MSC2-20260517-0900

We'll call the Conference Committee on the Operating Budget and the Mental Health Appropriation Bills to order.

HB 263 and HB 265. It is 4 minutes after 9:00 a.m. Present today, Senator Burt Steadman, Senator Mike Cronk, myself, Senator Hoffman, Senator Calvin Chagi, Representative Calvin Chagi, Representative Will Sapp, and Representative Andy Josephson. Today we will be addressing open items in HB 263 and 265 based on the motion sheets that have been distributed to the members earlier today. They are dated May 17th.

In the following departments, we have the Department of Administration, Commerce, Community and Economic Development, Corrections, Education and Early Development, Environmental Conservation, Family and Community Services, Fish and Game, Office of the Governor, Health, Labor and Workforce Development, Military and Veterans Affairs, Natural Resources, Public Safety, Revenue, Department of Transportation, Public Facilities, the University, Legislature, miscellaneous, state retirement payments, fund capitalization and the permanent fund, fund transfers, FY26 supplemental operating items, mental health capital and fiscal notes. We'll start with the Department of Administration. Representative Josephson. Mr. Chairman, I move that the committee adopt the following in the Department of Administration's budget. Item 1, Senate, both lines.

Item 2, Senate. Item 3, House minus— House minus $200,000 UGF. Items 4 through 11, Senate, all items. Is there objection?

Seeing no objection, this action closes the conferenceable items in the Department of Administration's budget. We now move to Commerce, Community and Economic Development. Done. Joseph. Chairman Hoffman, I move the committee adopt the following in the Department of Commerce, Community and Economic Development's budget.

As to item 1, House. Item 2, Senate. Item 3, House. Item 4, Senate. Item 5, House.

Items 6 through 10, Senate, all items. Is there objection to the motion? Seeing no objection, this action closes the conferenceable items in the Department of Commerce, Community and Economic Development. We will now move on to the Department of Corrections. Representative Josephson.

Mr. Chairman, I move the committee.

—Adopt the following: the Department of Corrections budget. Item 1, Senate. Item 2, House. Item 3, House. Item 4, Senate.

Is there objection to that motion? Seeing no objection, that motion passes. This action closes the conferenceable items in the Department of Corrections. We will now move on to Education and Early Development. Representative Josephson.

Mr. Chairman, I move the committee adopt the following: the Department of Education and Early Development's budget. Items 1 through 6: Senate, all items. Item 7: House, with the following modification: change fund source from UGF to interagency receipts. Add $376,600 interagency receipts. Item 8, House.

Item 9, Senate. Items 10 and 11, House. Items 12 through 15, Senate, all items. Item 16, House. Is there any objection to that motion?

Seeing no objection, this action closes the conferenceable items in the Department of Education and Early Development. Development Budget. Now we'll take up the Environmental Conservation Budget. Representative Josephson. Thank you, Chairman Hoffman.

I move that the committee adopt the following: the Department of Environmental Conservation's budget. Item 1, Senate, both lines. Item 2, House, modified as follows: on line 1, House minus $968.1 thousand Oil/Hazardous Release Prevention and Response Fund. Line 2, House, plus $968,100 UGF. Item 3, Senate, both lines.

Is there any objection to that motion? I object for a question.

Thank you, Chairman. Is there a staff— Just on Item 2 with the change in the general funds re-addition to the SPAR fund, I'm just curious if Director Painter can tell me about fund capitalization. Mr. Painter. For the record, Alexi Painter, Legislative Finance Division, through the Chair of Representative Staff. So the SPAR fund received a settlement of about $24.5 million.

The capital budget spent I think about $11 million out of that. So the $1 million fund change left in this would be projected to decrease the fund balance, but it would take quite a while to anywhere near zero at this point. Okay. Thank you. I remove my objection.

We have a brief adieu. Brief adieu.

Call the Senate— we'll call the conference committee back to order. Is there further— any further objection to the motion Seeing no further objection, this motion passes. This action closes the conferenceable items in the Department of Environmental Conservation's budget. We'll move on to Family and Community Services. Representative Josephson.

Mr. Chairman, I move the committee adopt the following in the Department of Family and Community Services budget. As to items 1 and 2, house. Item 3, house minus $50,000 UGF. Items 4 through 6, House. Is there objection to that motion?

Seeing no motion, no objection, that motion passes. This action closes the conferenceable items in the Department of Family and Community Services budget. We'll move on to the Department of Fish and Game. Representative Josephson. Mr. Chairman and committee, I move the committee adopt the following Department of Fish and Games Budget.

Item 1, House. Item 2, Senate, both lines. Item 3, House, modified as follows. As to line 1, House plus $161,000 CFEC receipts. As to line 2, House minus $161,000 UGF.

Item 4, House. Item 5, Senate. Item 6 and 7, House, both items. And item 8, House, modified as follows. Line 1, House, +1,843,1000 UGF.

Line 2, House, -1,843,1000 federal receipts. Is there any objection to that motion? I object to that motion, Chairman. May I speak to your objection, Representative Steffensen? Thank you, Chairman.

If I would be permitted by the committee just to ask Director Painter, I believe line 8 in this is the Dingle-Johnson federal and state funding for the Fairbanks Hatchery and Anchorage Hatchery. I noticed that there's a slight— there's an increase from the House version in general funds, but it's slightly short of the allocation that was in the executive's budget. I'm just curious if those funds are enough to maintain the operations of the hatchery through the year, if you know that. Mr. Painter. Mr. Painter.

For the record, Alexi Painter, Legislative Finance Division. From what the Department of Fish and Game and Office of Management and Budget have said, a $400,000 fund change would not affect hatchery operations. The department has something between $400,000 and $500,000 unobligated Engel-Johnson funds that they could use for this purpose. Thank you, Director. I remove my objection.

Objection is removed. Thank you. Is there further objection to the motion? Seeing no further objection, that motion passes. This action closes the conferenceable items in the Department of Fish and Game's budget.

We move on to the governor's budget. Representative Josephson. Senator, move that the committee adopt the following: the Office of the Governor's budget items 1 through 9, Senate, all items.

Is there objection to that motion? Seeing no objection, that motion passes. This action closes the conferenceable items in the Office of the Governor's budget. We move on to health. Representative Josephson.

Yes, Mr. Chairman. This one's a bit longer. I move that the committee adopt the following in the Department of Health's budget. Item 1, Senate. Item 2, House.

Items 3 through 5, Senate, all items. Items 6 and 7, House, both items. Item 8, Senate. Item 9, House, minus $1,100,000 UGF. Item 10, Senate.

Item 11, House, minus $6,500,000 UGF. Item 12, House, modified as follows. At line 2, House minus $654,400 GF match. Items 13 through 16, Senate. Item 17, Senate modified with language to read: The amount appropriated by this appropriation includes the unexpended and unobligated balance on June 30, 2026 of the Tobacco Use Education and Cessation Fund under Alaska Statute 37.05.580.

0. Item 18, House, minus $250,000 UGF. Item 19, House. Item 20, House, minus $200,000 UGF. Items 21 through 25, House, all items.

Item 26, House, as modified by the following: Line 1, House, minus $660,000 general fund match. Items 27 and 28, House, both items. Item 29, House, modified as follows: line 1, House minus $125,500 general fund match. Items 30 and 31, Senate, both items. Item 32, Senate, modify language to read as follows: it is the intent of the legislature that the Department of Health increase the rate per service increment of private duty nursing services from $20 to $30 for registered nurses and from $18.75 to $26.25 for licensed practical or vocational nurses.

Do any members of the conference committee have objection to that motion? Seeing no objection, that motion passes. And this action closes the conferenceable items in the Department of Health's budget. Moving on to Labor and Workforce Development. Representative Josephson.

Chairman, I move the committee adopt the following: the Department of Labor and Workforce Development's budget. Item 1, House, both lines. Item 2 through 5, Senate, all lines. Item 6, House. Item 7, Senate, both lines.

Is there objection to that motion? Seeing no objection, That motion passes. This action closes the conferenceable items in the Department of Labor and Workforce Development's budget. Moving on to Military and Veterans Affairs. Representative Josephson.

Mr. Chairman, I move the committee adopt the following: the Department of Military and Veterans Affairs budget. Item 1: House. Is there objection to that motion? Seeing no objection, that motion passes.

This action closes the conferenceable items in the Department of Military and Veterans Affairs budget. On to natural resources.

Representative Josephson. For DNR, I move the committee adopt the following: the Department of Natural Resources budget, Mr. Chairman, items 1 through 4, Senate, all lines; item 5, House. Is there any objection by conference members to that motion? Seeing no objection, that motion passes. This action closes the conferenceable items in the Department of Natural Resources budget.

Public Safety's budget. Representative Josephson. Mr. Chairman, I move the committee adopt the following in the Department of Education Early Development's budget: items 1 and 2, Senate, all lines. Is there any objection to that motion? Seeing no objection, that motion passes.

This action closes the conferenceable items in the Department of Public Safety's budget. Moving on to the Department of Revenue. Representative Josephson. For Revenue, I move the committee adopt the following in the Department of Revenue's budget: items 1 through 5, Senate, all items. Item 6, House.

Items 7 through 12, Senate, all items. Item 13, Senate, plus $500,000 permanent fund gross receipts. Is there objection to that motion? Seeing no objection, that motion passes. This action closes the conferenceable items in the Department of Revenue.

Moving on to Transportation and Public Facilities. Representative Josephson. Mr. Chairman, I move the committee adopt the following in the Department of Transportation and Public Facilities budget. Item 1, House, all lines. Items 2 and 3, Senate, both items.

Items 4 through 15, House, all lines. Item 16, Senate. Item 17, House, all lines. Item 18, Senate. Items 19 through 21, House, all lines.

Items 22 and 23, Senate, both items. And items 24 through 28, House, all lines. Do any members of the conference committee have any objection to that motion? Seeing no objection, that motion passes. This action closes the conferenceable items in the Department of Transportation and Public Facilities.

Moving on to the University of Alaska. Representative Josephson. For UA, I move the committee adopt the following: the University of Alaska's budget, House— rather, item 1, House, both lines; items 2 and 3, Senate, all lines; item 4, House, minus $130,000 UGF; item 5, House, minus $100,000 UGF; item 6, Senate, both lines; Item 7, House, minus $195,000 UGF. Modify position additions in Item 7 from 2 to 1. Item 8, House, minus $50,000 UGF.

Item 9, House, modified as follows. At line 1, House minus $250,000 general fund match and add $250,000 University receipts. At line 2, House, Item 10, Senate, both lines. Item 11, House, minus $50,000 UGF. Item 12, House, minus $30,000 UGF.

And finally, Item 13, Senate, both lines. Is there any objection to that motion? Seeing no objection, that motion passes. This action closes the conferenceable items in the University of Alaska's budget. Moving on to the Legislature.

Representative Josephson. Chairman Hoffman, I move the committee adopt the following in our own Legislature's budget: Item 1 through 5, Senate. Item 6, House, minus $39,000 UGF. Is there any objection to that motion? No objection.

That motion passes. This closes the conferenceable items in the Legislature's budget. Under miscellaneous items, Representative Josephson. Mr. Chairman, I move the committee adopt the following miscellaneous items: items 1 through 3, Senate, all lines; item 4, Senate, modified to accept House transferred positions related to the Department of Public Safety; item 5, Senate. Is there any objection to that motion?

Seeing no objection, that motion passes. This action closes the conferenceable items in miscellaneous items. We go on to the state's retirement payments. Representative Josephson. For retirement payments, I move the committee adopt the following in the state retirement payments area.

Item 1, Senate. Is there any objection to that motion? Seeing no objection, that motion passes. This action closes the conferenceable items in the state retirement payments. Going on to fund capitalization.

Representative Josephson. Yes, Mr. Chairman. I move the committee adopt the following in fund capitalization: items 1 through 6, Senate, all lines. Is there any objection to that motion? Seeing no objection, that motion passes.

This closes the conferenceable items. Fund capitalization. Permanent fund. Representative Josephson. As to the permanent fund, Mr. Chairman, I move the committee adopt the following in the permanent fund.

Item 1, Senate. Is there any objection to that motion? Yep. There is an objection. Senator Cronk.

I'm just objecting because, you know, listening to constituents and what the high— actually, we had a really long winter, extremely high prices now that are looking like they're going to go into this winter. I'm thinking the largest PFD that we could pay would be the best choice for Alaskans. That's just my opinion. You remove your objection? No.

Further discussion on the motion by Representative Josephson? Seeing none, roll call please. Senator Cronk. Yes. Representative Sapp.

No. Senator Steadman. Take a brief ease.

Thank you. Avoid the roll.

Call the conference committee back to order. Mr. Painter, the amount of the PFD? Mr. Chairman, so in the Senate position, the PFD is the amount necessary to pay a $1,000 dividend.

And related to that, is there an energy relief fund as well that is going to be considered? Mr. Chairman, yes, there's a subsequent amendment for energy relief increasing that amount as well for these supplemental section. You maintain your objection? Roll call, please. Representative Straubing.

Yes. Senator Steadman. Yes. Representative Stack. No.

Senator Krumm. No. Representative Josephson. Yes. Senator Hoffman.

Yes. House 2 yeas, 1 nay. Senate 2 yeas, 1 nay. That motion passes. This action closes the conferenceable items in the permanent fund, fund transfers.

Representative Josephson. Chairman Hoffman, I move the committee adopt the following in fund transfers: items 1 through 7, Senate, all items. Is there objection to that motion? Seeing no objection, that motion passes. This action closes the conferenceable items in fund transfers.

Moving on to supplemental appropriate— supplemental operating items. Representative Josephson. Thank you, Mr. Chairman. So under supplemental operating items, I move the committee adopt the following, uh, things. Item 4, Senate.

Item 21, Senate. Modified— modifying both items by adopting Amendment EA-2. Amendment EA-2 changes the amount of FY26 Energy Relief Permanent Fund dividend payment from $150 per person to $200 per person at an estimated total cost of $127.3 million. This amendment also increases the outside the BSA payment from $111 million to $115 million. Finally, the amendment also appropriates $15 million to the Bulk Fuel Revolving Loan Fund at the end of the FY26 waterfall.

That is reflected in new conference committee item number 26. Is there objection to that motion? I object. Speak to your objection, Representative Stapp. Thank you, Chairman.

I would be permitted by the committee, through the chair, to— Director Painter, we kind of discussed it lengthily, the capitalization of bulk fuel loan. I'm just curious if $15 million do you think would be appropriate in capitalization in the event that the loan capacity was indeed reached maximum with the pending bill? Mr. Painter. For the record, Alexi Painter, Legislative Finance Division. Through the chair, Representative Sapp, I think it's pretty— it's unclear what the amount could be based on the existing fund balance in that fund.

The $15 million is consistent with a, you know, 50% increase or so, something on that magnitude in the usage of that program. So that's a plausible number, but it's unclear exactly what the need will be. And just—. Yeah, thank you, Chairman. Just quick follow-up.

So am I reading this waterfall correctly? In the event that this third section is exhausted after the energy relief at K-12, formula. So in theory, if there's not enough surplus revenue, you wouldn't have fund capitalization in the bulk fuel fund. Is that correct, through the Chair? Through the Chair, or representative staff, yes, that's correct.

Okay. Thank you. I withdraw my objection, Chairman. Is there further objection to the adoption of the motion? Seeing none, that motion passes.

This action closes the confidential items in the in the supplemental operating budget. Moving on to the mental health capital. Representative Josephson. Chairman, I move the committee adopt the following in mental health capital. Item 1, Senate.

Is there objection to that motion? Seeing no objection, that motion passes. This action closes the conferenceable items in the mental health Capital fiscal notes. Representative Josephson. For the committee and before the members is a document entitled Packet 1.

This document adds a new Section 2 to both the operating budget House Bill 263 and mental health budget House Bill 265. Section 2 makes appropriations associated with the bills listed in your packet. If a bill listed either fails to pass, its substance fails to be incorporated in some other measure, or that bill is vetoed by the Governor, the appropriations associated with that bill are reduced. The attached reports prepared by the Legislative Finance Division list the fund sources and agencies associated with the bills. We have an amendment to the fiscal note package labeled as Amendment 2.

Also in your files.

Breathe at ease.

Call the conference committee back to order. Mr. Painter, can you explain the motion for the committee? Yes, Mr. Chairman. So the packet itself contains, as Representative Josephson said, the two Proposed Section 2, or Sections 2, I suppose, for the operating mental health bill, as well as a language amendment for House Bill 48, and then a number of fiscal notes prepared by the conference committee to reflect either amendments that happened too late to have administration fiscal notes or to conform with conference committee budget. The amendment number 2 makes a couple of changes.

It replaces two of those conference committee notes with ones prepared by the administration that were received after this packet had been put together. These amounts are slightly different, so these two, um, replacements are both for House Bill 239 for the Department of Corrections. The first is for, um, the Office of the Commissioner, Control Code 694, and this replaces a fiscal note in the packet for the same allocation and slightly increases the cost. The second is also Department of Corrections for the parole board OMB component number 695 and replaces a fiscal note for that same allocation prepared by the conference committee, again at a slightly higher cost than the conference committee note. And the third amendment is for— Looks like we have an error in the amendment.

Should say House Bill 193. It's a Senate bill, but for House Bill 193, that adds an additional fiscal note based on a potential amendment to the bill. This is a fiscal note that right now exists as a fiscal note to Senate Bill 217 but has been rewritten to House Bill 193, and it— this also amends that fiscal note by the administration to remove the STEP grants portion of that fiscal note. The conference committee version of the operating bill has open-ended language for STEP, so the, the STEP grants can be accommodated in that. This provides the funding for the agency for administrative costs from the STEP fund should HB 193 be amended as contemplated.

Call the conference committee back to order. Do we have a motion? Mr. Dros— Representative Josephson on amendment number 2. Yes, um, I described the amendment, and I would move that the committee adopt the first fiscal note packet as amended by Amendment 2.

Um, brief ideas.

Call the conference committee back to order. Representative Josephson. I move to adopt the amendment. Is there objection to the amendment? Seeing no objection, that amendment is passed.

The amended motion. Representative Josephson. I move to adopt the amended motion or packet. Is there objection to that motion? Seeing no objection, that motion passes.

We now move on to the operating bills.

Representative Josephson. I move that we give Legislative Finance and Legislative Legal Services the ability to make technical and conforming adjustments to the conference committee substitute for House Bill 263. Is there any objection by conferees to that motion? Seeing no objection, that motion passes.

I now move that the conference committee report out conference committee substitute for House Bill 263 with individual recommendations. Brief edis.

Call the conference committee back to order.

Representative Josephson. Mr. Chairman, again I move that the conference committee report out conference committee substitute for House Bill 263 with individual recommendations. Is there objection to that motion? Seeing no objection, the conference committee on House Bill 263 passes the conference committee.

Representative Josephson.

Mr. Chairman, do you want to sign that report now or move on? We'll move on. We can move on. I move that we give Legislative Finance and Legislative Legal Services the ability to make technical and conforming adjustments to the conference committee substitute for House Bill 265, the mental health budget. Is there objection to that motion?

Seeing no objection, that motion passes. Mr. Chairman,.

I move that the Conference Committee report out— report out Conference Committee substitute for House Bill 265 with individual recommendations. Is there any objection to that motion? That motion passes. We'll take a brief at ease and sign both reports. We're at ease.

Call the Conference Committee back to order.

This meeting closes all conferenceable items in the operating and mental health appropriation bills in HB 263 and 265. This concludes the work of the Conference Committee. I'd like to thank Representative Representative Josephson and his staff for all the collaboration that we've had between our two offices. Everything went very smooth with the process. I would also like to thank Senator Steadman, Senator Cronk, Representative Schraggy, Representative Stapp, and their staff.

I would also like to thank Alexi Painter, Valerie Rose, and the exceptional crew at Legislative Finance. Marie Marks, our very talented budget bill drafter at Legislative Legal Services, along with the rest of the staff at Leg Legal. I would like to thank the OMB Director Lacey Senator Sanders for all her participation working with the House and the Senate. And finally, I'd like to thank the committee aides and secretaries, especially Mr. Pete Eklund and my staff for all the many, many hours that he's put into this budget.

Thank you.

—Best to you. Thank you. Is there any closing comments that members of the conference committee would like to make at this time?

Mr. Chairman. Representative Stepp. Thank you, Mr. Chairman. I just wanted to thank you and the vice chairman for their many years of service to our state, and I wish you best in retirement. Thank you.

Thank you, Representative Stepp. Further comments? Seeing none, we are adjourned.