Alaska Legislature: House Finance — May 4, 2026 1:30pm

It is 1:33 p.m. on Monday, May 4th, 2026. Present today, we have Representative Stapp, Representative Hannon, Representative Tomaszewski, Representative Galvin, Co-Chair Foster, Co-Chair Josephson, and myself, Co-Chair Schraggy. As a reminder to members, if you could please mute your cell phones, I'd be grateful. Do the same thing here. I'd also like to take a quick moment to thank our committee support staff, including committee assistant Helen Phillips, Page, Tallulah Stuffka, Secretaries Bree Wiley and Leah Frazier, and our LIO moderator, Emily Mesh.

Thank you. All right. With that, today we will be adopting the House Finance Committee substitute for Senate Bill 214, the capital budget. And then we will also, assuming we have time, move on to two other bills scheduled, SJR 29, constitutional amendment, education funding, and SB 86, money transmission, virtual currency. And I see a third bill listed here actually as well, HB 261, Education Funding, although I thought that was removed from the schedule.

Brief at ease. Brief at ease.

All right, back on the record. Yes, I do believe we'll be bringing up HB 261 under bills previously heard and scheduled. All right, with that, Co-Chair Josephson, do I have a motion to adopt the committee substitute? Yes, I move that the House Finance Committee adopt House CES for CS for Senate Bill 214 Finance, Work Draft 34-GS2501/W, written by Walsh, dated May 2, 2026, as our working document. Okay, and I'll object for the purposes of discussion.

Also take a quick moment to recognize that we've been joined by Representative Allard and Representative Bynum. And with that, I'd like to ask my committee aide, Eric Gunderson, to the dais to explain the changes in version W. I'd also note that Legislative Finance Division is present in the room and online to assist with any technical questions. Mr. Gunderson. Could you please put yourself on record? When you are ready, begin.

For the record, Eric Anderson, staff representative Schraggy in the House Finance Committee. Good afternoon, Co-Chair Schraggy, Josephson, Foster, and members of the House Finance Committee. Through the chair, before I begin, I will go through the various reports provided to committee members. Report A provides a summary of the changes made in the Committee Substitute. Later on, this will be the primary document I use to run through the changes.

Report B, labeled Project Compare by Agency House Structure, I think is one of the more helpful documents to help understand the changes in the Committee Substitute. It includes all the projects and changes made between this and the Senate version. Report C, Agency Summary House Structure, shows the statewide totals between the governor's version, the Senate version, and this committee substitute for agency totals excluding supplemental and contingency items. Report D, Statewide Totals House Structure, shows the fund source totals in the committee substitute. And finally, Report E, Project Detail by Agency House Structure, shows all projects and changes between the three various versions of the capital budget.

And that's of the projects. Moving on to what is in the committee substitute. At a high level, the committee substitute brings the total amount of the capital budget to $347.2 million in unrestricted general funds, also known as UGF, $86.87 million in designated general funds, also known as DGF, $237.8 million in other funds, and $1.81 billion in federal receipts.

If the contingent waterfall language, which I'll go over later, goes into effect, an additional roughly $26 million in UGF will be added, bringing the total to $373.1 million UGF. I'll now move on to the report letter A.

For this handout, you'll see 4 columns. The first shows the project title. The second, labeled HCS 1 Edition, includes the amounts added in this CS. The third, labeled Total, includes the total amount towards the project, including those with previous funding in the Senate version of the budget. And then the fourth column, Note, shows a note if there is one that's associated.

So moving on to the deferred maintenance projects, um, each one of these buckets is ordered by page number for those if you want follow along in the bill. Um, first up, there's an allocation to Mount Edgecomb High School for student housing upgrades. This is found on page 3. It is $5.2 million in designated general funds. Um, this is from the Alaska Capital Income Fund.

Um, we also have another allocation to Mount Edgecomb High School to replace academic building envelopes. For $5.1 million DGF. Um, there's $48.4 million UGF for school major maintenance. This funds projects 16 to 33. This is on pages 5 and 6.

Um, one note is that project 28 is partially funded at $6 million. We did talk with the department and found out that this project was originally straight slated to be on the new school construction list. Um, this $6 million allows them to move forward with planning and initial phases while also allowing the capital budget to move on and fund a number of other school major maintenance projects. Under new school construction, there is $6 million for the Deering K-12 school This is on page 6. This builds on the funding for Stebbins K-12 that was added in the Senate.

Next up, there's the UAF Campus Transit Fleet Maintenance Facility on page 24. This is $6.8 million total. $1.38 Million of that is university receipts, and the rest is $5.44 million in federal receipts. There's an additional, additional $15.3 million in UGF for university deferred maintenance on page 25. This funds the top 18 projects spread out between the UAA, UAF, and UAS campus on their deferred maintenance ranking list.

I'll now move on to the AK LNG project workforce development projects. The first up is the Alaska Teamster Employee Service Trust Construction Driver and CDL Training Center. This is on page 3. Um, the CS adds $2.2 million in ADA receipts, bringing the total to $5.2 million. For the Fairbanks Pipeline Training Center, there's an additional $2 million also in those other funds, ADA receipts.

Under AVTECH equipment modernization and facilities upgrades on page 8, there is an additional $2.32 million in other funds, which is the ADA receipts. Um, moving on to the UA welding and non-destructive testing renovation, this can be found on page 24. There's $3 million in designated general funds. Um, this fund source is the Capstone Avionics revolving loan funds. This goes back to a revolving loan fund that was repealed in July of 2020.

Fledge Finance has assured us that these funds are available for appropriation, and they're essentially kind of a zombie fund. These dollars are there and available for use but don't have a statutory purpose.

Um, next up, there's the UAA industrial cutting systems and electrical distribution upgrades on page 24. This is $260,000 from that same DGF fund source. I'll now move on to the other projects section. First up, there's the Renewable Energy Fund. This can be found on page 2.

This is also known as REF. There's an additional $9.3 million in UGF added. This would bring the total funding to $14.6 million and fund the top 9 projects on the Round 18 REF list.

There's an additional $2 million for Alaska Seafood Marketing Institute, bringing the total to $6 million.

There is $217,500 in those Capstone Avionics DGF fund source for the Alaska Library Network sled and resources for literacy and online learning programs. There is also $450,000 in UGF for the Alaska Municipal League, uh, federal infrastructure implementation. This, um, program AML helps local communities and tribes in grant writing to capture federal dollars and is an ongoing program. Um, on page 3, for the Alaska Travel Industry Association, there's an additional $2 million, bringing that total to $6 million. There's also an appropriation to the USS Ted Stevens commissioning support for $100,000.

This is DGF from that same capstone fund.

There is also $15 million in UGF for the Port of Alaska cargo terminal replacement. There's associated waterfall language later on, which I'll go over.

For the Fairbanks North Star Borough, there is $500,000 for the Arctic Winter Games planning and support. Um, this is not the amount that the organization originally asked for. They had asked for $1.75 million, but we did reach out to them and work with them and found a number that fits within the budget and that allows them to get their feet off the ground and begin with the first year of planning. This builds on the $300,000 they've already raised, or roughly $300,000, which they'll receive in phases, but this allows them to do what they need to do for the first year and hopefully secure future funding, um, in next legislatures. Um, this is $400,000 UGF and $100,000 from the Capstone Avionics Fund.

On page 8, there's the Emergen— Emergency Medical Services Match Code Blue program. Um, Next up, I'll go to the contingent waterfall section. Um, the following appropriations that I'll go over are contingent on the 2027 fiscal year-to-date average price of Alaska North Slope crude oil being equal to or greater than $80 a barrel at the end of the fiscal year. If that happens, these projects will then go into effect and be appropriated. First up, there's an additional $10 million for the Don Young Port of Alaska terminal replacement.

There's an additional $10.65 million for school major maintenance. This would bring the— this would fund projects 34 through 38 on top of what was previously funded. There's $2 million for the UAS Sitka campus dock and mariculture training facility phase 2. This was partially funded during last year's capital budget. There is $1.25 million for the UA Leaders Archive.

Similarly, this was partially funded last year. There was quite a bit of federal and program receipts associated with it at that time. There is $2.05 million for court security projects. I should have mentioned these start on page 34 and go through page 35.

I'll now move on to some of the miscellaneous items. The first one is the receipt authority for allocation— for federal receipt authority for allocations to the West Usitna and Cascade Point projects have been removed. The West Usitna project, the receipt authority was $95 million and Cascade Point was a little over $39 million.

Next up, the governor introduced two supplemental capital amendments. Both have been incorporated into this committee substitute. The first on page 30 is the election security grant under the Help America Vote Act. This is a little over $1 million for federal receipts and is typically an annual appropriation we receive from the federal government. Under the Department of Family and Community Services, the amendment would reappropriate leftover funds from the Palmer Veterans and Pioneers Home to Pioneer Home system-wide deferred maintenance.

I will note this reappropriation was originally included in the Senate version of the capital budget going towards the Stebbins K-12. This replaces that reappropriation, backfills that with UGF. And then the funds from that reappropriation then go towards the deferred maintenance for the Pioneer Homes. There is also intent language on the Office of the Governor reappropriations requesting annual reports to the Finance Committee co-chairs and legislative finance. This can be found on page 44.

And I believe last up there is or return to a single fiscal year for the NPRA impact grants. This was a alleged finance recommendation and can be found on pages 38 and 39. And with that, that concludes my overview of the committee substitute. All right, questions from committee members? Representative Ballard.

Thank you. Um, Co-Chair Schrag, it looks like on page 24, the HCS lines 21 and 22, West Sustina Access Road. Do you want to explain why you have—. Sorry—. Chosen to take that out of the capital budget?

Yeah, thank you, Representative Ballard. I think the response would be multi-part. Part of it is that if you look at the STIP for this year, there is a great deal more federal authorization than there are federal funds available to be distributed. And there is some concern from members that I've spoken to that having such a large project with so much federal receipt authority when there's limited dollars will divert funds from other projects towards this one. And so this is partially an attempt to right-size the STIP.

Additionally, through the public comment process that we've had here in this committee, There's been a lot of discussion and scrutiny of this project, and we want to give this project an opportunity for further scrutiny. And the best way to make that happen is by removing it from the STIP at this time. I disagree, but thank you for your explanation. Appreciate it. Thank you, Representative Allard.

Additional questions or discussion from committee members? Representative Bynum. Thank you, Co-Chair Schrag. To the chair, the specific item that we were just discussing with the excess money being removed from the budget.

That was—. Correct me if I'm wrong— that was originally part of the governor's request. That was not an add in the Senate. Is that accurate? And just to be clear, Representative Bynum, you're talking about the West Sioux?

Yes. Yes, that's part of this. Well, technically it was not part of the original budget because it came through as part of the amendment package. But yes, it was a request from the administration as part of their STIP amendment process. Okay.

Follow-up? Follow-up. Thank you. So do we have any additional information from Department of Transportation on any cascading effect that that might have and/or what kind of delays, if any, that it might cause the project? Because I know that these things usually or long— they are in the STEP.

It is a long-focused or long-planned project. I was wondering if we have any idea if there are any negative impacts to the overall project by it being removed from this year's budget. Thank you for the question, Representative Bynum. I would note my recollection is that during the budget process, we did receive some correspondence from the Department of Transportation responding to some of our questions on this project during the committee process. Additionally, I would note that I myself received a letter from the Commissioner articulating some concern with the timeline.

But, again, that was personal communication with him and I don't have great details on that. Thank you. Yeah. Additional questions from committee members? [FOREIGN LANGUAGE] All right.

Well, with that then, I will take a brief at ease. We'll be at ease at 1:52 PM. We're at ease.

Alright, we're back on the record with Senate Bill 214 before us, the capital budget. We've got a motion to adopt the committee substitute, and I've objected for the purposes of discussion. Any additional questions or comments at this time? Representative Allard. Yeah, I, I'm— thank you.

I have real heartache with what was going on with the West Soo's, and I'm just trying to figure out how we could even consider adopting that with this. And so I don't know if this is the time to do it, but can we get DOT? They're on the line. I don't believe DOT is online, but I can go ahead and check.

They will be. I think Dom will be on the line. I do not see them currently. What I will say, Representative Ballard, is that this bill is before our committee today. We're adopting the CS.

We will continue to have possession of this bill for at least the next few days, and that'll provide opportunity for further discussion with DOT and any other stakeholders that members may want to consult with or that the committee may want to consult with. So I appreciate you expressing your concern, and I think we'll have an opportunity this week to— may I follow up on those? Yeah, well, I mean, we're going to be adopting something, and I think that it's, it's fair to have that input from the Department of Transportation when we're adopting such an important document. Could we just give them a couple more minutes so that I could— uh, Dom could reference the letter that he sent to you, um, and we as the rest of the committee had seen, or some of us at least? I absolutely appreciate that, Representative Ballard.

I think that there's, um, certainly, uh, we want to make sure that members have an opportunity to ask questions and vet that information. We do also have many bills on the calendar for today, and I want to be efficient with our committee's time. What I'll say is we should take the opportunity to make sure that that letter gets distributed to committee members and then allow for further discussion on that at a later time. All right. But thank you, Representative Ballard.

Representative Bynum. Thank you, Chair Chair Sharagi. I—. We have the CS in front of us, and there's many things I think that are important in this CS, things that I've— I have talked about in this committee. When we talk about capital, there is deferred maintenance items that are listed here.

There's funding that's much needed for school facilities. That's been an ongoing conversation that we've had. So there's many things that I think are good in here, not only from what was submitted from the governor, but what came from the Senate, and then what was put in in the House through this House CS. I do have some concern overall. I know that this isn't a big UGF, um, particularly UGFY item, but the West Susitna Access Project.

I'd hope that what we— that although that is removed here and not included in the CS, I would hope that we would be able to continue to have a conversation about the importance of resource development and potential access for resource development in Alaska, and along with the construction of and development of roadways. So I'd hope that, Mr. Chairman, that we would have a commitment that we can at least continue to have that conversation. I know that we're not going to be able to change this today, but we will have an opportunity for amendments and further conversation. I would just hope that we'd have that commitment. Absolutely, Representative Bynum.

I fully expect this committee to have the normal process and including the establishment of an amendment deadline, which we'll touch on shortly, an amendment process where members will be able to offer changes to the capital budget and speak to those, have a discussion here at the committee before moving the bill along. So absolutely appreciate the desire to have that discussion and think that that is something we should absolutely do. You do have that commitment from me. Thank you. Representative Tomaszewski, do I see you hoping to get in the queue?

Representative Tomaszewski. Yes, thank you, uh, co-chair Schrag. So yeah, I'm going to talk a little bit about that West Sioux also. It says you're removing the receipt authority for the allocations to West Ositna.

Is—. Are those receipt— is that receipt authority going to another project, or what exactly is the plan for that receipt authority for that project? And do we lose that if we do not adopt— continue this on with the bill. Thanks for the question, Representative Tomaszewski. In my conversations with Legislative Finance and the department, my understanding is that we do not have the ability to move federal authority around amongst STIP projects.

What we do have the opportunity to do is to reduce or eliminate STIP funding, specifically the federal receipt authority. That does not reduce the total amount of federal receipts that are available out there, and it's my understanding that looking at the number of STIP projects that are included in the STIP, that there will be an opportunity to still receive that same level of funding. We're just eliminating receipt authority from one specific project. But because there is more receipt authority across all of those STIP projects than there are federal funds, this should not reduce the total amount of federal funds that the state would be receiving for STIP projects. Okay, thank you.

Yep. And again, we'll have an opportunity to we can further scrutinize this over the next few days and have further discussion. Representative Ballard. Thank you, co-chair. So I'm going to bring it back up again because I really think it's important before we vote to adopt something that's going to completely, uh, probably be adopted, that's going to be stricken out.

I really would appreciate it if you could pass out that letter prior to us adopting it. Representative Ballard, we have a very tight schedule today. I understand if you're not comfortable voting for the committee substitute today. I respect that and understand if you need to vote no. But for my purposes today, I'd like to move forward with this vote, and we'll have the opportunity over the next few days to make sure that we're all receiving the same information.

And just a quick follow-up, if I may. Follow-up. Yeah, this isn't for me. This is for the public. And I think that letter is very crucial that we discuss it beforehand.

And I get we have a tight schedule, but I mean, honestly, you're the co-chair. We could, we could be here after floor and come back, adjourn, and talk about it. So, okay, thank you, Representative. I appreciate it very much. Any further discussion from committee members?

Representative Stapp? Yeah, I think, Chair Schrag, I'll do my talking here rather than at the objection timeframe, I suppose. Well, I mean, obviously there's an old saying: if you got the votes, vote, and if you don't, talk. So I'm just going to say I hope the committee throughout this process will reconsider this decision. You know that we talked a lot this session about our 9-to-1 federal match.

This deletes a sizable chunk of that over and beyond what's necessary in the STIP. It's $94 million. And also, like, the West Zoo Access Project is one of the few things that we have in Alaska that is going toward positive steps for resource development. We're a resource development state. We should have policies, in my opinion, on the Finance Committee that are driven for the future development of resources to be able to unlock Alaska and give all Alaskans opportunity to be able to thrive through our collective resource ownership.

So I like the CS minus a couple of things, obviously, and we'll be maintaining my objection for over the deletion of the Westview Access Road. Thank you, co-chair. Thank you, Representative Stepp. I appreciate the comments. All right, I'm not seeing any additional discussion from committee members, so with that, I'm going to remove my objection.

Is there further objection? Checked. All right, very good. With there being an objection maintained, I'd like to ask the clerk to call the roll, please. Representative Allard.

No. Representative Bynum. No. Representative Stepp. No.

Representative Jimmy. I'm sorry. Oh, Representative Hannan. Yes. Representative Moore.

No. Representative Galvin. Representative Tomaszewski. No. Representative Jimmy.

Yes. Representative Foster. Yes. Representative Josephson. Yes.

Representative Schrag. Yes. 6 Yeas, 5 nays.

All right. On a vote of 6 yeas, 5 nays, the committee substitute has been adopted for Senate Bill 214, version W. For this bill, I am setting an amendment deadline of Wednesday, May June 26th at 4:00 PM. An email will be sent to committee members and staff with details on the amendment drafting process. All right. With that, we are going to take a brief at ease while we transition the gavel.

Thank you, everyone. We are at ease.

Easy. Meet the match.

Okay, I'll call this meeting, the House Finance Committee, back to order. The time is currently 2:06 PM, and we do have 4 bills that we're going to attempt to, um, address today. And, uh, those 4 bills are, uh, House Bill 261, the education funding bill. We just wanted to bring this back for the committee when we left off last. There are some folks had some questions, and so we want to just make sure that folks are able to ask their questions.

After that, we have Senate Joint Resolution 29, that's constitutional amendment educational funding. We're going to be doing amendments on that, taking up amendments. And then after that, the third bill is Senate Bill 86, that's the money transmission and virtual currency bill. Taking up amendments on that. And then we'll be receiving a reintroduction of a bill we heard last year.

That's House Bill 104. That's the Addressed Confidentiality Program. Couple of things. We do need to be back on the floor at about 3:00, so we have a hard stop at about 2:55.

I don't foresee us being able to get to all of these bills by then, so there's the possibility possibility that depending on how long we go on the floor, we may come back later, recess out, and then come back later. But we'll see how long we go on the floor and we'll let folks know. So with that, we'll jump right into House Bill 261, education funding. If we could have Representative Story come up as well as her staff, Ms. Tammy Smith, and if you could put yourselves on the record. And I thought I had a list here of folks who had questions.

I'm not seeing that, but we'll just— we do have some folks who do have questions. So Representative Story, just again kind of get us moving the same direction here, real quick recap of the bill. Sure. Thank you, Co-Chair Foster and committee members, for hearing the bill again. My name is Representative Andy Story, representing District 3, Northern Mendenhall Valley, Haines, Skagway, Klukwan.

¡Angus Davis! Ah, yes, the bill before you, House Bill 261, reforms our education funding process. It is an opportunity where we can put our state online with giving our districts their number, their student count number on July 1st. As they go through the year, the community can budget it more with certainty. Municipalities can have their number in March and April based on a set student count that's been verified by DEED during the October process.

But most importantly, our teachers, um, we can give out their contracts to our teachers earlier in the year, and this is very important for keeping our teachers in the classroom. We know that our funding is based on our headcount, our student count, and the amount of the BSA, base student allocation. So this does not fix everything because we still always are wrestling with how much funding should we give to, what investment we should make to our public education system. But this is really transformative, I believe, in how we would be doing our, taking a 3-year average or the previous year and starting July 1st.

Their number for the year. Great, thank you very much. We've got a question, Representative Tomaszewski.

Thank you, Co-Chair Foster. Through the chair, so I'm looking at the fiscal note for the public education fund, OMB component number 2804, and it has a total operating budget of $113,710,000.

$31,000,000. And I'm looking at another duplicate of that fiscal note that was February the 21st. It's the same number. The, the new one that you have in this packet is from April 14th. There's a discrepancy on the amount, so it's a $34 million $34 million more on the February 21st fiscal note, which is $147 million.

I'm just curious as to what changed in the— I think it's maybe an earlier version of the bill. Can you kind of explain where that $34 million went? Representative Story. Thank you for that question. We are looking for that note, but we do have deed online, the justification for the analysis process is on the back of that, so we will try and find that.

But DEED is online and they prepared all those fiscal notes for us. Ms. Heather Heineken, if you could put yourself on the record.

Uh, good afternoon, this is Heather Heineken, the Director of Finance and Support Services for the Department of Education, and I'm going to try and see if I can get the right versions of the fiscal notes that you're referring to. So the The first fiscal note is— I apologize, could you repeat which fiscal notes you're referring to? Because let me start with, through the chair to Representative Tomaszewski, there has been some language changes in the bill. Originally, the alternative programs language was put in and then it was removed. And then it was put back in.

So that's one change. And then also, because of the complexities in this bill, the department had to clarify language, and we did have to rerun some fiscal notes. So I just want to make sure I'm looking at the right versions before I try and answer your questions specifically. But that, that is the overview of the most of the changes. Yes, thank you, uh, Director Heineken.

I appreciate that. So the earlier version fiscal note dated February the 21st is control code OUDCW, and that is a $147 million fiscal note. And I'm just wanted to compare that with the same fiscal note, just it's a different date, and that's the one you ran through, and that one is control code SCDW. E-Y-B-M. And so that one has $113 million fiscal note. And I just want to know where— how did we lose the $34 million approximately from one to the next?

And if I could, Representative Story, just would like to make a comment. Thank you for that. And through the chair to Representative Tomaszewski, We had had a version when we first started this where we were doing an averaging, a 3-year average of our intensive student count, and we removed that in the most recent version and are not taking a 3-year averaging of the intensive student count. We are just taking either the previous year, the current year, or truing it up in February. So we had 4 options originally, and then we decided to take out the 3-year averaging for the intensive student count because we realized the previous year would be the best thing to do because we had those intensive student counts for that previous year.

They were just in the district, and, and it was a lot of money to do like a 3-year averaging, and that had to be— that was some concern about possibly doing double on times 13 intensive child. Representative Tomaszewski. Yes, thank you. And so if I could hear from Director Heineken, if she can kind of go over that also, because that seems— I guess I'm curious, was the special needs count really a $34 million note on that? Director Heineken.

Miss Heineken. Uh, thank you. Uh, Heather Heineken for the record, through the chair to Representative Thomas Sheffke. Yes, um, between those two versions, that is the main factor, is the special education intensive counts. One intensive count is— and I'm— these are approximates, I don't have the figure in front of me, but it's, it's about $83,000 per change in one intensive count.

So it's a pretty significant difference when we start looking at those as an average as opposed to actuals. Follow-up, follow-up. So that's $83,000 per student change?

Through the chair to Representative Tomaszewski, yes, for an intensive student, uh, that is about the cost per ADM. Okay, thank you. Okay, do we have further questions? Thank you, Representative Bynum. Thank you, Co-Chair Foster.

Through the chair to Representative Story, I appreciate this bill. I appreciate what we're trying to do with it. I know we do have an amendment deadline on the bill. I mean, overall, I think the general concept is something I can get behind. The current construction of the bill is— I have some issues with the optional features of the bill.

So if it was purely a 3-year average and then there was a true-up for extraordinary circumstances, I'd be more inclined to be side-by-side with you on the bill, even if there was an immediate fiscal note, which we know that over time would alleviate or go away. So I look forward to the amendment process. I look forward to talking with you as well a little bit further. I just want to let you know that I do I appreciate this effort, and in general I do support the generalized concept, but just not in its current form. So thank you.

Great, thank you very much. And with that, just a reminder that the amendment deadline is today at 5 PM, and then my hope is to maybe address those amendments tomorrow. So with that, I think we're going to take a very quick brief at ease here. We do have Next Step Senate Joint Resolution 29, the constitutional amendment educational funding. We do have amendments for that, and I think we may be waiting for the bill sponsor, so we'll take a brief at ease.

Okay, House Finance back on record, uh, at 2:18 PM, and we have Senate Joint Resolution 29 before us. And if we could have Mr. Tim Grusendorf come up, uh, Senator Hoffman's staff, and if you could just put yourself on the record and give us a brief recap of the bill, and then we're going to jump into amendments. I think we've got 3 amendments. So, Mr. Gruessendorf. Good morning, Mr. Co-chair— good afternoon, Mr. Co-chair, co-chairs, and House Finance Committee.

For the record, my name is Tim Gruessendorf, staff to Senator Hoffman in the Senate Finance Committee. In front of you again today is SJR 29, which proposes to create a dedicated fund in the Constitution for the purposes of application and put that before the voters in the fall. Great, thank you very much. So with that, members should have the amendment packet before them. And Representative Hannon, would you like to offer your first amendment?

I move Amendment 1. Okay, an object for purpose of discussion. Representative Hannon, I have a brief at ease. Sure, brief at ease.

Okay, House Finance back on record at 2:21 p.m. And let's see, I objected to Amendment Number 1 for purposes of discussion. Representative Hannan. Thank you, Co-Chair Foster. Amendment 1 addresses what I heard in our discussion as two concerns about SGR 2023. 29.

The first was we had a lot of discussion around the way may and regarding the creation of the fund, and there were worries that voters might think they're approving and mandating that we create this fund, but no guarantee that the legislature would subsequently go and create the fund. So this amendment puts that to rest by instead mirroring language that we find already in the Constitution in Article 9, Section 17 of the Constitution that creates the Budget Reserve Fund. So the amendment deletes the words, "The legislature may create an education fund," and replaces it with, "There is established a separate fund in the state treasury, the Public Education Fund." And I think, you know, concerns of does the public believe And is it mandated? Well, this would make it clear that that's what this amendment, if it were before the voters, does. The second concern was to make crystal clear that the fund to be established is for public education only.

So the amendment drums this home by inserting the word public before education fund in several places where the current version, it's absent. It does appear in some places already in the version. This makes it consistent throughout SJR 29. Every time the education fund is referenced, it would then read public education fund. That's what Amendment 1 does.

Great. Thank you. Do I have any questions of the committee? Representative Bynum. Thank you, Co-Chair Foster.

I'm kind of mixed on this amendment.

I know that there was some discussion about whether or not the legislature may or may not have the authority to create create the fund. This amendment is stating that if the constitutional amendment was passed, that there shall be a fund established for public education. My thought on this is that I still don't want— I wouldn't want to give up the legislative authority to be able to create the fund. I don't particularly have a problem with the may language. I actually prefer it.

I do believe that there was some discussion about defining it as a public education fund. I think that that is something that we should do, but overall I don't know that I'm fully behind the idea of it saying that we shall establish a fund for this purpose. I still think that we should have the latitude to be able to create the fund. So I support the underlying bill. I'm not sure that I support this amendment for that reason.

Further discussion? Representative Gellman. Yeah, I have a question for the maker of the amendment, or perhaps for Ledge Legal. It is—.

If it says the legislature, there is established, does that mean that there has to funds in it, or can it be a fund sitting there waiting for funds in it? Ms. Marie Marks, could you put yourself on the record?

Marie Marks with Legislative Legal Services. Through the chair, I'm calling from my Ring app, not on speakerphone, so hopefully you can hear me a little bit better this time. Time. And the question was whether the legislature had to put money in the fund if it is established in the Constitution. And the answer would be no.

There's no requirement in SGR 29 to fund the public education fund at a specific level. That would be a policy call to be left to the legislature to decide how much to appropriate or how much land to transfer into the fund. Okay. Further questions? Representative Sharkey.

Yeah, thank you. Just to Mr. Grissendorf, have the Senate co-chairs had an opportunity to look at the amendments today? And do you have a position that you can relay on this amendment? Mr. Grissendorf. Through the chair, Representative Sharkey, I don't believe the Senate has an opinion on this piece of it.

I, for the record, I would have— for the intent at the end, if this amendment was not adopted, I would have put on the record that the intent was that the legislature can establish, revoke, and reenact the— but reenact the fund or bring it back, but by law. But I wasn't going to— but this eliminates the need for that because it just says that it will be enacted. So you don't have to worry about enact or reenact or anything like that to be on the record.

Further discussion? Representative Stapp? Yeah, thank you, Chair Foster. I'm not entirely sure adding the words public is actually necessary given the other constitutional provision that already says that we're not allowed to kind of spend state funds on education. So there's a mandate for education in the state constitution.

Also, you know, I mean, I guess I don't necessarily have a problem with the amendment from the maker to define that. I just don't think it's necessarily necessary because you already have the constitutional provision. Further discussion? Seeing none, I am— oh, Representative Tomaszewski. Thank you, Co-Chair Foster.

Through the Chair, I'd like actually Ms. Marks, if she can comment on that. By inserting the word public, does that remove any kids off of the ability, out of the ability to actually take part in this public education fund? Is it discriminatory against any particular group of kids that it would actually bar from using this public education fund. Ms. Marks.

Yeah, again, for the record, Marie Marks with Legislative Legal Services. Through the chair, Representative Tomaszewski, that brings up a really good point about how a court interprets terms and phrases in the Alaska Constitution. And when the court was interpreting the meaning of a term in the Constitutional Budget Reserve Fund, in the case Hickel v. Cooper, the court said, "We will interpret an amendment," and that was similarly done through an amendment process by the people, "We will consider the section's plain language, its purposes, its legislative history, and contemporary evidence about voters' understanding of the constitutional amendment meaning." the statement in support and the statement in opposition. So therefore, it's very important and what the legislative record shows of the meaning. And so I guess what I would recommend is that the committee make it very clear on the meeting what they mean by public education.

As we discussed before, there's no definition in the Constitution, in state statutes, or Black's Law Dictionary, which is often looked at by the court in interpreting it. It is true that Article II, Section 1 of the Constitution refers to public education, but the University of Alaska section in Article VII, Section 2 does not. There's a difference between, I think, public education, which is a very, very broad term, and a narrower term of public schools. And so under, I think, the plain meaning of the term, if, if the court just turned to the plain meaning and didn't look at the the pro and con statements and the legislative record that you establish here through the process. I think it could be very broad and it would likely include all public education programs such as public correspondence programs, public correspondence schools, um, or sorry, public charter schools, state boarding school, and so forth.

Okay, thank you. Okay, seeing no further discussion, wrap up. Representative Hannon. I don't think I need any wrap-up, but I would urge your support. And I just think making it clear that if you are— if this goes before the voters, that they are voting to establish a fund.

It does not fund the fund, but it establishes it. And I think I really support having that clarity before the voters so they understand at the outset that there's a binary decision. The decision to fund it is a secondary one that will be made by legislatures if this were put in place. Okay, thank you. Did I— no, okay.

I'm going to remove my objection. Are there any further objections? Hearing none, Amendment Number 1 has been adopted. That takes us to Amendment Number 2. Representative Galvin.

I move Amendment 2. I'll object for purposes Discussion. Representative Galvin. Okay, so this amendment does two things to this bill. After speaking with the sponsor staff, I felt that this might be helpful.

The amendment puts the proceeds of a state tax or license dedicated to and deposited into the education fund for K-12 students. And then I think it's important since that's our duty in the Constitution that we make that clear. And then secondly, the amendment specifically focuses on providing funds for the instruction in the classroom. Funds cannot be used for major maintenance or deferred maintenance. We have a process for that currently in the state.

This is crucial as allowing for major maintenance and capital improvement funds would take over most of the fund if that is— if that is in— if it is not clear here. And I think that in that case there wouldn't be funds left over for the teachers and rising costs of operating a classroom. And again, we have the burger program and lots of ways that we are determining how to handle major maintenance. So that's what this amendment does. Okay, discussion?

Representative Bynum. Thank you, Co-Chair Foster. Through the Chair, I guess this might be a question for legal and something I probably should have asked under the previous amendment. The way that the original SJR was written is that it allowed the legislature to create a law establishing this fund And within that law, it allowed the legislature to tailor specifically components of the law. Amendment 1 basically had changed that, and it said that there shall be a fund established.

Does this still allow the legislature once to, to create or define in law the elements of that fund and how it would function, or did Amendment 1 take away the ability of the legislature Legislature to do that. Ms. Marks. Yeah, remarks. Legislative Legal Services. Through the chair, Representative Bynum, the legislature could establish parameters for the Constitutional Education Fund subject to existing provisions of the Constitution.

So it could fund it in using different structures. Financial structures, maybe an endowment, maybe it appropriates revenue every year into it and spends the full amount of the revenue, but it still would be subject to the current provisions of the Constitution regarding majority vote to appropriate funds out of it and, and other, you know, other provisions of the Constitution. Representative Bynum. Thank you. And for the record, if you noticed on the last amendment, I did not object to vote no on that.

I can live with the fact that we would agree that it would be an established fund. But with that being said, I would still like to see some legislative authority over the fund. I understand that from our discussions prior that having elements or language in the Constitution to allow dedicated funds— or I'm sorry, dedicated funding sources or revenue sources to the fund is something that is absolutely necessary. It's not something that we can do through law and then make sure that it would stay in. So as far as the language goes here in Amendment Number 2, I don't have any issues with, uh, items that are in lines 1 through 8.

The items in lines 9 through 12 I do have an issue with. I think that is something that can be established through the legislature when we go to create the fund. I would hate to lock us in with being able to say that we wouldn't be able to dedicate tax revenues or fees into this fund or another fund for the purposes of these other items. So with that, I would like to make a conceptual amendment, Conceptual Amendment 1, or move Conceptual Amendment 1 to Amendment 2 that would delete or remove lines 9 through 10 12. Okay, we have an objection and we have an objection and let's go to Mr. Gruzendorf and then Representative Stepp.

Mr. Gruzendorf. Through the Chair, Representative Bynum, if you would look at line 10 of the amendment, this is something that wasn't mentioned. It says, and then you go to the bill on line 13, after education as defined by law So that is giving the legislature to be able to define public education. So you can't— that's where you get the parameters. So if you take that piece out, you will not be able to set the parameters because that is— that as defined by law after public education, that is what's letting the legislature define what public education means to them.

Representative Stout. Yeah. Oh yeah. I mean, if you need to talk, I'll defer. Okay.

Or I'll go. Representative Byer. Defer. Yeah, I was— I withdraw that amendment. And my— I see as defined by law, I would want to have a full stop there and remove this section, everything after that, which would then let us define it.

So, but I don't know, I don't want to mess up the process here, so I can just remove my, uh, move my amendment and make another amendment if that's appropriate. So Amendment Number 1 to Amendment Number 2 will be withdrawn by Representative Bynum. And Representative Bynum, would you like to restate an amendment? Correct. Thank you.

Um, I'd like to make Conceptual Amendment 2 to Amendment 2, which would remove after the words "defined by law," the language from lines 10 through 12. Okay. Representative Stout, we have an objection. Representative Stout? Yeah, I— okay.

So I am going to support the conceptual amendment to Amendment 2. Reason being is I think that you want to be as least prescriptive in putting things in the Constitution. It says for students in kindergarten through 12, money in the Education Fund may not be appropriated for capital project, capital improvement, or major maintenance. I think that though there probably isn't an issue with saying things like kindergarten through grade 12 in the Constitution, there might be a future date in which we don't have those things, or we'd call them something different, Right? So, and I think if you look at the framers of the Constitution, not only they were against any type of dedicated funds, they also wanted us to be as flexible and as least prescriptive as possible.

And I feel like getting rid of that language, though we may not want that, if you prescribe that in statute, in a future legislature, has a bill to prescribe that in statute. It would take a future legislature to again change that purpose in law, and I think that would preserve flexibility in budgeting through the chair. Thanks. And Representative Bynum, just so we have clarity in terms of the difference between Amendment Conceptual 1 and Conceptual 2, can you restate Conceptual 2? Thank you, Co-Chair Foster.

Yes. What Conceptual Amendment 2 of 2 would do is after the words as defined by law, there would be a period there and it would remove the remainder of that sentence and the next sentence. Great, perfect, thank you. Okay, Mr. Gruessendorf, any comments?

Through the chair, there— and when talking with the senators in the other body, they did not intend this to go for construction or major maintenance was their original thought because there's already a process established for that. And they did realize that the big cry out for education right now, although we do have maintenance and major maintenance and construction concerns, we are very concerned about the instruction in the classroom and the BSA. We've been having these battles, so they thought that this would eat away too much when we need to get more money towards the classroom and K-12. They thought it would be— should be limited to that, not pre-K and not college and university afterwards, which we thought the Constitution, when they put what they put in there for the legislature and that state was— it was there, they should follow and they need to fund public education in the Constitution. I don't think they were talking about anything below kindergarten or anything above, you know, 12, K through 12.

So this seems to fit with that intent. Okay, thank you for the discussion. Representative Hannan. I'm going to support conceptual Amendment 2 to Amendment 2 because we are drafting constitutional language. And although I agree with the perception from the Senate that I believe our intent is to look at operational costs, I don't think getting that specific in the Constitution puts us in a good stead.

Now, if this passes by the voters and is a constitutional constitutional amendment, we as a legislature would be called back to define by law what we mean by this fund and speaking to its intent or purpose primarily be operational costs. But again, you know, in the last 20 years we've learned a lot about preschool and early education being critical. And so one of the things, for instance, in law, we don't mandate kindergarten in Alaska. We're one of the few states. But to put it in our constitution seems overly prescriptive but not reflecting the norm.

And I could foresee, let's just say someday this is a multi-billion dollar fund and we have numbers of schools that have burned down, been destroyed, flooded out, and for that year we need to make some intense capital investment and turn to that fund. Although that's not what I'm envisioning, I don't want the Constitution to prohibit us from doing that in a time and place that we were. So I'm going to support Amendment 2 to Amendment 2. Representative Galvin. Thank you.

In hearing the discussion, I have to also concur with this amendment to the amendment. It's a friendly amendment to me. And the reason is the conversation around the Constitution and how important it is to leave some of the terminology very broad but yet still give the control to the legislature to define at some point. And so for that reason, I will be supporting Amendment 2 to Amendment 2. Is the objection maintained?

Representative Moore?

I withdraw my objection. Okay. The objection has been withdrawn. And I don't see any further objections. So Amendment 2 to Amendment 2 has been adopted.

That takes us back to the main amendment. Representative Josephson. Question for Ms. Marks on Amendment 2 as amended by Conceptual Amendment 2. Through the Chair, Ms. Marks, when we say— I apologize and I will make it right with the committee. When we say the proceeds of a state tax or license, in your testimony, Ms. Marks, From last week, I guess it must have been.

I think you said that there was that a, for example, a $50 head tax could not be put in the fund, but a special appropriation could. Did you say something like that? Ms. Marks.

Marie Marks, Legislative Legal Services. Through the Chair, Representative Josephson. Correct. SJR 9 as currently written at that time would not legally allow the dedication of money directly into the fund. All right, uh, follow-up, follow-up.

Uh, it's pretty obviously that under Amendment 2 as amended, it could do that. Um, and my question is, it says the proceeds of a state tax or a license. Uh, would it have to be all of a state tax? So if we raised I don't know. Let's say our motor fuel tax wasn't the lowest in the country but it was 25th in the country.

Could we spend 80% of that increase on this item or would we have to spend 100%? [SPEAKING FOREIGN LANGUAGE] Through the Chair, Representative Josephson again would reiterate that the legislature should put its intent, what it intends, on the record so it's very clear. I think the common understanding just by the plain language is bylaw means the legislature could, by a bill, establish a percentage of the proceeds. If it does not, bylaw would not have to be the full proceeds. I think that's the common understanding.

If the legislature would like a different understanding, I think it's really important to put that on the record. All right. And I don't want a different understanding than that. So I'm going to leave that language right there in the record. And then lastly, a follow-up, if I might, Mr.

Chair. Representative Josephson, the use of the word license.

Tell it— tell us what you think that means to you, Ms. Marks.

Yeah. Marie Marks, Legislative Legal Services, to the chair. Representative Josephson, That is the phrase that's used in Article IX, Section 7, that has been interpreted to mean any— the source of any public revenue. So that phrase, proceeds of any taxes, license, is used here because that is the exact phrase used in the dedicated funds clause. But in State v. Alex, the court said that it's any public revenue, tax, license, rental, sale, royalty, whatever.

Is included in that phrase. Again, I think that it would be important for the legislature to put on the record that it means, you know, any source of public revenue that's been taxed.

So in State v. Ellis, the Supreme Court said it's any source of revenue that has been taxed. Is that what—. Can you repeat what you said?

Yes, through the chair, Representative Josephson, it was interpreting the phrase, um, what does any tax or license mean. And in the Alex case, it involved assessments, and the question is whether these assessments were a tax or license. And so the court said in the anti-dedication clause in the Alaska Constitution, with the use of the word state tax tax or license, it means any revenue that is— any public revenue is subject to the anti-dedication clause. So here, the amendment provides an exception to the anti-dedication clause, meaning it allows the legislature to dedicate and deposit directly into the education fund a source of revenue as set out by law by the legislature in a bill. All right.

That's sufficient. Thank you. Representative Hannan. My question was the same as Representative Josephson's. Any further discussion on Amendment Number 2 as amended?

Representative Galvin. Thank you. I just wanted to urge support for this amendment. I do appreciate the Senate's intent originally in trying to make sure that the public understands that they see the people in education, the teachers, the educators who are part of it, get the support that is needed. I think that clearly we are experiencing a time unlike any others with regard to our outmigration of educators.

So I do appreciate the intent. Of trying to carve that out if possible. And yet, after becoming aware of so many emergencies that do happen and also how important it is to keep flexibility in— and general language in anything that would touch the Constitution, I really do appreciate this amended amendment, and I hope that you'll support it. Thank you. I'm going to go ahead and remove my objection.

Any further objections? Seeing none, Amendment Number 2 as adopted— as amended has been adopted. And so that takes us to Amendment Number 3, and I assume you're going to— I'm just debating whether or not I want to recess. Um, I'm going to offer Amendment 3 if, if you'll allow me, or we can, we can wait. It's up to you.

Um, I'm I'm thinking we're supposed to be going to the floor here.

Oh, I'm seeing some folks who would like to maybe have a little time to take care of some things before we go to the floor. So what we're going to do is we'll come back to Amendment Number 3, hopefully a little later, and we'll figure it out depending on how long the floor session goes. So what I'd like to do for now is go ahead and recess House Finance at 2:48 PM. PM, and we'll announce later when we're coming back. So with that, we're at recess.