the problem for everyone and again that's why we've stepped up

Um another question.

Representative Jimmo?

Thank you, Co-Chair Foster. Um private construction contractors already get interest and penalties when the state pays late. Why have we treated non-profits tribes and municipalities differently for this long?

That is true for who? Representative Himmy?

Ms. Wolf.

Ms. Wolf.

Through the chair, thank you.

Well,

that is exactly the question we are trying to answer ourselves.

There's no current rules in the state of Alaska for them to do differently.

So we are trying to rectify that very problem.

We believe, and that's why we've called this bill a parity bill.

We're just taking existing state statute and saying you should just treat us all the same.

Do we have faith?

Representative Schumacher?

Thank you, Co-Chair Foster.

What does the state actually need to do staffing technology process to meet the 30 day deadline?

Are the fiscal notes from the DOH reflecting a real gap or is this doable within current operations?

Representative Himschoot?

Thank you, through the chair.

We have

a number of fiscal notes with this bill, and those will be addressed, I think, at the next hearing. But I would just add, what we have heard or we've been working on this bill for quite a while through the chair, we've been hearing it's a question of personnel, staffing, it's a question of turnover,

training and equipment. So some departments have been able to pay on time, some have minor arrears and some have major, and each one has a different sort of issue. Oh and the unification of the grants management system, some states use one system and we have multiple systems, is another issue.

Last question,

Representative Himes.

Representative.

co-chair, it's weanna. If we don't pass this bill,

what does the status quo cost for the state in the long run and in interest,

lost partners and disrupted services?

Representative Himschoot.

Thank you, through the chair. I can't really guess at that. What I will tell you is the state might actually make money because when we don't pay it out, it's collecting interest somewhere.

We've tried to calculate that and haven't really been able to come up with how much money we might be saving by not paying on time.

Oh, yeah.

And maybe we've got Representative or Ms.

Wolf before us, and so maybe if we could

maybe direct our questions to her for now and then we'll come back to the sponsor here in a little bit. I've got in the queue Representative Moore,

Representative Allard, Representative Stapp.

So next up Representative Moore.

Thank you, Co-Chair Foster.

I will hold my questions until they are ready for Representative Himeshute.

Okay, thank you. Representative Allard.

Thank you, and through the Chair.

So I don't know how to phrase these sort of questions,

That's

I guess.

it.

So I'm a little bit concerned that right now we're in a pretty, well, I think it might have been proved, but through the Chair. So Representative Henshoot,

we have

Here, and I think it's page 3, line 24 through 30,

30,

29,

my concern is that we want the taxpayers to pay interest when we're actually doing nonprofits favors as well.

So when we as a state come in and hire nonprofits or give nonprofits for them to be successful,

what they want to do is grants or other means,

and they come and say,

hey, you owe us money.

I understand that,

but this isn't the state not paying.

These are taxpayers.

So we're putting the burden back on the taxpayer to fund the NGOs anyways.

So if you say, hey,

we're going to charge a state interest if they don't pay us on time,

you're saying that you're going to charge the taxpayers'

interest because they're not getting paid on time, the nonprofits.

It's

Representative Himschoot.

Through the chair, I don't have the exact number, but a huge proportion of what we're talking about are federal funds. But when you talk about

Representative Allard, when you talk about taxpayers as Alaskans, we don't have a statewide

We do pay tax taxes.

But we pay taxes in other ways for our whether it's through utilities phones or whether it's for the internet and whether it's for roads, we do pay taxes. I hate when people say that we might not have an obvious blanket tax of income tax or sales tax. We pay taxes or the state wouldn't be able to run. So if you look at 24 through 30

represented HIMSHU it doesn't say the federal government would pay interest it's saying the state is going to pay interest or that state agency can you clarify what agent is it any agency with it because I guess I would just be like well fine nonprofits go find somewhere else to raise your money

Representative Himschoot.

Thank you, sure.

Through the chair,

these are, to Representative Allard, these are long-standing partnerships with the nonprofits and many of them are doing work that we as a state can't do efficiently or choose not to do.

So, for example,

halfway houses.

Um another example would be thread. So I can go on with a lot of examples of agencies doing the work that we are as a state probably not going to do as well as they do, they specialise. Um and then I guess I would add um the funding has already been awarded, it's getting the funding out the door. And so I just want the state of Alaska to be

the best business partner it can be and to reduce the burden on those organizations that are, I guess, carrying out some of the functions that we need in the state, services that we need in the state,

on behalf of us.

Perhaps better said in place of the state.

I appreciate your response. And just a quick comment, I see there's organizations in here that our governor actually vetoed, and they're in here saying that they need more support financially from the tax payers. Okay, thank you. I appreciate the explanation.

Okay. Representative Stapp.

Yeah, Thank you.

Co-Chair Foster,

I have a question for Ms. Wolf if she's still on the line through the chair.

Okay. Representative Stapp.

Yeah, thank you, Co-Chair Foster. Ms. Wolf, during your question,

you mentioned that you were doing this

because some nonprofits felt like they were going to have retribution from the state.

That's a heck of a thing to say.

Do you have any evidence of any of that through the chair?

Ms.

Wolf?

Through the chair,

thank you for that.

I think we have lots of evidence of organizations being afraid to step up and speak up because unlike the way

It was just momentarily characterized.

We are partners with state government.

We are doing the work on behalf of the state and we are just looking for a good partner and I think you know anyone that has run a successful business knows that the relationships between your customer and your partner in getting the work done is essential and you know difficult conversations are hard to have.

have some time so we are willing to step up and have those difficult conversations on behalf of all of the organizations and we appreciate all of the people who have also been willing to step up and say that this is important it's not a handout it's not it's not it's not something for nothing these are or all organizations that are doing work as partners to the state of Alaska

My fault, Mr. Kircher. Representative

yeah, thank you, Ms. Wolf.

So just for the record,

I

think the state should pay its bills within a timely fashion. That was not what I asked you. I asked you, you said a moment ago that you were doing this because clients,

other members that you represent, felt were afraid of retribution from the state in the event that they said something. What do you mean by that and do you have any evidence that any of these nonprofits are being threatened by state agency with retribution through the chair?

Ms. Representative Hemshoot first, and then we'll come back to Ms. Wolf. Representative Hemshoot.

Thank you, Chair Foster. I just want to point out that we um to representative Stab, we attempted to find private contractors who would speak to this to find out if they have been, you know, the the one section of statute that says you'll be paid uh penalty, interest penalty, if the state is late with their payments. We tried to find folks under that

at current statute who've been paid late and they were unwilling, we were unable to find anyone willing to speak up. So we're hearing that it has been a problem, but we can't get anyone on the record because of the fear of retribution. So whether it's actually happening could happen or it's just a fear that people have, um I know from our efforts to find someone people were, I guess, reticent.

It

Representative Stapp, I'd like to go to

hear from Ms. Wolf, please.

Ms. Wolf.

Thank you to the chair.

I have no evidence of anyone being threatened or harassed or anything of that nature.

I have just had lots of conversations with lots of people who are asked who asked for acre to step up because they felt unwilling or scared to step up themselves.

Okay.

Thank you, Ms.

Will.

Okay, next up I have Representative Josephson.

Thank you, Chair Foster.

I was going to ask Ms.

Wolfe for further clarification,

but she just offered it.

So instead,

I'll ask her a different question.

Ms.

Wolfe, have you seen the 15 fiscal notes?

Ms.

Through

Wolf?

Through the Chair, yes, we have seen them.

Follow up?

Follow up?

Uh before I become a student of the fiscal notes, Ms. Wolf, is there a reason, is there some pattern I'll find as to why seven of them uh are departments asking for money and eight of them are departments saying we don't need any money?

Is there some pattern that you've identified?

Through the chair, we have not identified a clear pattern,

but I would also say I'm not completely surprised by that because every department in the state of Alaska has a different process.

We don't have one system in which we delivered grants contracts and reimbursements. So I am not surprised that there are different responses from different departments.

Sure.

New question,

New question, rather.

Representative Joseph.

Sure.

Miss Wolfe, could you offer the names or...

Oh, the issues, that's not the word I'm looking for, but basically the names of some non-profits that might surprise the committee as to um the nature of their work.

Sponsor Himeshoot mentioned a couple, but can you name some others that might surprise this body as to the nature of their work, notwithstanding that they are non-profits, and ways in which they assist the state in functioning?

Through the chair, that's an enormous question.

Nonprofits are woven throughout the fabric of our everyday lives across Alaska.

There's really, it's almost impossible to go through a single day in Alaska without being impacted by a nonprofit in some way.

I'm not suggesting in a litany that everyone is impacted by delayed payment. Not everybody gets payment from the state, but, you know, nonprofits in Alaska do everything from, you know, your electricity in your home to child.

healthcare to housing to senior services,

food security,

affordable housing,

reform,

prevention,

domestic violence, sexual assault,

you name it, education of various shapes and sizes.

I mean there are literally thousands of nonprofits operating in the state of Alaska every day to support our

the people and our way of life across Alaska.

And again, all of this just reminds us that this is not just a bill that says that the state of Alaska should be a good partner to its nonprofit partners, to its nonprofits,

but it should also be a good partner to its local governments and its tribal organizations.

We're all in this work together to make our Alaska communities work.

Okay, thank you.

Okay, representative Moore and then Stapp.

Thank you, Co-chair Foster. Um through the chair.

Um we have six departments that didn't report a fiscal note. Do we know why?

Is this for Representative Hemshoot?

Representative

Representative

Through the chair, Representative Mork, I need a little bit of clarification.

Did you say divisions or departments?

Representative

Moore

divisions.

Sorry.

Okay,

Representative

thank you

Representative Hemshoot?

you. Through the chair, I think we have fiscal notes from all of the departments. I can't maybe not all of them.

I could I let my staff Ella Lubin speak to this? She's been managing the fiscal notes. There've been a lot of them.

Yeah,

sure,

absolutely.

Ms. Lubin, if you could put yourself on the record.

For the record, Ella Lubin, staff to Representative Hemshoot, through the chair,

Representative Moore, six of those fiscal notes that we do have are from the Department of Health, one for each division.

So

I

believe you're correct that not every department has submitted a fiscal note. And we have tried to get information from some of them, but have not been successful.

Follow up?

Follow-up?

Are we going to continue trying to get those so we can follow through on this bill or where are we at?

Ms. Lubin.

Through the chair, we will work with the

Thank you.

committee to do so.

Thank you.

Representative Stapp.

Yeah, thank you, Co-Chair Foster. I got two lines of questioning here. First is going to be to Representative Hemshoot and Ms. Lubin. By the way, thanks for being here folks. Wonderful to see you at House Finance today. So first question to I guess Ms. Lubin, unless Representative Hemshoot wants to take it. So I'm interested if you have looked at impacts on state-owned corporations like

the Alaska Railroad or

ADA,

you know, I don't know if they make late payments, but I'm curious if you had taken into account our state-owned enterprises, and if they pay third-party vendors and if this legislation would affect them at all through the chair.

Representative Hemshoot.

Thank you, Chair Foster.

Through the chair to Representative Stepp, great question. We have not looked at that. I'm kind of thinking that there

quasi, like they're independent agencies, but we can definitely look into it. Thank you.

Okay, thank you. And follow up, Mr. Co-Chair, Representative Stapp?

Yeah,

Yes.

thank you. Could we, can I get Courtney Enright to come to the dais,

Mr.

Ms.

Chair?

Enright, if you could put yourself on the record.

Oh.

Representative Stapp?

Yeah, thank you, Co-Chair Foster. Through the chair to Ms.

Enright.

Well clearly based on the paperwork one department struggles with this more than the other. Um so through the chair to Miss Enright. Uh I obviously I don't think you guys want to not pay payments promptly. So what is actually happening within the divisions in the health department that we're behind? Uh and maybe you could state for the record I have a pretty good grasp of this, but I think it would be helpful for the people in the committee to know exactly what is happening and why we're not paying super timely through the chair.

This

So,

Ms. Enright, if you could put yourself on the record.

For the record,

Courtney Enright,

Legislative Liaison for the Department of Health.

I'd actually like to pull Pam Halloran, who is our Assistant Commissioner and operates these structures, up to help answer that.

She's far more knowledgeable than I am.

Yeah, that works.

Okay.

Halloran, if you could put yourself on the record.

And for the record,

For the record,

Pam Halloran, Assistant Commissioner,

Department of Health.

Courtney had this, but I'm happy to help. So yeah, we definitely did not want to turn in six fiscal notes. That was our reality as a department. We, you know, we've had some operational challenges, some goals. I can take you through our methodology, I can take you through the contributing factors, I can take you through things that we're doing better to prevent this from happening very soon. But I can tell you that this is not the reality that we want to see as a department.

as a department.

Yeah.

Mr. Couture, represent staff.

Fault.

Yes.

Yeah, thank you Kocher uh through the uh chair to the deputy Commissioner.

Um so I I just my philosophy on this is I really do not want to pass a law saying we gotta have prompt payment, right? So I know that you guys are not paying because you have lots of challenges within the department. So other than pass a bill, say you need to do something and then incur a bunch of penalties and have to pay a bunch of money, what can what action can we take perhaps maybe outside this bill or in our budget to help you guys facilitate a more prompt

More prompt and reliable payment system. So we don't have to pass a law that we know that's not going to work solve the problem through the chair.

Uh through the

Ms.

chair,

Hallrod?

um through the ch chair Representative Stapp. Um

Yeah, first we don't want to be here. Absolutely. I ran a non-profit myself for eight years. I I understand what our non-profits are against. We as far as what you can do, I think that we're implementing some things in our department already ourselves to prevent this um training. So and our retention rate, we're having one of the contributing factors that we've determined was part of this was was overall capacity of our staff. And um

training staff on our very complex accounting system every time we have a turnover. So we we need time, we need to train, we need time, we need and then the things that we're implementing is that we're leveraging our accounting system better. There's we're actually entering a project that's gonna be fully launched by July one where our divisions are actually going to be entering payra or comp transactions directly into the accounting system at the division level.

all. Before there was an extras process where there they were putting them in a finance portal, which was very far away from the division. So if a payment erred for some reason, the budget wasn't where it was supposed to be, it took time to email the division, get that coding, get that back, now divisions are gonna see that real time. And so that's that's and so we need we need time. I think that we're we're also

also doing one more thing that I'm proud of. We're doing scorecards for our divisions on a monthly basis which is on timely payment. So our divisions now know exactly where they are and they're kind of excited to see themselves improving over time.

So so that's what we need.

If if I might add one thing, Courtney Enright, legislative liaison, Department of Health.

Is Miss Enright?

Um through the chair, representative staff, I think part of the reason you see the Department of Health in this particular area, is that during COVID we had to move billions of dollars through our system. And so we have burnt out a lot of our long-term staff. We're really grateful for the ones that are still here, but we've had a particularly high turnover rate in those staff that have had to process pieces. And I think what you see reflect

reflected is a reality of where we are in the rebuilding process.

Yeah, follow up Mr. Co-chair.

Representative Stapp.

Yeah, thank you Co Chair Foster. So on that kind of the same line, I appreciate all the things that you guys are doing. I will point out I don't see

in my perfect world we would get you folks at the Department of Health kind of on a better pathway so we don't need a law saying pay people on time. And I don't see a lot of requests for any asks in the 27 budget from the departments regarding this specific issue. I do see them all in this bill saying that hey, this is what you will need to help people pay on time.

So again I'm going to go back to, if there's not a personnel ask specifically, what can we do to help you folks at the Health Department,

you know, have a better than let's say one of these is net 98 days, how do we get you from net 98 to net 60 for example this coming fiscal year?

Through the chair.

Ms. Hellerund.

Yeah, through the chair,

Representative Stapp,

I'm going to have to think about that one for a moment. I mean, I already said that we need time to, you know, to have our scorecards, to make this problem extremely visible to our staff and to make them want to improve. We

training, you know, we're working off an accounting system that was purchased or launched in 2017.

We could improve training for our staff. We could look talk to the Department of Administration for online videos about how to

pay invoices within the accounting system, how to manage budgets within the accounting system.

So we could look at that. We could look at enhanced training within

the Department of Administration last fall. Mr. Co-chair.

Representative Stapp.

Yeah, thank you for that answer, and I'm going to come back to this because it was put on the record by our testifier had mentioned that the 4 acre group was basically doing this because they had nonprofits that they felt would have retribution in the event that they brought it up. And I just want to give you guys the opportunity to articulate your point of view to something like that. I can't imagine that you would actively seek retribution for struggling with making a payment.

So through the chair.

Through the chair, Representative Stapp, I'm not aware of any retribution for nonprofits.

Thank you.

We have strayed. I'm going to try to bring this back here. We're under invited testimony and so if we have questions for Ms. Wolf, I'm going to hold off on any other questions unless they're for Ms. Wolf and we can come up, keep people in the queue. If it's questions for the departments, questions for fiscal notes, questions for the sponsor, I'll keep everyone's names in the queue. Representative Hannon, Josephson, do you have questions for Ms. Wolf?

Hold off.

No, thank you.

Okay.

Mine was for Ms. Halloran when we have her back.

Okay, and also Representative Josephson.

Well, my question was more for uh Assistant Commissioner Halloran as well. But but just to confirm uh with Miss Wolf, Miss Wolf, you said you've been working on this with the state, uh presumably one agency or another or multiple agencies, for six years. Is that what you said?

Ms.

Wolf?

Through the chair,

yes, that's correct.

Follow-up. What I heard the assistant commissioner,

one could say bravely say,

is that the complaints I'm paraphrasing are legitimate. Is that what you heard her say as well,

Ms.

Wolf, through the chair?

Through the chair, yes, that's what I heard her say.

And

And

we have heard that somewhat from a few other commissioners, I mean not commissioners, but staffers as well during these hearings and on the record.

Representative Josephson.

Yeah, through the chair,

Ms.

Wolf, do you know,

does the state's concern with interest and penalties as to for profits,

does that have the desired effect for the state?

Does it result in prompt payment,

if you know?

Through the chair,

I do not have that data,

but we believe that the carrot and the stick moment is important.

We're pleased to hear that the Department of Health is holding some accountability,

but I don't know what that looks like in the for-profit arena. Perhaps our sponsor has more research than I do.

Okay.

Okay, thank you.

Okay, Representative Tomaszewski, question for Ms. Wolf.

Thank you, thank you,

Representative

Co-Chair Oster.

Tomasker.

Yeah,

Yeah.

this is a question for Mrs.

Wolf.

So I've worked with private contractors before as a contractor myself and I go into those contracts kind of knowing the terms.

I've worked with contractors that only pay quarterly.

And so I know that if I get my, if I submit my request for payment on the 1st of April,

I may not.

not get paid. I probably won't get paid until the first week of July.

So my question is, do these contractors go into these contracts knowing the terms and are they explicitly laid out before you would actually get and sign on that line for this contract?

Ms.

Ms. Wolf,

Thanks.

Through the chair,

well,

first of all, I'd love to say that there's one way that this goes,

but there's not one way.

Let's remember every department in the state of Alaska has a different process,

and many of our organizations are dealing with many different funding sources from many different departments, so every relationship would be slightly different.

But there is an expectation of a timely payment because there is an expectation of a timely reporting mechanism.

And as I mentioned in my testimony,

we have organizations who are regularly having to report on money they never received.

So that they can be in line for the next tranche of money that they should receive.

So it is clearly outlined the steps for reporting are clearly outlined. You would expect that that reporting would align to a payment process,

but the payment and the reporting are not in sync.

So I think what's happening is our nonprofits, they have begun to accept a...

a reality that they're not going to get paid, but that's certainly not acceptable,

nor is it articulated up front.

I want to follow up.

Follow up, Representative Tomaszewski.

So the bill states the contract will be paid within 30 calendar days.

So what you're saying is essentially that of the multiple different agencies dealing in multiple different contracts, there is no standardized...

process to expect your payment.

Well then.

Well, that's.

Through the chair,

that is the expectation of why we wrote this bill,

so that there would be a standardized expectation of 30 days.

That's the very reason that we're doing this is to hold one set of standards that everyone can hold themselves accountable to.

Okay, thank you.

Okay,

Representative Ballard.

Thank you.

I'm hoping that I can have the individuals, Ms.

Herlin, or I can't remember her last name,

if she could come back and speak in regards to what we're talking about right now, and that's the standard payment.

So where I think if I'm hearing right,

the testifier is saying that we wanted to make sure that everybody has the same standard in every department to pay the nonprofits correctly,

right?

Is that what you're saying, Ms.

Ms.

Ms. Wolf.

Through the chair, I'm saying to pay all of the entities that the state does business with, nonprofits,

local governments,

tribal organizations,

everyone.

The same, meaning from the same system, or treat them all the same equally, or

Ms.

both?

Wolf?

Ms.

Wolf?

Thank you through the chair.

I'm not sure of the distinction that's trying to be made here.

I'll refer to the sponsor.

Representative

Ballard.

mean,

Ms.

Wolfe, are you the expert on this?

I'm trying,

you just kind of said a few things and I'm just trying to find out, are you saying that, that you're, I heard you say that the contractors get paid probably better, more timely than the nonprofits,

and I'm trying to find out, are you asking also in this bill that the departments are all aligned with the, in the avenue in which they pay the nonprofits?

Ms.

Wolf.

Through the chair,

yes, we're asking for a standard from the state of Alaska to all the entities it does business with, nonprofits,

tribal organizations,

and municipalities.

So I think part of my,

and I can reference and speak with Ms.

Representative Hemshute through the chair,

I think part of my concern about that is every department gets their funds differently and every department has a different avenue of how they pay out based on their independence because everybody's money comes differently and I'm concerned about that within this.

Could you help me if there's a way we could tweak that or.

How do you think, Representative Hemshoot, that we're going to get every individual department

To do it the same, we can't. They they they get their money differently and they have different rules for every single department. How could we work on that?

Representative Hemmings, thank you.

Thank you. Through the chair to Representative Allard, that is correct. Every department has different parameters they're working within, but setting a standard of thirty days, if they can do it for private contractors, they should be able to do it for non-profits, tribal organisations and uh municipalities. And I'll add to that, um some states have

a unified grants management system where they are kind of working on the same system.

Yeah.

We do not have that in Alaska.

I know that we do for the municipality. May I, Chair?

Representative Ballard.

Representative Himschoot, did you get anything from any of the departments to say why they delay paying the nonprofits versus the contractors?

Representative Himeshute?

Thank you for the question through the chair to Representative Allard. Yes, it's a lot of different issues. So again,

each department is different.

In one department, they need more staff. In one department, they need more training. In one department, they need more technology.

Okay.

I do, I would like to add one thing that I should have said from the get-go and just forgot to comment on. And that is, this is a long-standing issue.

This is not tied to any particular administration.

This has been a problem for uh decades.

Yeah.

And then I I also wanted to add I I wanna be really clear that this is not a failure of the personnel in the departments. Um

Mm-hmm.

That has not been brought up. At at no point have they said our people just don't do their job very well. No one is saying that. It has to do with other issues having to do with um technology, turnover, etcetera. So it's different in each department.

Just a follow-up comment.

Reps and Ballard.

Representative Hemshue, thank you for that. And I think you kinda hit it on the head that every department has their own issues. And so making a blank bill saying hey we should just do it a

This is if you don't pay us within thirty days, because some departments are struggling too. Okay I appreciate your comments. Thank you, representative.

Okay, questions for Ms. Wolf. We're gonna go to Representative Shragay.

Thank you, actually, for the bill sponsor. If I may.

This bill has been repeatedly described in terms of parity. Can you remind me, there is already a blanket standard today for private contractors and payment to private contractors and entities. Is that correct?

Through the chair, I'd have to look up the statute, but that is correct. It's private contractors completing public works have a standard of, I'm going to say 30 days, but it depends if the funding source is federal, it's 30 and if it's state, it's 21.

But.

Or I might have that reversed. Yeah, and the statute is AS 36.90.200.

Follow-up?

Follow-up.

Yeah, thank you. I I bring this up just because I think the concern about all the different ways in which departments might receive money that they are then passing through or using to pay uh whatever entity it might be, is is a v valid concern that's been highlighted by uh my colleague from Eagle River. Um but I I think what kind of re-centres me on this bill is that we already have a standard that takes that nuance into account and that already exists for our

for our payments to private entities. It's just these non-profit entities that don't have that standard, don't have that that surety of prompt payment, for at least some some level of surety if not uh complete surety. So um thank you for that, that helps clarify things for me.

Thank you for that question.

Okay. Did you have Representative Hamstreet, did you have any comments on that?

No, nothing,

Okay.

Nothing.

I think that's a good framing of the situation.

Okay.

Thank you.

I want to be fair.

We're going off script here and so I just want to make sure that if we're going to open it up to folks and we do that and so I want to come back to represent of Hannon.

You had a question for Ms.

Halloran. Ms. Halloran, if you could please come up.

Thank you, co-chair Foster. Ms Halloran, um one of the things that we're seeing in other parts of this state budget is a return to departments, to many departments including yours, um payroll, accounting

Okay.

personnel, etcetera. Do you think that in those people being placed back at your department, it will help your variety of divisions expedite

the prompt payment piece.

Ms. Halloran?

Through the chair, Representative Hannon, I'm glad you asked that question. We've been talking internally at the department. We have five positions coming to us and we have six divisions. So we are going to - two divisions have decided not to accept a position for whatever reason, but we're taking those five positions and we're giving one to fiscal. And because we're doing the new process where items will be certified in the divisions, then they'll go to fiscal for the final approval.

So one of those positions is going to go to fiscal, the other four are going to go to our divisions with the more lengthy payment timelines and we do hope that that will help.

Follow-up?

Thank you, Co-Chair Foster and Ms. Halloran and I appreciate that, but because of my ignorance of some of the verbiage internal to your agency, would that fiscal processing so

the contract with a nonprofit, let's just, you know,

was let on August 1st, and so when they then submit for a bill to be paid, is fiscal at the end of that process once the nonprofit is asked for a bill payment or by executing a contract that says you're going to be doing this and you've set out that payments are going to be quarterly or monthly or twice a year, is that all included at the origination of the contract, or is fiscal touching it at two parts in the process or just at the end when it's

ready to be paid?

Ms. Halloran?

Through the chair, Representative Hannon, for our grants, if we're going to speak specific to grants right now, our grants are advanced on a quarterly basis.

So whether or not we're actually going to incorporate the in division entry for grants, I believe that will still happen in the grants team.

Fiscal will touch those four times, actually five times, because we advance 25% each quarter. That last quarter we advanced 20% and then we hold back 5% for the final reconciliation piece. So there's a lot of pieces that have to happen to issue that grant.

At least is the approved budget. So we issue an award to a grantee and then we work with the grantee to finalize that grant budget. At that point, once that report is approved, that sets the clock for the payment to that first grant. After that for each other quarterly grant, again the reports that we receive from the grantees on a quarterly basis will again set the clock

for that grant payment. And we advance our grants on a quarterly basis.

Thank you.

Okay.

Do we have any further questions for Ms.

Wolf or anyone else?

Okay. Seeing none.

Oh, Representative Bynum.

Thank you, Co-Chair Foster. I do.

I didn't have any questions for Ms. Wolf, and I know that this is an introduction, but I hope I was hoping to ask just a couple quick questions of the sponsor of the bill.

Sure, Representative Bynum.

Thank you, co-chair Foster,

through the chair, Representative Himschoot and staff. Thank you very much for bringing this forward. I know when I initially heard of this, I, uh you know, I got to thinking, I was like yeah, we we need to make sure that we're being prompt in our payments.

I haven't had a full opportunity to go through the full bill, so I'll just lead off with that. I'm looking forward to really digging into it.

But I did have just a couple quick questions. When we talk about the bill in front of us, we're trying to say that we are aligning what we do potentially in contracts with grants and other things.

other payments and other services that are being provided. I was just hoping you might be able to talk a little bit about how we might differ in grants versus say contracts, because when we do contracts we have an explicit, we have explicit language within the contract when we issue those contracts to a vendor or to an individual to have specific performance metrics. We have very clear

elements within those contracts on how payments are to be made whether they're electronically or check system or whatever it's going to be and I'm just trying to align that with what we're actually doing grant systems and I asked that because when I look at the federal system in the federal system there's federal law to dictate what we do in actual contracts versus what we do in an appropriation for a grant and there is no obligation in the federal government to give you grant money in a

in any particular time frame even if you qualify, but there is the obligation under cra under contractual uh situation. So I was hoping that you might be able to describe those differences a little bit and then how you think this bill will uh align those those different things.

Representative Hemshoot, thank you.

Thank you uh through the co-chair to Representative Bainum. I um

I I am assuming that grants also have parameters written up and you know you you apply and then based on certain standards you're awarded the grant and so it effectively is the same as a contract. All this bill does is set a timeline and so I don't

know that we need to get into that specific language that you're asking for.

I'm happy to take a closer look of course, but um I think that the bill basically says if we're going to be a partner with

a tribal organization or a municipality or a non-profit, we need to be able to deliver on our agreements with them in the same timeline that we do our contracts with

Private contractors.

Appreciate that. I have another question.

Representative Bynum.

Thank you, Co-Chair Foster through the chair.

Thank you Representative for that. Um

One of the other things I was wondering about is when we talk about our particular programs that we have,

a lot of times we have partnership with a federal program and the state is being an agent to administer those programs,

which then might have an agreement with a provider.

And obviously we want to make sure that we have prompt payment,

but there are circumstances where the federal government prohibits using federal monies for

interest penalties. So under those circumstances would we then be saying that the state would take on the financial liability of these penalties?

Representative Hyemshoo.

Thank you. Through the co-chair to Representative Bynum, I like that you said obviously we should be paying promptly. So I think that is a,

what do you say,

a common sense statement. And to my knowledge, and we can check further, but to my knowledge, yes, this could be.

something the state would need to assume the liability for.

Thank you.

Okay, next up I've got Representative Josephson and then Galvin. Representative Josephson.

Yes. Uh

Representative Hempchute, a couple things you cited, thirty nine or rather thirty six ninety two hundred payment deadline and interest in public construction contracts, and I see here

There are no fewer than four, three or four references to grant money, and I'd have to study this to see if that's interchangeable with contracts. It seems to link itself to political subdivisions using grant money, which would be local governments as I'm reading this.

So I'm not sure without a careful study of this whether this statute is exist meant,

means to make a difference there,

but I'm, I'm, um

Noting something here that is remarkable,

and it says,

if I might, Mr. Chairman,

it's subsection C of 3690-200, it notes that it's a long sentence, but toward the back of the the bottom of the sentence,

within eight working days after receipt of the payment, uh the contractor um requests the state or political subdivision shall not or I get

Let me do this again. If part or all of the payment is going to be withheld for unsatisfactory performance, or if the payment request made under the second does not comply with requirement of the contract, in other words, the state is unhappy about something,

within eight working days after receipt of the payment,

uh request the state or political subdivision shall notify the prime contractor in writing stating specifically why part or all of the payment is being withheld, and what re this is the key, and what remedial actions may be taken by the prime contractor to receive full payment. So this is

That was clumsy,

but this is laid out for for-profit agencies like a red carpet.

It's like, tell us, first we'll tell you if we are unhappy with your services anyway.

You'll get notice of that.

And then you can tell us why we're wrong about that.

And we'll tell you if we think that we're right about that, how you can remedy your performance. So it's this back and forth interaction with...

with for-profit contractors that appreciates the work of a for-profit contractor,

holds them in high regard,

and I see that wholly missing as well.

And I guess my question is,

do you agree that...

You can see in the nature of this that it's not just about prompt payment for for-profits.

It's about respect for profits.

That's what I'm reading here.

Is that something you wanted to comment on?

Uh Representative Himshew.

Yes, thank you, uh Co-Chair Foster. Through the Co-Chair to Representative Josephson, uh yes, on page two of House Bill 133, that exact same standard is set for again the non-profits, municipalities and tribal organizations, um for exactly the reasons you stated.

Thank you.

Okay, uh next up I have Representative Galvin.

Thank you, Co-Chair Foster.

And I can hold my questions since I know there are folks waiting to testify.

So if that is better, then I'm happy to wait until we've heard from especially AML since I think their voice hears.

so helpful to the conversation.

Oh, thank

Did

you.

you have any questions for Miss Wolf?

No,

No questions,

thank you.

okay.

And we are actually going over to AML next. So just wanted to look around really quick, make sure we're not missing anything.

So with that, Mr.

Niels, thank you so very much Miss Laurie Wolf for being online, appreciate it.

And next we have Mr. Nils Andresen, the Executive Director of the Alaska Municipal League.

Mr.

Andresen, if you could put yourself on the record and provide your testimony,

and then after that we'll go to questions.

Yeah, thank you.

Co-chair and members of the House Finance Committee,

thank you for this opportunity to testify.

Can you hear me okay?

Yes, we can. Thank you.

Wonderful. My name is, for the record, my name is Dale Sandreas and I'm the Executive Director of the Alaska Municipal League,

established to strengthen and support Alaska's 165 local governments.

It feels like at this point you've covered a lot of ground,

but I'm going to cover some of the same ground and hopefully be able to additionally answer some of the questions that are out there.

Well, we're here to talk about offhanded failure,

late state payments.

And based on some of the conversation that has already occurred during this meeting,

I want to be really clear about what that looks like.

So whether it's a contract or a grant,

the state has entered into an obligation with an entity to provide a service on behalf of the state.

Once that service is provided or along the way and consistent with either the grant or the contract.

The local government,

the nonprofit,

the private sector contractor, the tribe submits to the state an invoice or a request for reimbursement. At that point, the state determines whether those costs were consistent with the contract or grant agreement eligible for reimbursement as either a contract or through grant,

and that is when the 30-day clock should start. That's what we're talking about here.

And it doesn't, I mean I think one of the things that concerned me maybe from the conversation prior to my testimony has been that the state might be waiting for