Alaska Legislature: House Finance, 4/27/26, 9am

I call this meeting of the House Finance Committee to order. Let the record reflect that it is 9:05 AM on Monday, April 27th, 2026. Present today we have Representative Bynum, Representative Allard, Representative Tomaszewski, Representative Hannan, Representative Galvin, Co-Chair Foster, and myself, Co-Chair Schrag. Also here to help our committee today is committee staff, committee assistant Helen Phillips, Paige Tallulah Lestufka, Secretary Bree Wiley, as well as Leah Frazier, and our LIO moderator Emily Mesh. Thank you for all your help in our committee.

Before we begin, just a quick reminder to committee members to please silence your cell phones. Today we will be hearing a presentation from Lacey Sanders, Director of Office— Director of the Office of Management and Budget, for an overview of the two recent batches of Governor's Amendments released earlier this month on the 8th and on the 23rd. Director Sanders, if you are ready, please come up to the dais, put yourself on the record, and begin with your presentation. And before you do, we have been joined by Representative Jimmy and Co-Chair Josephson. Good morning.

Please proceed. Good morning. Thank you. For the record, my name is Lacey Sanders, the Director for the Office of Management and Budget. And as noted by Chair Schraggy, Today I am presenting two batches of amendments to the committee.

The first was transmitted on April 8th. It pertained to the capital budget. It was the allocation of the STIP, Statewide Transportation Improvement Program. And then we had a second batch of amendments and the final batch of amendments that was transmitted on April 23rd. This primarily included contractual bargaining unit agreements, as well as a few other items that I will walk through today.

Okay. And just really quickly before you continue, just a quick note that Representative Moore is joining us via teleconference this morning. Please continue, Director. Okay.

So to start on slide 1, each presentation that we brought before the committee, we have included a short updated fiscal summary of unrestricted general funds only. The numbers and the total amount that were transmitted are fairly small, so it doesn't change the outcome of the fiscal summary for the governor's budget too dramatically. So if it's okay with the committee, I'm going to just move forward into the meat and the potatoes. Please do. Presentation.

So starting on slide 3, we have operating amendments to the governor's budgets. As you can see, we've worked Down the slide to April 23rd. These are the governor's requests totaling $8.8— excuse me, $8.4 million of unrestricted general funds, a reduction of $8.4 million in designated general funds, and an overall increase of $2 million in all funds. And on slide 4 outlines each of the requests that are before the committee, and you should as well have the accompanying spreadsheets in your packet. So, uh, starting at the top, uh, under the Department of Administration, there is a $50,000 federal receipt increase, uh, for a court-appointed and special advocate CASA and Guardian Ad Litem GAIL program support grant that was received from the federal government.

Um, there is a corresponding supplemental, um, on a future slides for that as well. Within the Department of Commerce, Community and Economic Development, the governor's original budget proposed using $1.3 million of rail belt and energy funds for the newly established rail belt transmission organization. After working with the Department of Commerce, Community and Economic Development, and the Division of Finance in the Department of Administration, Um, we have been able to reconcile that fund and the $1.3 million is not available. Uh, so there is a net zero fund source change to unrestricted general funds to continue that program, uh, in fiscal year 2027. Under the Department of Public Safety, we have the recently negotiated contractual bargaining unit adjustments, um, for the Public Safety Employee Association.

Uh, this is the changes associated with both salaries as well as health insurance. Um, there also is a related fund source change for rural trooper housing. Previously, troopers contributed towards the housing cost in the bargaining, uh, agreement that those troopers will no longer pay for that, uh, requiring, uh, general funds to replace those receipts were collected. Lastly, there is an increase of $924,000, uh, for contractual cost increases related to dispatch services in the Matsu and Kenai areas. Um, these costs have been continually increasing over the last, um, at least 3 fiscal years.

Uh, the department did not receive increases to cover those costs, um, and so therefore we're requesting, uh, the ability to fund those costs with an increment. Uh, within the Department of Transportation and Public Facilities, we have the increase for the salary adjustments associated with the Public Safety Employee Associations and the airport police and fire officers. Um, again, this was the contractual bargaining unit that was, uh, agreement that was transmitted to the legislature. And then lastly, under the University of Alaska, There were salary adjustments included in the governor's budget providing a 3% increase to non-covered individuals. There was a group of individuals that did vote to unionize recently, and so this budget reverses out the increases associated with employees that would have been covered by that 3%.

This will allow the individual— or the individuals covered under the new union to negotiate for their salary increases and bring those back next year to the legislature to fund those salary adjustments. Okay, Representative Josephson. Thank you, Mr. Chair. Director, as to the last item, as I understand it, on the 11th of December, the governor's position was that the university could use its own dollars university receipts to pay for the non-organized individuals.

Is that— was that true on December 11th? Director Sanders. Through the Chair, Representative— or Co-Chair Josephson, yes. The December 11th budget included a 3% increase for all non-covered individuals. Follow-up?

Co-Chair Josephson. And so now, having organized, the Governor's position is the university can no longer use its own dollars to pay these same individuals any increment in salary. Director Sanders. Through the chair or co-chair Josephson, the individuals that determined or took a vote to unionize will now need to go through the same process that all other unions are required to go through, which is a negotiation process. Once that outcome is determined by the negotiations and it is finalized and brought forward by the legislature, then it would be included in the budget for a payment.

Follow-up, if you'd like.

Am I right? Yes, follow-up. Am I right that at least— I view it as inadequate, but at least on December 11th, the governor's office took the position that the university could spend its own money to fund say a 3% adjustment, and now the university can't do that even if it wants to. It must wait to show— well, it must wait until essentially a year from now to make those increases. Director Sanders.

Through the Chair, Co-Chair Josefson, so at the time the governor's budget was submitted, there was no union coverage of those individual employees, and therefore the request that was put forward aligned with a group of individuals that did not have coverage. There are still individuals that are not covered under the union, um, that are still covered by that 3% that is remaining in the budget. Um, but with that vote to change, to unionize, the outcome of the request that was initially put forward has changed until they go through the process of negotiating. Okay, thank you. Representative Galvin.

Thank you, I appreciate it. Through the chair, my question is around that set of people who are going to be without an increase for that year of contract negotiations. Is there— was there consideration for them to have a one-time increment so that as they are negotiating they are not left with all of their colleagues who are making more because they are currently unionized and they are not. I just wondered what the thinking was. Director Sanders.

Through the chair, Representative Galvin, so we are treating this like we would any other union that has to go through the negotiation process. If negotiations fail and aren't reconciled to some degree before the legislature adjourns, then we continue to move forward and bring it back for the legislature next year. That's the process that's been in place for as long as I have been a part of this. I did have conversations with the university about this. The members that determined that they wanted to unionize were notified that this step would be taken well before they decided to vote.

And it is not uncommon to come back and ask for an agreement retroactively. That answers my question. Thank you very much. Thank you, Representative Bynum. Thank you, Co-Chair Sharkey, for that.

Through the Chair, Director Sanders, thank you for being here. Just for clarity on this topic, what I'm hearing you what you say is that the administration is taking the position that we aren't going to be putting money aside for these pay increases because those employees are in a collective bargaining process. And that after that process is concluded and we know what the outcomes are going to be, that those requests would then be forwarded for funding. Through the chair, Representative Bynum, a much more eloquent way of putting it, yes. Thank you.

Okay, I'm not seeing any additional hands, so please continue, Director. Thank you.

The, uh, the next slide, slide 5, is the FY27 capital budget amendment. So again, as noted earlier, the April 8th, uh, submission of amendments was really tied to the STIP program. I'm going to fast forward, if it was— if it's okay with the committee, to a summary on slide 6 that outlines the Statewide Transportation Improvement Program and Airport Improvement Program projects. So just a little bit of background: in the December budget that was transmitted by the governor, it includes an estimate of what we anticipate these two programs will cost. Including the federal match component towards them.

As the Department of Transportation works through the process of allocating the programs and determining which projects will be included, the administration forwards a packet of amendments outlining each of the projects within that. It nets out, so you have the governor's budget at the top, the amendments that were transmitted on April 8th at the bottom for an overall change here. And again, the amendment packet itself and the packet in front of the committee includes extensive list by project that are included in the appropriation bill moving forward. Happy to take any questions. We do have Director Don Pannon here in the room to assist if there are specific project questions.

Representative Galvin. Thank you, Mr. Co-chair. I just want to comment. We have not seen this before, so— and the font size I think is maybe 0.6 or 0.5, so it's really difficult to read this and ask questions accordingly. So I just want to make sure that You understand why some of us are shuffling through papers right now.

We would love to ask questions or get more clarity, but it is going to take a minute, I think, for all of us. Representative Hannon. Thank you, Co-Chair Schraggi. Ms. Sanders, so the amendments of April 28th show a reduction in our federal match, correct? Is there—.

Sorry, go ahead. Is that—. Can you direct us instead of flipping through, are there multiple projects where there's small reduction? I mean, because as DOT projects go, that's not that much money. So I am assuming it's only one or two projects.

Through the chair, Representative Hannon. So in the December budget, we don't have a list of the projects underneath. We just have an estimate at a high level. Once DOT goes through and identifies each individual project, they determine what the match requirement will be, and that's the true-up. Sometimes it goes up and sometimes it comes down.

It's— the $324,000 is fairly small in this instance. Yeah. Follow-up. Follow-up. So what you're saying is there is no change in the projects in this.

It is just a truing up. So instead of it being the estimated federal match, it is more accurate reflection resulting in $325,000 less. Okay. Thank you. Okay.

Very good. Through the chair— to the chair, Representative Sharagi, both myself and Director Panone are available after the committee meeting to talk through any particular item if somebody wants to take a bigger picture or a bigger printout and follow up. Well, I think two questions that I would expect you all to get in follow-up after this meeting are around two items that I discussed with Mr. Pinon earlier this last week, one being Cascade Point and two being the West Sioux access. Maybe Director Pinon would be willing to come and speak to those items just briefly.

66, I believe.

And, and we'll give you a moment to get yourself situated there.

For the record, Don Pannon, Director of Program Management and Administration at the Department of Transportation. To the Chair, the allocations for the fiscal year 2027 capital budget do include an allocation of federal funds for $49 million for a portion of the Cascade Point ferry terminal Project.

I don't believe there's an allocation for the West Susitna Project in the '27, but the STIP amendment that we are— the new STIP we're putting out does have a significant increase for the West Susitna Project and the new corresponding bridge involved in that project. Okay, very good. Representative Josephson.

Through the chair, Mr. Pannon. I'm not a supporter of the Wesu project. And so candidly, I'm disappointed that this is where the state's going. I side with the, for example, the hunting and resort opposition to this proposal. As I understand it, the road would go to the opposite side, the west side of the Susitna River, but this is not the multiple 90 miles further up behind Mount Susitna to the mining sites there.

Is that correct? Mr. Director Pannon. I, through the chair to the co-chair Josephson, I would have to, I'd have to contact the project manager for that specific question on the project. I don't have that information. Follow-up?

Yes, follow-up. So I don't mean to sound testy about this, but just as you sit there, you don't know whether this is the portion that I did a flyover of that simply goes— some might say simply— from the Knik Goose Bay area west, largely west across the Susitna to a terminus somewhere just to the west of the Susitna and not further north-northwest behind the mountain itself. You don't have a sense of how far this road project goes at this point in the STIP. Director. Through the chair to Rep. Josephson.

Representative Josephson, I don't— I'm not familiar enough with the technical mile points or the area itself, but our project manager and our staff certainly are. We could provide any information you need. Okay, thank you. Representative Hannan. Thank you, Co-Chair Schrag.

Mr. Pannon, go ahead and stay because my question is for you, and it's about Um, the Cascade Point. I thought I heard the first is that it was $49 million, but in the detailed backup it looks like it's a $39.2 million request for federal. Director Canone.

So I'm looking $49 or $39.

And while the director looks, just for members' awareness, that's item 66 on the line, 66 in the—. Yes, I could have helped. Director Pinon, or excuse me, Director Sanders. That's okay. Uh, through the chair, um, Representative Hannon, we're going to have to get back to you.

We have a discrepancy between the two documents that we're both looking at, so we'll follow up and what the number should be. One follow-up, and that dollar amount is The request, because it is under federal funds, so we are requesting on the STIP that dollar amount whether it is $49 million or $39 million. And one more follow-up. Mr. Pinone, that project has had a delay for permitting. Is this additional amount, $39 million or $49 million, to get to compliance with the The federal request for— and I can't remember if it is an EIS permit or— it may not be an EIS permit, but there was a permit that the feds said before you could go forward, you need to get this permit done.

So I am looking to see, are we requesting federal money to come into compliance with the permitting process, or is this the next phase of— on the STIP? I am not sure what is in the STIP. 'Cause it just gives us the dollar amount. Director Pinnow. Through the Chair, Representative Hannan.

The permitting process is through the Corps of Engineers, and there is currently a delay in the permit. There was a change in decision on— or interpretation. So— but the current contract and that work is still scheduled to proceed once we resolve the permitting.

That will be accomplished with the money in the contract that has already been issued for Upland's work. The portion in the STIP is for the in-water and the completion of the in-water, the dolphins and the rest of the terminal project. So this is additional work that would complete the rest of the project. And then one more. Yes, follow-up.

So this is the federal match of $39 or $49 million. What is the state portion of that project for this request? Director Pinon. Through the chair, Representative Hannan, it would likely be 20%. So this would— it would be roughly just over $10 million would be the match requirement.

Thank you. Representative Staff. Yeah, thank you, Chair. Through the chair. I almost said Foster.

I got to uncondition my brain for that, I think. Through the chair to OMB Director and Director Purnon. Thanks for being here, folks. Just a couple questions on the West Sioux Access. Obviously, I'm going to take a different position from Co-Chair Josephson.

I mean, it unlocks 6 million acres in state land, and I kind of feel like we don't ever do anything positive for the future of Alaskans in this state, and that project would be not only a great recreation project, but it would actually unlock resources to help us get the revenues we need to help people's lives get better in the state. But regarding the project, I see there's like 5 bridges. I was just on the DOT website. So specifically, this increase, is this to fund, look at design and build for some of these, the bridges across the West Sioux or some of the tributaries, or How far kind of in the process do we know that this $94 million in Fed funds project—. Through the Chair.

Director Pinon, if you know the answer to the question.

Through the Chair, Representative Stapp, I know that the increase in the new STIP takes the project from $84 million to $222 million. And does construction— construct at least one new bridge. I'm not certain of the other bridge work that would take place. Okay. Follow-up?

Follow-up. Thank you. Through the Chair to Director Panone. It says Stage 2. How many stages are in this project?

Through the Chair. Director Panone? Through the Chair, Representative Stepp. There's— in the STIP, there's one parent and final construction project and then two stages underneath that project. Oh, let me clarify real quick.

Yeah, thank you, Coach Oshoragi, through the chair to Mr. Pinon. Sorry if I was unclear. I'm just reading the spreadsheet that we have from 4.8 Attachment B. It's a Project 153 West Sioux Access Road Stage 2. So I'm— so maybe I didn't understand.

So did you say that there were multiple stages of Stage 2, or is there a Stage 3 and a Stage 4? Like how far away is Stage 2 from completion, I guess, is a better question, through the chair. Director Pinon.

Through the chair, representative staff. There is only 2 child stages in the federal funding.

I believe we are ready to or approaching the ability to obligate the federal funds in fiscal year '27. So that, that's our timeline for obligating those funds and using them. Okay, thank you. Additional questions from committee members? I'm going to pause briefly.

Not seeing any. Director Saunders, I believe that's back to you. Please continue. Thank you, Director Pinon. Appreciate it.

So moving on to slide 7, we do have a few supplemental items that were submitted totaling $1.75 million in unrestricted general funds and $2.6 million in total funds. I'll move on to slide 8 to summarize those. We have spoken already about the Department of Administration's federal receipt increase. Increase for the public— excuse me, Office of Public Advocacy, and the Department of Commerce Community and Economic Development's fund source change for the Rail Belt Transmission Organization. The two new items on this slide are under special appropriations.

As the Department of Law continues to reach settlements or receives judgments or claims. Uh, we bring those forward to the legislature. There are two additional items. Um, one is $378,000, uh, for a case, uh, Morris O. Johnson Jr. versus the State of Alaska's Department of Transportation and Public Facilities. Um, and the second, um, is a total of $1.2 million for Hari versus the State of Alaska's Department of Family and Community Services, uh, in the Office of Children's Services for a total of one— just under $1.6 million.

Lastly, we, uh, each year we receive late in the process an award from, um, for the Election Fund. Uh, this is, uh, from the Federal Help America Vote Act. Uh, the state of Alaska has received, um, an $819,000 federal award with a company $164,000 match. Um, so the operating budget will capitalize the fund. Um, and on a— the next slide, we will see a spending from the— I'm going to move forward.

Um, from the capital budget, um, for the Office of the Governor, there's an election FY 2026 election security grant for $1 million. That, that's the spending of the fund from that capitalized account. Additionally, the last capital item that was submitted was a reappropriation request for the Alaska Pioneer Homes. There was a previous project using funding to replace the Palmer facilities— Palmer Alaska Veterans and Pioneers Home roof. That roof is completed and there is $270,000 $2,000 remaining to be utilized for deferred maintenance needs at the same facility.

Representative Hannan. Thank you, Co-Chair Schrag. Ms. Sanders, I am going back to both on page 4 and then again on page 8 for DC CED Rail Belt Energy Fund where we are switching from DGF to UGF, and I am, you know, it's— we're only at $1.4 million if we add the two together.

But I am wondering if that's because the Rail Belt Energy Fund is not yet up collecting fees from ratepayers, and will we— is that why we're having to switch fund sources? So through the chair, Representative Hannan, just one point of clarification. It's a UGF fund source. The Rail Belt Energy Fund is, and we're changing it to another UGF funding source, which is 1004. The Rail Belt Energy Fund, we were under the impression that there was a balance, and after working with the Division of Finance, there was obligations that utilize that balance and it's not available.

This is established as a one-time increment. Because rates will be set in the future and then we will bring back to the legislature next year those rates to utilize that funding source in a future year. Follow-up? Yep, Representative. Regarding that fund that we've— how many years have we had to do one-time allocations out of it anticipating that we are going— is this the second or the third operational year we've had to put UGF into it.

Director, uh, through the chair, Representative Hannan, this is the first year. It's just split between, um, a supplemental for fiscal year 2026 with the legislation just passing, and then one year, full year, with fiscal year 2027. Okay, thank you. Okay, very good. And did you have anything left in your presentation, Director?

I think we were at the end. Just double-checking. Yep, that was the answer. Thank you. Okay, question from Co-Chair Josephson.

Yes, um, Director, last week we learned that the annual comprehensive financial report from FY25, um, which was released a couple months ago, concluded that there was $290 million of available monies that that are spendable in FY26, essentially. We further learned that a lot of that, perhaps two-thirds of it, was probably swept into the CBR. I always say probably because so much of this is a mystery, even to the experts.

What is the governor's proposal for the remainder? How does the governor wish to spend spendable parts of FY26 dollars that have now been disclosed. Director? So through the chair, co-chair Josephson, I'd like to just provide a little bit of clarification. Sure.

If I might, before answering directly your question. So correct, the state's comprehensive annual financial report did come out in late February. I will note that this is an accounting document. I am not an accountant. Myself and Director Painter have been working closely together over the last few weeks to sort this out.

And what I will say is that budgets and accounting are not the same. And they do not align in the same manner. From a technical perspective, looking at the appropriations that were made last year by the legislature in total, and looking specifically at unrestricted general funds, there is a total appropriation amount that we can identify. In the budget world, we use fund codes to very closely track what funding sources are unrestricted general funds, which ones are designated general funds, all the way through to federal. The accounting world does not look at those the same.

The accounting world does not care what fund source was utilized. So when I asked the Department of Revenue, uh, the economic research group, for what was the total amount of revenue collected in a fiscal year and compare that to the total appropriations that were made by the legislature there is still a deficit. That is very different than the picture that is painted by the, the ACFR or the Division of Finance because they are not looking at those fund sources. One example of what we have been digging through is that the state of Alaska often pays using unrestricted general funds for things like federal COVID receipts or Medicaid or other federal programs we pay our contractors, we pay our bills, we pay our employees, and then we wait for federal reimbursement from the feds. That federal reimbursement is deposited into the general fund.

I do not count federal receipts as unrestricted general fund. So from a purely technical budget, budget perspective, in looking at total appropriations and total unrestricted general fund, there is still a deficit that would have been borrowed from the Higher Education Investment Fund. And following forward, you guys have passed legislation in HB 289 that returned that money to the higher education fund from the general fund. So, um, to answer your question, Representative Josephson, I am not in agreement that there is a surplus of general fund revenue available to spend in the current year. From my budgetary perspective, there was still a deficit and we are still at the same spot.

I know that there have been lots of conversations about this. It is, it is not the easiest to sort through. There are other factors such as the lack of a reverse sweep and the money from the subaccounts under the general fund going into the, into the CBR, being lapsed into the CBR. There are prior year encumbrances that agencies have had on the books that they have released from prior year capital appropriations or prior year operating expenditures, and the ACFR is counting those as, as general fund revenue. We've already counted that revenue in a prior year.

So all of that to say, we're working our hardest to sort through the differences and see if we can come to an alignment. I'm not going to have an answer for you today or even tomorrow. This a very complex process to work through.

Follow-up? What is your impression of the fact that the Senate has appropriated unswept dollars in its version of the operating budget as supplemental items? Through the Chair, Co-Chair Josephson, so there are frequently prior year appropriation bills that we can refer to back to where the legislature has taken a position of any unappropriated balances above what the estimated general fund— so if the, the price of oil continues to be very high and we get more revenue to the state, then we will appropriate that in an energy relief payment or something like that. So this is not uncommon. I would say that, you know, from my recommendation is to continue to utilize the spring forecast as the base, that we don't account using the ACFER to tell us that there was extra funding in that bill because I truly can't say that it really was unrestricted general funds to the state.

And that if oil is high and the version of the Senate's bill that passes the legislature is what's passed, then additional funding would go out either in an energy relief payment or relief to school districts. Obviously there are a lot of steps that still have to continue, but I would utilize what the Department of Revenue identifies as unrestricted general funds for the purposes of budgeting as what we use to count against the appropriations that are made by the legislature for unrestricted general fund appropriations. Okay. Thank you. Representative Galvin and then Representative Stack.

Thank you. And I appreciate your sharing some of the context around how these funds have seemingly become available. But perhaps they are not. But my question is, with— you had mentioned that sometimes UGS funds are spent with the understanding that other funds are going to come back in, whether federal funds of some sort. And do you keep track then of what was used from UGF and then reimburse the UGF for those amounts?

Through the chair, Representative Galvin, yes. And just to follow that process forward, if we weren't reimbursed the federal receipts, we would have to come back to the legislature and ask for that ratification that we talk about. So yes, there is an accounting practice to do that. But again, you know, those expenditures may have happened in a prior year and now we're receiving revenue from the federal government and putting it into the general fund, but we're not counting it towards a prior year because that, from the accounting perspective, that year is closed. And so it, It's very technical, and again, I am not an accountant, so I'm doing my best to articulate what is happening from both sides.

Okay, it seems as though to have that accounting is very relevant to us at this time because even if that year is closed, nevertheless, the funds have been put in And they are there, or could be there for UGF. And I'm just trying to understand if it was for prior, but the prior bills were paid and now the funds have come in, perhaps later than expected, then there should be an accounting for that, I would think. And I'm just trying to better understand, and it sounds like you're trying to as well. So I look forward to it. Do you have any sense of when we might hear more in terms of the details of this?

Director? Through the Chair, Representative Galvin, yes, I am actively trying to sort through this. I—. It's not something that we are going to solve overnight. It's, you know, sitting down with the state accounting team and working through the differences that we— how we count for things in budget versus how they account for things in the accounting world.

I don't have a timeline on how quickly we can solve this. Follow-up? Yes, follow-up. Thank you. And I appreciate that this is going to happen always to some degree.

But when I heard the figure was at between $230 million and $260 million, That's a high number that I think the public— and I'm speaking for them— would like to have a better understanding about. And in these times when I'm hearing every day, I'm getting letters of desperation, desperation for little things to perhaps to you or to others. But these little things matter. And Band, for example, I got just a really heart-wrenching letter. And, um, and we need to know, we need to know if there's $200 million out there, whether it's for one-time increments or whether it's for major maintenance, which I know everybody's in not deciding the same thing about what to do with that kind of money.

But I really look forward to hearing soon what's going on, and if or if not, that those funds are available or do they become immediately swept? I don't know any of the way that works, but I would really appreciate hearing it as soon as we can hear it because the decisions are being made now in terms of full budget on the floor. Through the chair, Representative Galvin, that is why I go back to what is known. I know what appropriations the legislature has passed. We can see that in the legislation.

We can count it. I know what the general fund revenue is. Department of Revenue keeps track of that, and you can reconcile A plus B, A minus B, however you want to mathematically look at it to get an outcome of what the general fund balance should have been at that point in time. Adding another factor of an accountant world that doesn't count things the same as we do in budget and in appropriations, not even the same. Makes it very difficult to come up with a quick response.

And so that's why I keep going back to, we know the appropriations, we know the general fund revenue to the state, and if you do the math on those two items, there was a deficit that would have been borrowed from the Higher Education Investment Fund.

I do have one follow-up. Okay, quick follow-up. So one thing I've heard is that the, the Higher Investment Fund wasn't pulled from, the Higher Investment Fund was pulled from. And so I guess— and I'm one who spoke very, very much about this. I was concerned about the— I think it was $400,000 a year we were losing because of our not reinvesting that.

And I just feel, you know, a little bit embarrassed about it if it's true that that never did get taken out of there. That's something that I think we should all be aware of as soon as possible. And I look forward to that report later, I guess. Through the chair, just to clarify, Representative Galvin, we did transfer from the Higher Education Investment Fund. That transfer did occur.

The legislature passed a reversal of that in HB 289, and the money is being put back into the Higher Education Investment Fund. Thank you. Thank you. That's an important clarification. Representative Stout.

Yeah, thank you, good chair. Shragney through the chair to Director Sanders. Just kind of technical thought on kind of fund source transfers. I mean, I know regarding like the permanent fund, the idea is typically they try to kind of keep the money in the fund as long as possible because the nature of investment returns. So from your guys's perspective, And then I have a different question, too.

Like, how fast typically do you act on fund transfers? Because, I mean, all the money is kind of fungible, and you don't really need to access it until, honestly, most of the time, right before July 1st, right, to make payments. I'm just curious when, as OMB Director, you typically make those decisions through the Chair. Director? So through the Chair, representative staff AP, you are correct.

We have a transfer plan between the Department of Treasury— or the— excuse me— Department of Revenue's Division of Treasury and then the Alaska Permanent Fund Corporation on the percent of market value transfer. The Treasury Division carefully monitors the balance of the general fund to ensure that You know, we know when payroll is going to run, which is one of our larger payments. We know generally what cash flow is going to look like. And so in order to ensure that there's cash in the fund, they monitor that and work very closely with us.

The nuance for the Higher Education Investment Fund is that We have to close out the end of the fiscal year in the accounting system by August 31st at the end of reappropriation. That means any items that need to be recorded for the purposes of reporting in the ACFR need to be completed. All bills need to be processed by that date. Any transfers between funds need to be completed by that August 31st date. And there is an order almost of operations that the Division of Finance goes through to ensure that we're completing all of the appropriations that need to be recorded.

And as well, ensuring that there's revenue available. So it's, we work very closely with the Division of Finance, but again, I'm not an accountant, I'm a budget person. So my job is to make sure that the appropriations that the legislature passed are recorded appropriately in the timing that needs to occur. [Speaker:JACK] Follow-up, Rep. Snap?

[Speaker:REP_SNAPP] Yeah, yeah, quick follow-up, and then I have a— probably a Director Painter question through the chair. Thanks, Director, for your answers. So I'm just curious, and not to kind of get into too big of the weeds on this, but in kind of my mind, it's like when you're looking at cash flow balances and general fund, and we've authorized this say a fund transfer, doesn't have to be a higher ed, you know, a high fund transfer, any fund transfer. I mean, do you go to CBR borrowing first before you transfer the money for repayment? Because that's probably a more efficient way of doing that.

Or you just do a lump sum transfer? Or do you just kind of take money for cash flow at a time? So like worst case scenario, we would have taken like $150 million of the higher ed fund on the transfer. Would you do that all in one go or would you transfer, say, $50 million for cash flow a month and then another $50 million through the chair. Director.

Through the chair, Representative Stepp. So the way that appropriation was written was at the end of the fiscal year, um, the total— we knew what the total appropriations were, and the unclear factor was how much revenue was collected by the state for unrestricted general funds. So that was where we worked worked closely with the Department of Revenue in August to get an update on what, what actual revenue was collected by the state for fiscal year 2025. It wasn't a case where we could transfer slowly over time. It was at the end of the year, how much were you short in unrestricted general fund revenue compared to the appropriations that were made?

So it was a one-time transfer in that case. There is an agreement in place to do short-term borrowing from the CBR for cash flow purposes. That happens throughout the year and it would be a one-time, generally a one lump sum borrowing that has to be returned at the end of the fiscal year. Okay. And now last follow-up, Mr. Kocher.

Yeah, follow-up. And did you want Director Painter up here as well? Yeah, I was just going to ask the current kind of nature of, obviously, We see revenues coming in from FY26 are above the forecast. I'm just curious if anybody has an idea how much, kind of where we're at so far, because we've had price and production relatively high for the last 2 months, even above the spring revenue forecast. Through the Chair.

That's a question for Director Sanders. Yeah, if you know, or Director—. Director Sanders. Through the Chair, Representative Stapp. So the— you are correct, the price of oil has varied.

We've seen swings upwards of $10 up, up or down. I don't have an exact number compared to the spring forecast to give you, but I want to remind the committee that the swings that we're seeing are a very, very short time period that we're collecting revenue for. So, you know, up through the, the March date that Department of Revenue had reported on, that is a known, It is a fixed and it is just the short brief moment that is going to have the variations up and down that could net out. And we can follow up with the Department of Revenue for the committee. Do you want LFD to opine as well?

Yes. Okay. Director Painter, would you please come to the dais?

Can't have a finance meeting without calling up Director Painter.

Representative Stamp, would you like to get your question? Same as those previous. I'll be a little concise. Thank you, Coach O'Shaughnessy, the chair, Director Painter. Good to see you here, Director.

Just curious, as far as, you know, when we went through the supplemental process, we had the big spring revenue forecast. And by looking on revenue's website, it doesn't look like we've been anywhere near the— we've been substantially above price and even on the production volume pretty much every day. So we had talked about how we would need a $91 a barrel average to balance the budget. The question is how much are we kind of putting in now and in the event from now to the end of the year, what would the average price need to be to make sure we fund our bills through the chair? Director Painter.

For the record, Alexi Painter, Legislative Finance Division, through the chair, representative Stapp. So you are correct that the forecast was based on $91 from March through the end of the fiscal year. I think we have averaged a bit over $10 more than that so far.

So in order to make existing appropriations in House Bill 289 and last year's budget, I think prices need to stay over something like $80 for the rest of the year. So, you know, we kind of have half of the— half of that period, right? We've baked in the higher prices and you could go under for the rest. But as Director Sanders said, when you're dealing with short-term swings, it's really hard to be as precise as perhaps we would be with a longer time period, because especially corporate income taxes, the companies may pay based on expectations about price. And so they may pay more or less depending on their expectations forward-looking about price and that gets very difficult to project in the short term.

Yeah. And quick follow-up. Very quick follow-up and then we'll go to Representative Hannan. Yeah. Thank you, Chair, through the Chair.

Yeah, no, I appreciate that. I think everyone feels a lot more comfortable knowing that their average is somewhere in the 80s now because we've had higher prices. So it means more confident to kind of close out the session. And regarding the corporate income tax, I mean, given the higher prices, wouldn't it be— would it be reasonable to expect higher corporate payments, corporate net income collections too, through the chair? Director Painter.

Through the chair, Representative Stapp. So some of the companies may have had assets that have been impacted by the war, and corporate income tax is based on global profitability. So it's possible that some of these companies, despite the higher prices, their global profitability has been impacted. And I can't really give any better accurate information other than to say it's uncertain at this point. Okay.

Thank you. Representative Hannan. Thank you, Co-Chair Schrag, my question is about the hyphen. I believe Ms. Sanders has addressed it as best she can today. Okay.

Thank you. Last question will go to Representative Bynum. Thank you, Co-Chair Schrag, through the Chair, Director Sanders, you made a comment earlier about you keeping track of where we're at financially based on, in our budgets based on what the legislature is actually appropriating in law. And one of the questions that we've been kind of dealing with here in the legislature over the last month or so is revolving around the issue of the disaster emergency and the continuation of that disaster emergency and necessary funds required required for it. I know that that's running for— through DMVA, but are you guys keeping track of what appropriations are being made and under what authority those appropriations are being made?

And basically a better idea of, of how much money we are spending and what we will anticipate needing, because we're currently right now in the plans I've seen is tens of millions of dollars and on the floor of the House, there's been indication that that might be into the hundreds of millions of dollars. And so I'm just wanting to get a better understanding of what you guys are actually tracking and under what authority those appropriations have been made. Director Sanders. Through the chair, Representative Bynum, yes. So the Office of Management and Budget and the Department of Military and Veteran Affairs work very closely.

Together on the disasters and the allocation of funding from the Disaster Relief Fund to each of the disasters. The, uh, the passage of HB 289 included a $40 million deposit, which was significant, um, and as well as the contingency language putting $37 million into the fund to address the Halong disaster. Right now, we haven't received a response from the federal government at the request to, to change the allocation of that federal disaster to 90/10. So at this point, we are still assuming that the $35 million will be needed for Halong. That is going to be a large chunk of the the required, um, match that will be needed for the costs associated with Halong.

Um, our office, uh, is collecting information from each of the agencies, uh, to identify how much, uh, they have spent, uh, in each agency that will need the required match for eligible expenditures. Um, that includes, for example, the Department of Transportation, who estimates their cost upwards of $160 million, that would be a 20% match applied to that amount. So right now, in my conversations with Brian Fisher, Director Brian Fisher, we are in a good place for the match requirement associated with all of the disasters, including Halong. But if there are costs that are unanticipated that come up between now and next year, we will bring those back again before for the legislature. Okay, thank you very much, Director Sanders, for your time this morning with us.

Our next meeting of the House Finance Committee will be this afternoon, where we will take public testimony on House Bill 261, Education Funding. For those planning to testify this afternoon, please call in or sign in by 3 PM, and testimony will be limited to 2 minutes. We will also hear House Bill 271, Kitchen Lights Unit Royalty Modification. With that, this meeting of the House Finance Committee is adjourned at 10 AM. Thank you, sir.