HFIN-260505-0900

I know who she is, I just don't know where she lives. Uh-huh. Okay, I'll call this meeting of the House Finance Committee to order. Let the record reflect that the time is currently 9:05 AM on Tuesday, May 5th, 2025, and present we do have Representative Moore, Representative Co-Chair Josephson, Representative Galvin, Representative Tomaszewski, Representative Hannon, and myself, Co-Chair Foster. And before we start, just a reminder, if folks can mute their cell phones.

And we have two items on the agenda today, and that is the introduction of two bills, and that is House Bill 388, that is the bulk fuel loan cap. Bill, and then also Senate Bill 29, that is the Big Game Commercial Services Board bill. And we also have with us Representative Allard. So we have two bills before us. We're going to take up the introduction of each bill, and then we have invited testifiers for the bills.

And let's see here for— oh, that is for 388. We have the introduction, 2 presentations, and an invited testifier for 388. We also have with us Representative Stepp and Representative Kocher-Schraggi, Representative Bynum. And then for the second bill, the plan is for Senate Bill 29, commercial— Big Game Commercial Services Board we'll take up the introduction, invited testimony, and review the fiscal notes. I think it's an ambitious agenda.

What I'm hoping to do is maybe spend 30 minutes on each, and that would allow us to be done in our allotted time. If we go over slightly, I think that's probably okay with my schedule, if other folks can also do that. But So we're going to jump right into HB 388. So I'd like to invite up my staff, Mr. Paul LeBoul, if you could put yourself on the record and introduce the bill. We also have with us Representative Jimmy.

Thank you, Mr. Chairman. Paul LeBoul, staff to Representative Foster and staff to the Finance Committee. House Bill 388 is a fairly simple bill. It takes the cap on the Bulk Fuel Loan Program, which is currently $750,000, and raises that to $1.5 million. It also takes the alternative minimum cap for pooled loans.

That is when multiple communities pool their resources to take the loan out. Currently, that— the cap formula for that is 3 times or sorry, the number of communities times the $750,000 cap, which kind of makes sense. It just carries that forward. But there's an alternative minimum cap of $1.8 million, and it is whichever is less. Um, Alaska Municipal League was very interested in, uh, expanded the opportunity for pooling, and so we remove that alternative minimum cap.

So we just keep the formula cap multiplied by the number of communities.

Okay, thank you. Before we get into questions, we do have two slide decks that are very detailed, so I think those were— those will answer a lot of questions that folks may have. So we're going to jump right into the first presentation, and that is by Ms. Sandra Muller, Director of the Division of Community and Regional Affairs. Ms. Moller, if you could put yourself on the record and begin the presentation.

Yes. Good morning, Mr. Chair and members of House Finance. For the record, this is Sandra Moller. I am the Director of the Division of Community and Regional Affairs.

[FOREIGN LANGUAGE] I appreciate the opportunity to present something that affects the whole state of Alaska. Director Muller, the volume is a little low and also you are coming in a little bit muffled. I don't know if either you are on a speaker or if you can maybe get closer to the mic.

Is this a little better? It is a little better. It still sounds a little muffled though. I don't know if maybe you are on a speaker.

No, I am not. I will try to speak up more. Is that better? It's—. Folks are having a hard time hearing, unfortunately.

I don't know if maybe there's a different phone that you can call in from?

Yes, let me do that. Okay. We'll stand by for a moment. We'll take briefings.

Okay, House Finance back on record at 9:13 AM. Director Mauler, are you there?

Mr. Chair, can you hear me? Hello, I'm here. Can you hear me now? We can hear you.

It's— I don't know that it's much better, but maybe we'll give it a shot. I think— are you still on the same line or are you on a different line?

I believe I'm on the same line. Is this better? You sound much better now. Thank you. Okay, if you could go ahead and start us off with the presentation.

Okay, again, for the record, Mr. Chair, members of the House Finance Committee, Andra Moeller. I'm the Director of the Division of Community and Regional Affairs, and I want to thank you for allowing me to present on an issue that is impacting all of Alaska. As you know, we do have a large fuel price per gallon increase, and we have concerns about the 2026 bulk fuel loan season, specifically the prices and the fuel access. And I'm on slide 3 of my presentation if you have that up.

We are all aware of the fuel prices and this causes pressure on our rural communities. The last time we saw price spikes like this was in 2022. This was very high prices. We're also concerned with our bulk fuel loan program, but the difference between then and now is there was an energy rebate that was provided to all Alaskans, and it was in the midst of COVID in which there were funds to communities and entities across the state that helped alleviate the price increases that we saw in 2022. On the next slide, and I'm going to try to hurry through, Mr. Chairman, shows the statewide projections for retail heating.

I want to draw your attention to the blue box where we had our partners at the University Health System with a study that they've done And if there's a $5 increase times 90 million gallons, that's $450 million. That shows the amount of impact that we are looking at. We currently think it's in the $3 range, so that is a little higher. But it's very concerning to be able to not only purchase the fuel, but for each entity that purchases, they will sell it to their users and they're going to have to come up with that additional cost. That is everybody seeing in the cost of fuel these days.

The other issue is our access to fuel with the global events that have been happening. We are concerned about availability. I believe the retail fuel companies and the barge delivery services can speak more specifically to the issues that they're seeing, but globally the— availability of fuel is, is very variable at this point. On to slide 6. I wanted to bring this to your attention that we every twice a year we do an annual fuel price— I'm sorry, an Alaska Fuel Price Report.

On this slide you have a QR code that you go to. You can also look at it on our website. As you can see on the slide, Fuel average price for gasoline is $6.63 and heating fuel is $6.32. Now this survey we've— for the last 15 years we've looked at 100 communities and almost every year they are— reply and provide us this information so you can see the full report. But the survey deliberately excludes the South Central region of Anchorage, Alaska.

And the Matanuska-Susitna Valley. Because this is, you know, we're looking at what the off of those systems, off of that road system prices and what that impact is. That also is the delivery customer base that we typically use our Bulk Fuel Loan Program. Those communities off the road systems typically, and they have the prices that vary across the region in the state. Last winter we had gasoline prices of $3.65 in Southeast and then as high as $11.50 in Northern Interior.

So that has really jumped in heating fuel, which we know is about 40% of the consumption of the fuel in rural areas, has ranged from $4.40 per gallon in Southeast to a high of 15 in Northern Interior. And that average heating fuel price is about $6.32. And so if we go to the next slide, I wanted to give a visual— this is slide 7— a visual of the communities that we serve in with our Bulk Fuel Loan Program. Currently we have 76 to 78 borrowers. It is important to know that on the next slide, slide 8, that the revolving loan program is actually— it is important to know it is not a grant, it is a loan.

Borrowers apply for and get approved for a dollar amount and a gallon amount. As they pay it off in a 12-month period maximum, then they're able to have funds to buy the next year's fuel. Most of the communities receive 1 or 2 deliveries a year. So we typically will work with the fuel provider and pay directly to that provider once it's approved. So it's a pretty— smooth operation of how it is working.

We work with vendors, the community, and typically the utility, electric utility, as well as retail suppliers in a community. And that was the reason for setting up this bulk fuel loan is to help with bulk shipments before freeze-up and be able to know that they have a full tank ready for winter. This last year we saw a lot colder weather and therefore a lot of communities consumed more gallons and therefore are buying more to replenish those stores as well as for their use for the next year. The next couple slides I can go through in more detail, but the— Takeaway for slides 9 and 10 are it is revolving. You can see that the pieces and steps that we take to have this program operate.

We do struggle with some communities on the collection. And we help them with the pricing, setting up their rates for what they will resell the fuel for. So it's very important they buy fuel, say, at $6 a gallon, but they shouldn't be selling it for $6. They should have— their operating costs incorporated in that so that they can continue to maintain their utility or their infrastructure, think farms, etc. We have a very high collection rate on our bulk fuel.

On slide 12, you can see our collection rate is close to 97%. Oh, maybe that's the wrong slide. Sorry. But the next slide on slide 12 is showing the number of loans, and it's important to know that we'll have a loan and the community or the entities will continue to pay up— pay down every month, and then we can get new borrowers. So, it is truly revolving.

So, to get an exact number at any given time, you know, it's just— It depends. We could have a community pay off a loan yesterday, but it doesn't show up in our figures. But the average loan amount that we've seen is $350,000. Of course, that was before this spike. We've had 5 loans that have hit the maximum of $750,000.

Again, this was prior to a month and a half ago. It's the data we have. On the next slide, 13, it shows that we've been successful with the Bulk Fuel Loan Program. We've got very good borrowers and you can see our annual collection rate is 99.5%, which is a couple of percentage points above the conventional loans that we've been able to access and see. So we are very happy to work with our communities and our— our— our We've got several that have been probably in the program since we started, but it really is a successful loan program.

In the next slide, 14, we have— is— represents the universal outcomes with our program as far as the amount of money that is loaned to each borrower as well as the number. We believe that we are going to see an increase in the number. This last year we've had, I think, 77, 78 borrowers, which was our previously— is our high. We're expecting that to increase, but we don't really know how much. So this slide is trying to indicate that as we increase the fuel price and the gallonage we're loaning, we'll need additional capital as we continue to process these loans.

And we've done a couple of scenarios that are shown in our fiscal notes. And I think that that would be a place that this committee is going to be probably focusing on something from the draft bill. Similarly, the third— I'm sorry, slide 15. Shows what happens when we not only have our current customers at the cap, but if we get additional, say, 15 additional— sorry, 19 additional, what does that look like and how the cap might need to be increased. So that's what that's trying to represent.

And then I think slide 16 is— showing that we are and believe that we have a very successful program that's been running for years working with the electric utilities as well as fuel providers. And then on the last few slides, some options that we have presented and what we think would be necessary for the legislature to work on are to address. Additional funds for the bulk fuel loan. Currently, we have about $22 million in the fund. Obviously, that changes almost daily as we pay out for deliveries as well as receive payments for that.

So, in order to increase that capitalization, obviously, we require legislative action. Another item would be to raise the maximum loan above $750,000, and that would also require a change in statute and also a companion infusion of funds into the, well, fuel loan fund.

One of the— on the right-hand side, the disaster-related assistance. Some of that paid— is paid. I'm sorry, trying to go too fast here. Disaster-related assistance, we've had a couple of hurricane effects that have hit Western Alaska, both Murbok and Halong, and we do not currently have a way to adjust the current loan because of a disaster. So that would require legislative action.

To allow us instead to be able to provide that. And the other concern we have is that these are loans and we want to make sure that we set up the communities for success and are these able to pay off the loan. And as I mentioned earlier, even as we provide more loan capacity, one of my biggest concerns is how are the users going to pay. And the loan program is successful only if the borrower pays back. And so, you know, that's going to be an ongoing concern.

We do help communities through various programs that we have that do technical assistance, again, on rate setting. Part of the bulk fuel loan application is required showing how they're going to pay off. The loan. So we try to set them up with— for success. Once they purchase the fuel, we do not want them to go into default.

And, you know, it's quite a critical piece to rural Alaska and having availability of affordable fuel. The last slide I wanted to share that we are working with partners both on the regional level to the community that this is not extensive, but the types of entities that we've worked with on the situation, as well on the statewide partners with on that. It really, I think, is one of the sectors that we have really good communication between all the entities. So with that, Mr. Chairman, that's my abbreviated quick slide presentation on the bulk fuel, and I'd be happy to answer any questions Thank you very much, Director Muller. Just for the committee, we have 3 presentations for this bill.

The next one will be from Vitus Marine and then from AML, and then we still have our other bill, which is SB 29, and I see that will probably go over. I'm happy to stay, but just want to give folks a heads up if folks have other commitments. And so we've got questions for Director Muller and then we'll go to the next presentation which is from VITAS. And so in the lineup I've got Representative Hannan, Josephson, and Bynum. Representative Hannan.

Thank you, Co-Chair Foster. Director Muller, in your fiscal note you use that there are 78 communities or there have been 78 loans. So I guess my first question but maybe I'll give them together, is: are those 78 different communities, and/or are there some entities that have more than one loan? And secondly, how many communities are eligible for the loan programs? So are there 150 other communities that could have loans?

Director Muller.

Yes, through the Chair, to Representative Hannan's Sandra Moler with BCRA. There are communities that have multiple loans, although there's only a few. I want to say we have probably 4 to 5 communities that would have multiple loans, and that could be one loan to the utility and one loan to the home heating fuel vendor. So when you look at the number of loans, it doesn't 100% exactly match that, that's the number of communities, but it's, I'd say, 95% of what number we have in borrowers is probably the number of communities.

And as far as eligibility, the statute currently says the loan program is for communities that are under a population of 2,000. I don't have that number right off the top of my hand, my head here, but we have the 78 and we, I would believe it's around 120 would be my estimate. I'm just knowing because we do know that communities that are eligible for the loan will go to conventional loan banks to get the loan. So not even if they're eligible, they may have other means or reserves and funding to be able to not need a loan from us. But I can get back to the committee on exactly how many would be eligible.

But my, my estimate is probably not more than 120, but I'd like to get back to the committee on the, on that effort. And follow-up, Mr. Chairman, my, my questions, and when I'm looking at the fiscal note, what I want to make sure we do and I'm very supportive of the bill. The fiscal note is predicated on current borrowers either going to the max or, you know, so there's two scenarios all based on current borrowers. And I want to anticipate that we may see more communities in need this year to become borrowers that maybe haven't historically. And I want to make sure that we put forward fiscal note that accurately builds into the budget a realistic number.

I'm not saying we need to maximize and overcapitalize because I think many of those— when we're looking at it, I doubt that people are going to double what they've borrowed, but I think we're going to have new players in the game and we want to make sure that we have adequately prepared to address the needs because it doesn't take —much to convince me the need is real, the need is current. This is a solid loan program where we see over 99% return on the revolving, but we need to capitalize it in a way that it's going to be able to meet the demand. So, thank you, Ms. Moler. Thank you, Mr. Chairman.

Great. Thank you. Next question, we have Representative Josephson, Bynum, and Schrag. Representative Josephson? Yes.

Good morning, Ms. Moler. In a couple slides, you talk about funds lost to disaster. Is this a source that was used by the administration after Halong last October? Director Mueller.

Through the chair to Representative Josephson, this oil fuel fund is not used for disasters currently. Representative Josephson. Yes. Follow-up here. Slide 17, it says disaster-related assistance, a source of disaster funding to help pay off loan in certain circumstances.

Can you explain what you mean there? On slide 17, Representative— Director Mohler. Through the Chair to Representative Josephson, the intent of that slide was to show that there is a need for disaster funding, as I believe Representative Denny and others have pointed out in different committees. It is intended to reflect that we believe that there's that perception that this fund could be used for that. And because it is not a grant, it's a loan, that was just to illustrate what would happen if that was the change.

I hope that answers your question.

I'll take a closer look at that existing language. I guess, I mean, when you say disaster-related assistance, are you talking about the impact of the war in Iran on prices altogether, or are you talking about natural disasters like Typhoon Halong? Director Muller. Yes, through the chair, through Representative Josephson, I am referring to the natural disasters that Western Alaska has experiencing both Hlong and Nrvac. So those are the ones I was referring to.

Okay, follow up. As to the poolers or pooling, is this where, for example, I think Grayling and Anvil and villages that are quite close to one another, that it would make sense for them to cooperate? Is that the idea that that, um, as a logistical matter, it would typically be villages, uh, within reach of one another. Director Muller.

Yes, sir, the chair, to represent those systems, that is correct. If an entity wanted to purchase, um, for 3 communities, then they could get a loan of 3 times the maximum for each of those communities, and that's what I believe is the staff the representative Foster was referring to and the change for the collective needs for many communities. Okay, and then, and then finally, if I might, on page 2 of your fiscal note, you, you have a zero fiscal note, but because I assume because it's a loan, but the, this body, the legislature, would have to capitalize —for example, under Scenario B, it looks like at least, I don't know, mid-$20 million? Is that the idea? That we would have to appropriate $25 million, for example?

Director Mullen?

Yes, through the Chair, to Representative Josephson, that is correct. The fiscal note shows a zero for the division because we already have staff working on loans. However, at the capitalization table on page 2, it does provide 2 scenarios that should the legislature want to add to the loan, these are the amounts that we are projecting. And to the previous representative's comment about additional communities signing up, May is typically our largest request for loans. Because that's when the communities are looking at supplying their next year's load amount of fuel.

And but this year we have seen one new entity apply already. We do not know if that is the— is the one and under, but we believe that there may be more that come in, but we have not really idea exactly how many might come. I think the reason we, we provided two scenarios, one is that all of our current borrowers, because we know what that realm of possibility is, we know the number, and we said let's go to the maximum. Again, remember, the current practice has not been only a small percentage, 5 to 10%, take out the cap. Now if that case, then there would be additional room in Scenario A to add additional borrowers.

And the Scenario B is if we take our same number of borrowers and have them increased by different amounts because of the cost of fuel. So that's the difference between the two scenarios. Thank you, Ms. Muller. Okay, next question, Representative Bynum. Thank you, Co-Chair Foster.

I was just going to briefly say, for me, this is just a very simple bill. This legislation was enacted in 2013, so effectively it's 13 years old, and the numbers that were in there were established then. If we look at the numbers in the bill or in the legislation and we want to do a consumer price indexing adjustment, that brings this number up to about $1 million. If we look at fuel cost volatility, that brings us up over $1.1 million. So, you know, I appreciate all the information that is put in here, but to me, this seems like a very simple loan modification threshold that we see all the time in our lending institutions as time goes forward.

So I feel fully confident in what this does, but I did have a quick question, because I don't think it's really addressed in the slide— in the slides. If we look at slide 13, we talk about the actual collection rates and the— on these loans. And then on slide 11, we talk about fund loss. Just curious because it doesn't really define it. I don't believe that collection rate— that the annual collection rate actually defines loan loss.

Can you clarify what the health of the loans are and then as a percentage of the overall fund? That we see for loan loss? Director Moller. Yes, through the Chair, Representative Bynum, the figures that you see are the actuals of how basically we have less than 1% of nonpayment. And I'm not sure I'm answering your question correctly, but as we collect from the borrowers, they do pay an interest rate.

So it actually adds to the fund as it goes. So those offset any nonpayments. And what we've seen is people and entities may miss a couple of payments, but depending on the time of— you look at the loan itself, it could show a loss, but then it— payments are made and with collection of interest rates of all the other loans, it fills in that. So our fund has remained stable. Follow-up?

Representative Bynum. So long story short, overall the loan program sees a net positive as opposed to declining capital account balance? Director Muller. To the chair, the representative by him, that is correct. OK, that's all I need to know.

Thank you. OK, Representative Sharagi, and then we'll go over to Vidas. Representative Sharagi. Yeah, thank you, Co-Chair Foster. I'm trying to get at the capitalization amount that might be necessary to accommodate expanded usage of this program.

Couple of questions to that end. On the fiscal note, in Scenario B, all current borrowers want to increase their average loan amount. What is the increase to that average? Have you— yeah, can you tell me how you increase the average loan amount calculated there? Director Mueller?

Yes, through the chart to Representative Schrag, we look at 3 scenarios. One is at 50% increase to the maximum 100% increase and 150%. So the 1.5 million maximum loan is at the 100%. So we looked at 3 different increase scenarios. And in Scenario B, you're telling me it was increased by what percentage in Scenario B?

Director Muller. Through the Chair to Representative Sharkey, the amount in scenario B went from $750,000 cap to $100— I'm sorry, $1.5 million. So that is 100% increase in the individual loan cap. So that's not— I'm sorry, that's not what I'm asking. We're trying to understand what we think the total amount borrowed by participants would be.

My understanding reading the fiscal note is that under Scenario B, you assume that all of the current borrowers, you take their average loans and you increase them by a certain amount. Is that not what Scenario B is modeling? Director Muller. Through the Chair, Representative, it is what is modeled. And if you look at potential capitalization in order, if Scenario B is correct, the fund would need an additional $25 million based on our projection for a total fund balance of $47 million.

[Speaker:JASON] Okay, so I understand that part. What I'm trying to understand is you have an average loan amount for all the participants. What did you, by what percentage did you increase that average loan amount in your modeling to come up with that $25 million as needed for your potential capitalization. Director Muller.

Yes, through the chair, I'm sorry, I did have a more expanded chart on this, and I believe I understand your question. In Scenario B, we took the average loan amount, which is about $350,000, we increased it 100% for all those borrowers, and that's what these $25 million would represent. That would fund the increase of all existing borrowers to pay double their loan. Okay. Thank you very much.

I see— So 100%. Yep. That is what I was getting to. And then if we look at slide 14 on the presentation— a follow-up, if I may, Commissioner Foster. Thank you.

So we have 18,273 current applicant population. I assume that is the population covered by all those who have loan applications currently approved through you. Is that correct? Director Muller?

Yes, that is correct. And how many participating entities is that?

[FOREIGN LANGUAGE] It is in the 77, 78 range of number of borrowers. And is that in line with historical averages, or is that increased, decreased? Do we expect that to grow? I mean, I, I see to the right of this table 86,000 potential applicant population, but have you ever seen What is the greatest expansion you have seen in recent memory of the current applicant population or number of participating entities? Director Moller.

Through the Chair to Representative Sharagi, the largest number of loan applicants that we have seen has been this last year, which was about 78 applicants. In the past, say 3 years ago, we had 54. —That I'm looking at. So we've seen an increase in the number of applicants. So if you projected that, that's 10%.

But so we— again, we do not know what the number of new applicants will be. However, we have— again, we did have one entity asked for a loan that we haven't loaned to before just last week. So that's why we weren't able— I guess we could run some models to say what, you know, the projection would be to the number of borrowers. However, we wanted to use what we knew, which was the existing borrowers, and made some estimates on what we think they will be. Hope that answered your question.

That does. One more follow-up, if I may. Representative Sharkey. If I go back to the fiscal note, we talked about applying a 100% increase to the average loan amount. Is there a reason that we didn't assume a number more in line with the percent increase in fuel prices that we've seen in recent history?

Where does the 100% come from? Is that just a number kind of pulled out of thin air to have a few different models, or is there a basis that is grounded in reality and kind of the prices we're actually seeing? Director Muller.

Yes, through the chair to Representative Sharkey, I believe that 100% came from the fuel company projection as cost for that would increase. So if we took the gallons that a community purchased and what their current price or their last known price was and increase it by the $3, that's where we came up with the 100% increase, uh, the price. Okay, thank you. Yeah, I just, uh, finally, for some commentary if I may, I fully agree with Representative Bynum's comments. I view this bill as fairly straightforward.

I'm very supportive of what we're trying to do I want to make sure that our communities have access to the resources necessary for them to be able to make these bulk fuel purchases and have fuel in their communities. I just— I know that we're always at this table in a limited resource environment and want to make sure that we're thinking carefully about what level of capitalization is required for this fund. So I'll have some further questions, I suspect, offline, but this has been helpful. Thank you. Thank you very much, Director Mueller.

We're going to come back to questions for Director Mueller at the next meeting. We still have two more presentations and then the next bill. So with that, Mr. Mike Poston calling in from Anchorage, if you could put yourself on the record. Hello, my name is Mike Poston from Vitus, the director of sales here. And just, uh, the Vitus's role in the western Alaska energy market is to go to refinery buy fuel, transport it to Western Alaska, and deliver it to the end user.

Our part of the market does not include financing the fuel or carrying notes, and that's where the state loan program has been instrumental in allowing us to continue our operations without interruptions. What we found going back decades is that we could— there were customers that we could not deliver to because we did not have funding arranged for their fuel delivery. And the state loan program has been instrumental in accomplishing that. This year we're finding that our role is more challenging, that the restricted supply has made it more difficult for us to acquire product. We're getting the job done, but it's more difficult.

We're finding that we've got to use less efficient transportation to arrange it, so transportation costs are up. The fuel cost is up as well. For comparison, last year at this time, the reference price or published index price for jet fuel on the West Coast compared to today is up $2.65 a gallon. And if we add the cost of transportation increase and we— and other, you know, inflationary trends and other things that we are finding that the $3 to $4 a gallon increase is what we're seeing in the marketplace. So that $3 that Sandra referenced, that's— That's definitely a real number, and it's probably on the low end of the range.

When we compare prices that we were charging last year to the ones this year, that 100% increase, that's a real number.

The number of borrowers that are going to need more money because of the cap is going up. We're finding that some entities that could fund a certain amount of fuel within their operating budgets are, are now going to need outside or additional resources to fund this year's purchase. And so we're referring more people to the State Bulk Fuel Loan Program. What we sometimes find is that an entity will make a deposit payment out of operating funds and get a loan for the balance. So the amount of an increase in price to buy the same gallons as the previous year will be skewed higher in those cases.

Some entities will apply for a loan for the entire amount. And then that 100% increase is probably in the ballpark. But we do see that more entities will be over the cap, and we are referring additional fuel consumers to the loan program.

Okay. And is that the completion of your testimony?

Mr. Poston. Yes, sir. Oh, I've got a question. I just want to make sure you're done with the presentation. Is that correct?

Yes. OK, and we've got a question from— we'll take 3 questions and then we're going to jump to the next presentation. So we've got Representative Bynum and then Hannan. Representative Bynum. Thank you, Co-Chair Foster.

Through the chair, really quick, are we seeing the folks you're talking with? We seeing the Communities use bulk fuel contracts, long-term contracts, or is this more of an ad hoc purchase?

Mr. Poston. Each year is by— each customer buys one season's worth of product. Sometimes they'll buy a spring order and a fall order. So it's a regular ad hoc, if you would, not a long-term.

And long-term contracts are always going to have a market escalator for future years. Sure. Thank you. Okay, Representative Hannan. Thank you, Co-Chair Foster.

And I didn't catch his last name. Mr. Poston. Mr. Poston, you gave us jet fuel as a benchmark. Is that the primary commodity that our communities are purchasing from you? Mr. Foster.

Yes, so jet fuel is the product where the index prices are derived. It's an Arctic-grade diesel number 1, and you know, it's a physical product. Okay, thank you. But it often meets the jet fuel specification as well. Okay.

Representative Hammond. Thank you, Co-Chair Foster. Currently, this bulk loan program, my understanding is, does not cover school district. Mr. Poston, how many school districts purchase bulk fuel through you? Mr. Poston?

Uh, so from our company specifically or through the market area that we serve? Market area that you serve.

8 To 10. Okay. Thank you. And Representative Hannon, that was a good question about the jet. I used to be the president of our fuel company up in Nome, and it is confusing.

Jet fuel is heating fuel, just for the public. Thank you. It just threw me off. But if you're buying Arctic fuel and used to saying that it's Tied to jet fuel. You knew that.

Okay. Okay. Third question, Representative Stell. Thank you, Co-Chair Foster. No, I just wanted to say, obviously, like and support the bill.

It's a real bonanza. Oh, that was a good one. Let's see. I guess we'll take the last question here and then we're going to go to the next one. Representative Ballard.

Thank you. I just wanted to— I have some notes here and I just wanted to raise, Co-Chair, to the committee. About the sovereign immunity waiver requirement, and I'm a little bit concerned about it. It says that the existing program requires Alaska Native villages to waive sovereign immunity as a condition of borrowing, a significant and controversial legal concession that becomes higher stakes when the loan amount increases substantially. So I want the committee to consider that and how we could address it so that it's not so risky for our villages.

So I think it's something we need to put thought into. Okay, um, I think, uh, that is all for Mr. Poston. So, uh, thank you very much for being online. And, um, next up we have, uh, AML, and we'll hear from AML and then take, uh, 3 or 4 questions, and then we'll jump right into the next bill, which is SB 29.

And that is the Big Game Board. So with that, I believe online it looks like— I think there should be Caitlin Conway. If you can put yourself on the record.

Yes, good morning. Can you hear me? Yes, we can. For the record, my name is Caitlin Conway. I'm the Intergovernmental Affairs Manager for the Alaska Municipal League.

And I am not a fuel or energy expert, but I will articulate what communities itself are state are experiencing and pull in information and offer some additional ideas we think could help, help you get done what you can in the time remaining in the session and to address the pressing needs of communities when it comes to this high-cost energy landscape.

So we want to describe the risk environment that local governments and communities are experiencing. The summation of this slide is that they see limited fuel availability, higher costs, and great potential for service disruptions. We want to highlight how much of a ripple effect this will have across Alaska. This isn't only affecting Western Alaska or the Northwest or the Interior. This is an Alaska-wide issue where an individual Alaskan might experience a price increase based on availability and higher prices overall, but communities will feel this when it affects transit in urban communities, when it affects coastal communities with increased construction costs, or say, port improvement projects.

It's going to be widespread, and it's worth noting that this will mean solutions or mitigation measures have to be thought of as broadly applicable as possible. So this slide tries to capture some of the impacts that are out there that Alaskans might experience on a higher level. On my next slide, a lot of these impacts translate into a financial threat, which you are aware of, and while price is a big issue, The cost of things will go up and everybody will be paying more in some way. And we also want to address whether fuel will be available at all. Increased costs will strain both communities and households.

Both availability and price will be at play. So this graph from DCRA shows what happened when prices increased in years prior. You can see the years of other disruptions, increased prices who stayed beyond the year of disruption. When there are jumps in prices, they're fairly sticky. To say it could be multiple years that a rural community experiences that price increase.

And this is to say you aren't all— you all aren't tackling an issue today or this year, but over the next many years. So, no pressure. On my next slide, I just want to bring that up because I think this will help figure out what to do with that. And to be clear, AML fully supports this bill. One of the primary tools that the state has to address cost and access to funding for bulk fuel is the Bulk Fuel Revolving Loan Fund.

Director Moler discussed the mechanics of this fund, and we believe that by increasing capitalization of the Bulk Fuel Revolving Loan Fund, that you'll expand and improve the financial capacity of these communities ahead of delivery season. Rural Alaska depends on large annual bulk fuel purchases, as we discussed, and this program fronts the cash for those communities without a new appropriation and without an operational mandate. And so without this bill, when communities must stick to the $750,000 cap, even though the price is going double, the loan won't get communities as far. This is going to lead to under-ordering, meaning communities won't have enough fuel to make it through the year. A higher borrowing ceiling makes sure communities can fully finance the amount of fuel they will need.

So again, we completely support increasing the borrowing limit and support this bill. And we want to offer a short list of ideas to help make this potentially even better. So first is making sure that the fund has sufficient resources and capitalization and making sure that there's enough of it if local governments or utilities or eligible applicants to access it to a greater extent than they have, as, uh, Koshar Sharagi mentioned earlier. And all signs point to that they will be utilizing this fund to a greater extent than before. Another idea you could think about expanding eligibility of the fund, which we acknowledge would be tricky and challenging, but would address some trickle-down effects that others might be experiencing.

And just a note that there might be, um, that there are many potentially eligible applicants who haven't utilized the Bulk Fuel Revolving Loan Fund like school districts, as Rep. Hannon mentioned, and thinking about how to soften the blow for those who could utilize this at a greater rate. That includes addressing the interest rate from zero for more than maybe just first-time borrowers.

And just two more. Another idea, I mentioned public transit earlier for urban Alaska, and one of the impacts might be felt by transit users and transit operators in urban Alaska. You could pause the ICAP collection by DOT on all FTA transfers. Instead of FTA dollars going directly to local governments or nonprofits who operate those transit systems, the state collects some percentage. It's basically an indirect rate.

You could pause collection of the ICAP and let the full funding flow from FTA to those operators to help them manage fuel costs for their transit systems. And then finally, The state has a ton of experience in this area with the Alaska Energy Authority and DTRA through their local government specialists. So making sure to utilize that expertise and make sure that there's somebody communities can call at any point in this process. Those people, they can offer support to help communities and other purchasers navigate the price or supply crunch. Because right now those calls are coming to AML.

But having someone at the state level that we can point to would make it more navigable both for us and for communities. Um, AMAL doesn't want to, and we won't tell a community when to buy fuel and at what price point. What we're saying right now is that if there's not going to be fuel at some future date, then the sooner they make the purchase, the better. And that's based on what we've seen and communicated from some of the providers that are out there. And we want to acknowledge that local governments also play a part in this.

And we're doing what we can to get information out to communities, and that includes encouraging them to act early, not to wait for a better price or something to change globally in the market. Um, acting early is what we're saying right now and encouraging communities to build that price escalation into the budgets that are being drafted right now. So, wrap up: AML supports this bill, and we appreciate the work the legislature is doing to address this critical need. That's appeared so late in the session. I know the communities appreciate it.

It's all facets of community who feel this and would really benefit from your work on this because high prices or unavailability of fuel are going to impact everybody. We look forward to working with the legislature and the state to help soften the blow of the high price of fuel for our community. Thank you. Great, thank you very much, Ms. Conway.

We'll take a question here and then we're going to jump right into the next bill. Will you be available at our next— at our next meeting when we bring this bill up again for questions?

I can't be. Okay, perfect. Representative Galvin. Thank you, Ms. Conway. I appreciate your presentation.

Thank you. I have heard a lot of concerns around there being missed barge deliveries. In other words, possibly with world dynamics, there may not be some availability for fuel. And I just wondered if you would give us a quick recap on what you're hearing from the federal delegation, if anything. Ms. Conway.

Yeah, thank you. Through the chair, we're working with our federal partners, but I would have to follow up with you to give a more detailed overview of that. Um, thank you. But that is something we're nervous about and are prepping communities for. Yeah, thank you very much.

Representative Galvin, I'm very glad you asked that question, um, because, um, I think it's such a global issue in terms of, you know, when we talk about price, uh, that's one issue, but supply is going to be a big issue. And that goes back to what Mr. Poston was saying, and that is is, you know, regardless of everything, if we can't get the fuel, we can't get the fuel. And that's a big concern in western Alaska, I know. And a letter recently came out saying that there was the possibility that 140 million gallons that go into western Alaska may or may not be there, or maybe it's going to be a partial. And what does that mean for small rural communities that rely on that for heating, but not only heating, but also the electricity to run power plants to keep the utility lines moving and not letting the pipes freeze up, not only in people's homes, but communities underneath the streets.

And you've got heat tracing, you've got systems that keep the pipes from freezing. So anyway, it's a big issue, and I'm glad that you raised that because it's going to take more than the state, it's going to require that we also look to our federal partners. Representative Galvin. Yeah, thank you, uh, Co-Chair Foster. What really caught my eye is page 3 of her presentation where they talked about offering technical assistance, on-call support to navigate price or supply crunch.

Because I imagine the scenarios that you just painted would create a lot of concern and rumors and, you know, everything— everybody wants to know what's up next and what should we do to protect ourselves for the moment. And perhaps just get information. And so I appreciate that piece of perhaps what we really need to make sure we're putting in place is that technical assistance. So thank you. Great.

Thank you. Okay. With that, we're going to set the bill aside and we'll come back to questions again. And so, Mr. LaPole, thank you. And we're going to jump right into Senate Bill 29, and that is the Big Game Commercial Services Bill— Board— Services Board.

If we could have Senator Bjorkman as well as his staff, Ms. Sevea Deaver, if you could put yourselves on the record. The plan here is to— this is our first hearing, and so we'll get the introduction on the bill.

I think we've got one person online who will be invited testimony, and then we'll set the bill aside. So with that, thank you for being here, Senator Bjorkman. Thank you very much, Chair Foster and members of the House Finance Committee. For the record, my name is Senator Jesse Bjorkman, and I represent the northern and central portions of the Kenai Peninsula. Thank you very much for hearing Senate Bill 29 today.

This bill secures the administrator— executive administrator position in statute for the Big Game Commercial Services Board. The board is comprised of 9 members who serve staggered 4-year terms. A dedicated staff member that knows the business of guiding in the state of Alaska will improve efficiency of the Big Game Commercial Services Board. The board handles hunting guide licensing functions. They administer the board meetings.

They maintain and write 29 different guide examinations, including the registered guide and outfitter written and practical exams, and an exam for each game management unit. They generate significant reports. They assist the Department of Commerce and Community Development in investigations, as well as the Department of Public Safety in game investigations. The Big Game Commercial Services Board was previously sharing an executive administrator with the Board of Marine Pilots. While this helped the two— while this helped a little bit, the two boards are quite complex.

They have many of their own specific regulations, responsibilities, and to continue to share one person between the two boards is a significant burden to both. As a result, there was a temporary executive administrator position added into the budget for the last two fiscal years. The position was filled in October of 2024. This position is currently full and will continue to be paid for by designated general funds that come from guide licensing fees. Senate Bill 29 codifies this executive administrator position and its range in statute.

My staff, Ms. Sevea Bieber, is here today to go over the sectional analysis for this bill if the chair desires. Ms. Bieber, if you could put yourself on the record. For the record, Sevea Bieber, staff to Senator Bjorkman. Section 1 amends AS 08-54591, allowing the department, which is DCCED, to employ an executive administrator for the Big Game Commercial Services Board. Section 2 amends AS 08-54600 to require the board to establish qualifications and duties of the executive administrator.

And Section 3 amends AS 3925-120, making the executive administrator a partially exempt employee.

Okay, thank you very much. Senator Bjorkman, anything else before we go to questions? Or actually, we'll go to the invited testifier maybe first. Let's do that. So with that, Mr. Keegan McCarthy, chair of the Big Game Commercial Services Board, if you could put yourself on the record.

Yes, good morning through the chair. Keegan McCarthy, I'm the chair of the Big Game Commercial Services Board.

Board. And I, I don't have, um, necessarily anything different to say than what's already been said, but I just wanted to reiterate the need for this. Um, as a board, we oversee a complex set of statutes, regulations, and policies as discussed, and that is very true. Um, you know, as I've been sitting on this board for the last few years, we're realizing the complexity that's already been as a guide, but it's even more interesting to see the back channels and everything. That happens at the state level.

So, part of this requires Alaska-specific knowledge about animal strain and how those differ through the state's regions, Alaska's hunting laws. We have a majority of our members are in the field. Obviously, this time of year, I'm actually out in the field myself. Luckily, it's fairly green, so I have a little more access, but having a good, you know, qualified personnel there at the state level is definitely more advantageous for when we're out in the field during long periods of time during the hunting season. —Because of this, we need an executive administrator who is a higher-range staff so we can delegate higher-level board duties so that operations can continue even when we are in the field, retain institutional knowledge even when board membership changes since these positions are career-level.

The board currently has a temporary exempt for age 23 executive administrator that was created as discussed FY '24 and '25. It's essential to add this position to statute so that position continues. The duties would include approval of straightforward applications, management and administration of all board meetings and exams, generating reports, maintenance reviews, and draft updates in both primary guiding exam and the 26 guide use area exams. That's a big critical one there from our perspective on the board, having somebody that has that knowledge to be able to keep our exams updated, especially at times when our board members are changing or when we're out in the field again. Keeping those exams up to date, especially with this changes in regulations and changes in times.

Maintenance, covered that. As was discussed, this position is paid for by the, by the guide licensing fees. And from here, and my standpoint, the board appreciates Governor Dunleavy and the legislature approving funding for the temporary executive administrative position, but we now need to ensure the position continues permanently. We hope that you guys will consider passing Senate Bill 29. Thank you.

Thank you very much. Questions for the senator or invited testifier? Representative Ballard. Thank you. Thank you.

Through the co-chair, thank you for being here today, Senator Bjorkman. I have some concerns in regards to the bill. One is that when I was in the Army as a buck sergeant, I worked for a 3- and 4-star general that ran the European Command. And I got to tell you, I didn't get paid nearly as much. And so I'm very concerned at the duties and the pay.

Can you— is there a better job description? Because I am looking at what they're saying in the bill and it looks like it's a secretarial position and $130,000 of the fiscal note of $211,000 is a little bit alarming. Senator Bjorkman. Thank you for that question, Representative Allard, through the chair. As we look at the significant breadth of knowledge that this person has to know, understand, and then be able to execute through the regulation packages that they are in charge of shepherding through the process, as well as the significant amount of different expertise very specific to the guide industry in Alaska, this clearly is not a run-of-the-mill secretarial position.

This is a highly technical and very highly specialized person that has to know a wide breadth of regulations across the state and be very skilled at applying them in the guide licensing tests and, and other applications that they do. So I think it would be a bit of a mischaracterization to merely say this person is a secretary who who should be paid as such. And the pay ranges of positions like this are set by folks other than the legislature. So I think as we look at what we expect people to do in the marketplace of labor, I feel like that's a fair amount for what this person and the high-level expertise this person is expected to have. Thank you.

Rep. Sandvallerd. Thank you. Thank you for that explanation. I've spoken to other people that are in the gaming community I say gaming, but hunting community. And I cannot wrap my head around this particular range.

And I understand that it's in there of some of the things they do, but I'd actually want to see one, a resume of the person that's in the line of work right now and proof that they doing anything but these things that are listed here. So thank you very much. I have other concerns, but we'll address them at a later date. Thank you. Representative Hannan.

Thank you, Co-Chair Foster. Senator Bjorkman, in developing this bill, I'm interested in how many of our professional service boards, because we have many— the medical board, the nursing board, etc.— have designated staff and what are their ranges for their staff? Senator Bjorkman. Thank you for that question, Representative Hannan. Through the chair, Representative Hannan, I think the person that is most suited to answer that question is the Director of Corporations, Businesses and Professional Licensing, the illustrious Sylvan Robb.

She is behind me. Director Robb, if you could put yourself on the record.

Good morning. Thank you, Mr. Chair. For the record, Sylvan Robb, Director of the Division of Corporations, Business and Professional Licensing. Professional licensing.

Through the chair to Representative Hannan, so as you noted, Representative, we do have 21 professional licensing boards within the division. 6 Other boards have executive administrators that are all at an equal range or one of them is higher. The Board of Nursing does require that individual to have a master's degree in nursing. There is also a coordinator for the Marine Pilot Board.

Representative Hannon. Follow-up. If we could get on the record, you are saying they are all range 23 or 24 of those 6 professional boards that have executive administrators? Director Robb. Through the chair to Representative Hannon, yes, they are all paid at a range 23 or higher.

Follow-up. Follow-up. —Of those 6 in specific, are they set in statute, the range and definition as exempt positions, or are they non-exempt and the job classification is placed in there, or are they statutorily placed like this bill does? Director Robb. Through the Chair to Representative Hannan, all 6 of those executive administrators are created in statute in the partially exempt service.

3 Of those cases, the range is specified in statute. Okay, thank you. Okay, further questions? Um, I have one more for Senator Bjorkman, and he may— and I am curious to see if he knows what the Deputy Commissioner for Game is set in statute at as a range, or do you know? Senator Bjorkman.

Thank you for that question through the chair to Representative Hannan. I don't know the answer to that. Okay, thank you. Okay, uh, in the lineup, I've got Representative Galvin, Moore, and Bynum. Representative Galvin.

Thank you. This is a question for Ms. Robb. Um, of the 6, uh, of the other boards that do have an executive administrator, can you give us a sense of if it's the same, uh, or similar —number of licenses issued and things like that? Just, is the workload similar? Director Hrob.

Yes, through the Chair to Representative Galvin. The number of licensees varies somewhat. There are other executive administrators that have a similar number of licensees. So this board has about 1,700 licensees. But part of the need for an executive administrator is due to the complexity of the program that the individual is working on, which is why you see those for the State Medical Board, the Board of Pharmacy, other programs that have more complexity to them.

And as the sponsor, you know, enumerated, there's a great deal of complexity to this program. Many of our professional licensees we interact with at the time they obtain their initial license, and then when they need to renew. Typically not at other times, but for this board there are many reporting requirements as they go out and do their work in addition to the 29 exams that were mentioned. So it's a heavy and complex workload for this individual. Thank you.

Okay. Representative Moore. Thank you, Co-Chair Foster. Thank you, Senator Director Burke, Burke, for being here. This is a great bill.

I have family members that are master guides and assistant guides, and it is very complex and takes a lot of training and a lot of dedication. And so I appreciate this bill bringing some efficiency to the board. I just have a question, I guess, for Director Robb. The information that we have here Um, some of the licensee totals are from '24 and FY— just FY '24. Do we have any recent update— updated, um, information on the licensees totals for '25 yet?

Director Robb. Through the chair to Representative Moore. Yes, so in fiscal year '25, which obviously is getting a little stale at this point, there were between assistant guides and Class A assistant guides, that was 1,004 individuals. Master guides and registered guide outfitters, collectively there were 442 of those individuals. And then the board also licenses transporters, and there were 147 of those licensees in fiscal year '25.

Wow, thank you. I appreciate that. Okay, Representative Bynum. Thank you, Co-Chair Foster. Through the chair, thank you, Senator Bjorkman, Mr. Chairman, thank you for bringing this forward.

Just some quick questions. I know that there has been some discussion throughout the Capitol, or that I hear some discussion going throughout the Capitol, and they are talking about specifically having boards and the need for the boards and the purposes that they serve. Specifically, when I look at the number of individuals being covered on this board, about 1,100 or so, maybe that number is off a little bit. Of licensees that are actually covered. What would happen if the board was completely disbanded?

Where would those responsibilities ultimately go? Senator Bjorkman. Thank you for the question. Through the chair to Representative Bynum, the licensing functions that are performed by the board would fall on the Department of Commerce and Community Development and Economic Development. As we think about the role that this board plays The role of professional guides, they are able to really regulate their own profession.

And they're able to play a significant role in developing regulations that govern what a successful, safe, and good ambassador of Alaska guides should be. And they are able to police themselves through providing their lifelong experience to their own board. They're able to assist in investigations through many, many hours of volunteer work that if the state were to pay for through general fund dollars would cost millions and millions of dollars a year. That really is probably the most important work that our volunteer professional boards do is assisting in those functions to police their own occupation in an effective way so that their occupation is trusted and respected in the state. And as we look at specifically the very detailed nature from region to region and game— from game management unit to another, we see very different landscapes, different animals, different regulations, and very different things that guides need to know, understand, and be able to do in order to be effective.

And that's one of the things that this board does and provides value to throughout the state as it functions. I think it's important to understand that. Also, as we look at very needed new regulation packages that are under consideration by this board, they've taken a significant amount of time because even with this executive administrator in a temporary role in place, there's more to do. And they need additional support from law and from others in order to actually perform the functions that are necessary to make the guiding profession and transporter profession more accountable, to work better, and to make sure that the outdoor experience for many user groups is one that people want to return to. And so they have many, many regulation packages before them now that have taken quite a long time, and they They desperately need more support.

This bill is a step in that direction. Thank you for the question. Follow-up, Representative Biden. Thank you, uh, Co-Chair Foster, through the chair, Senator Bjorkman. So what I'm hearing is, is that it's a highly technical field and that there's a lot of complexities involved in it.

And because of those complexities, we want to be able to add, when we look at the statute under in the bill, I'm sorry, under page 3, starting on line 26 through page 4, ending on line 15, we are adding a big game commercial services board to that, saying that there would be a principal executive officer. So what I hear you saying is that this need is complex enough that we would want to have an executive person to be able to help administer, follow the guidelines, and then assist the board in its mission of regulating the industry overall. Is that accurate? That's correct. Okay.

And then is there another follow-up? Representative— Thank you, Coach Foster, through the chair to Senator Bjorkman. So would you say that the complexity that we have in the big game commercial services board is complex enough or that it is in alignment with the other items that are being listed under that A through Q and we're adding R. That it rises to the level of complexity of the other ones that is necessary that we really need to do this. Senator Bjorkman. Through the chair to Representative Bynum.

Yes. As we look at what it is that the board does with commercial services. Absolutely. Thank you. Okay.

And last question, and then we'll go ahead and wrap up for the day. Representative Galvin. Thank you, Co-Chair Foster. Through the chair to the sponsor of the bill, thank you for bringing this forward. And I wondered if either of you would like to give us a kind of more broad picture of perhaps some of the multiplier effect of how big game is having an impact in our economy.

I know that the independent travelers are looking for activities with purpose like this, and I don't— I assume that you have some sense of how much this particular segment of of travelers and frankly, some are local as well. But big game does contribute to our economy. And I wondered if you have a comment on that. Senator Bjorkman.

Through the chair, Representative Galvin, I don't have that economic data in front of me, but I'm sure that we can provide it for you. Thank you. I wondered if the department might have some, any comment. I know that they kind of do a dipstick into what the multiplier effects are of different industries. Director Robb.

Through the Chair to Representative Galvin, I don't have that information readily available either, but Mr. Chair, I don't know if the board chair, Mr. McCarty, is still online, but he may be able to say a little bit about the impact of guiding in the economics generated by that. Mr. McCarthy.

Mr. McCarthy. I don't, uh, sorry, through the chair, I was muted there. Um, I don't have the exact numbers. I do know there was a McDowell Group report done not too many years ago that was showing, you know, strong economic multipliers up to $80 million annually for the state through the big game hunting services. Okay.

Thank you. Okay. So with that, we're going to go ahead and close out for the day. Senator Bjorkman, any final words before I announce the rest of the day's calendar here? Thank you very much, Chair Foster, for hearing the bill today.

Very simply, this bill puts in statute, meaning kind of into our base budget, an executive administrator position for the Big Game Commercial Services Board that is not paid by general funds. It is paid by designated general funds that are gathered from guide license fees themselves. So no general funds are used to pay for this position. The sole purpose of this bill is to take that temporary position that has been in the budget for 2 years and has been filled by a highly competent person and make that a year-over-year expenditure by placing into statute. I urge members' support.

Thank you. Great. Thank you very much. And so with that, our next meeting is scheduled for today at 1:30, and at that meeting we'll take up amendments for HB 261. That's the education funding bill.

We'll take public testimony for HB 388. That is the bulk fuel loan cap bill. And we'll receive an introduction to SB 24. That is the tobacco and e-cigarette bill. So if there's nothing else to come before the committee, we'll be adjourned at 10:29 AM.

Thank you.