Alaska Legislature: House Finance — April 30, 2026 1:30pm

Why, thank you. Okay, I'll call this meeting of the House Finance Committee to order and let the record reflect that the time is currently 1:42 PM on April 30th, 2026. And present today we have Representative Stapp, Representative Allard, Representative Moore, Representative Bynum, Representative Kuchar-Schraggi, Representative Josephson, Representative Jimmy, Representative Galvin, Representative Tomaszewski, Representative Hannon, and myself, Co-Chair Foster. And as usual, if folks can mute their cell phones. And we have two bills before us today.

That's House Bill 193, that's the Paid Parental Leave Bill, and also House Bill 1, that is the Spee-Cee as Legal Tender. And so first up, we'll take up, uh, 193, that's Paid Parental Leave. And so my intent is to, let's see, probably get the recap on the bill, and then we'll get our presentation from the Department of Labor, and then after that we'll have fiscal notes. So I think what we'll do is get the recap. I think we had a CS too.

We'll get through all of that. So with that, Representative Hall, if you could please come up and put yourself on the record. Also your staff, Ms. Joan Wilkerson, and maybe take us to the next step.

Good afternoon, Co-Chairs Foster, Josephson, and Schragi, and members of the House Finance Committee. My name is Carolyn Hall and I represent the West Anchorage neighborhoods of Turnagain, Spenard, and Sand Lake, also known as House District 16.

Um, I appreciate this opportunity to give a brief recap of what HB 193 proposes to do, and that is to update the unemployment insurance benefits that haven't been touched since 2009 and to create a paid parental leave program. Thank you. Co-chair Foster, if it pleases you and the committee, I have a list here of stakeholder policy recommendations that I'm happy to run through very briefly if it's the will of the committee. Sure. Representative Hall.

Okay. Thank you, Co-chair Foster. So I'm going to start with in response to committee questions from April 16th. We provided to the committee a list of the stakeholders and the dates in which we met with them. And it's based on all of those extensive conversations that I've had over the course of the last year, to which you see this list before you.

So beginning with the— at the top, reducing the paid parental leave benefit duration from 8 to 26 weeks to 8 to 12 weeks. That change would align the paid parental leave program with the Federal Family and Medical Leave Act. Or FMLA, and the average leave of similar benefits in other states. That's also a very strong policy consideration, a recommendation coming from the business community. Next, we have reducing the weekly benefit from $817 per week to an amount that better protects the UI trust fund solvency.

Exempting businesses that have a leave program as good as the paid parental leave program or more generous. Exempting seasonal employers from participation, setting a threshold of employees to where employers who have 50 or fewer employees would be exempt from the program. Additionally, there would be an option for small and seasonal employers to opt into the program if they so choose.

We would The next item is to exempt the paid parental leave fund from the sweep.

Next is polishing the snapback language that is in the bill and that is based on feedback from the Department of Labor and Workforce Development, and that is to at all costs protect the solvency of the UI trust fund. And then changing the effective— excuse me. Maintaining the Department of Labor's annual inflation adjustment based on the Alaska taxable wage rate and not the Alaska CPI. Um, instead of inflation adjusting based on the Consumer Price Index, uh, it would be more prudent to adjust, uh, inflation based on the Alaska taxable wage rate. Um, and then lastly, changing the effective date for benefit distribution to January 1st, 2029.

That change would allow the Department of Labor to prepare for the program changes that that this bill would create and also give the paid parental leave fund time to accumulate funds. With that. Great. Thank you very much. So those are the changes from the last version to version L. Sorry, Representative Hall.

Excuse me, Co-Chair Fields. These changes are not in version L. These are policy recommendations coming based on stakeholder feedback. These recommendations are not in Version L, but they are considerations based on stakeholder feedback that the committee could consider if it so chooses. Perfect time to open this up for questions, just to make sure that we're all on the same page with regard to these recommendations, and we do have a question. So what my intent is, is to do questions questions on these recommendations, and then we'll go to the Department of Labor's presentation, and then fiscal notes.

And after each one of those segments, we'll go to questions. So in the lineup right now, I've got Representative Moore and Representative Josephson. Representative Moore. Thank you, Co-Chair Foster. Thanks for being here, Representative Hall.

I just had a quick question on the reduce the weekly benefit. What did we bring that down to, or what was the recommendation? The recommendation is for the weekly benefit to be either $425 a week or $470 a week, but beyond that I would defer to the Department of Labor because they have more expertise in that matter. Wonderful. Thank you so much.

That's it. Okay. Representative Josephson.

Thank you, Mr. Chair. I was going to ask that question as well, but fundamentally the thing that I need, and maybe this is this would be offered by the Department of Labor, is a chart showing crossover points where we reach a point of concern based on increasing the weekly benefit, which we absolutely need to do, and adding the paid parental leave feature. So if there was something I could see presented that showed me that. And I apologize, Representative Hall, if it's in the packet and you want to direct me to it.

So those are the couple things. I can see wanting to adopt some of these. I think excluding employers with 50 or fewer employees is not a great idea because that's so many businesses in Alaska. But I'll just leave it there. Representative Paul.

Thank you, Co-Chair Foster. And it appears that I may have misspoken earlier and accidentally called you Representative Fields, and for that I apologize. But Representative Foster, to Representative Josephson, the Department of Labor could best answer your first question. I don't know if you want me to respond to your second point about the employee threshold, but I am happy to if you want me to. No, that is okay.

We will figure it out. Thank you. And just so folks know, we do have Ms. Paloma Harber as well as Lennon Weller with the Department of Labor. And did you want to hold off on going to them? Oh, if they are prepared, if it takes you out of your flow and you are waiting for them to do a holistic thing, that might be better.

Looking out into the audience, and it looks like that might be the better avenue. So I would like to also recognize that we do have with us Representative Aishide, who I believe is here to check in on this bill and support it, I believe. And we also have Representative McCabe, but also here for another bill. So with that in the lineup, I have Representative Allard, Galvin, and Stapp. Representative Allard.

Um, yeah, Allard. Uh, thank you. And through the co-chair, thank you for being here today. Representative Hall, did you— um, I think I asked it last time you were in front of us, but I was just curious, have you spoken to the small businesses about this bill and how did they respond to doing it? Do you have a list of them?

Through, through the co-chair, Representative Allard, I have a list here. My, my staff happy to share it with the committee if that is the will of the co-chair. But yes, we have met extensively with the business community, and as recent as Monday when I connected with the Alaska Chamber for the— here is a second time on this— but the, the list includes meeting with the AFL-CIO, the Alaska Chamber, Alaska Children's Trust, Alaska Business Education Compact, the Anchorage Chamber of Commerce, the Anchorage Economic Development Council, the Juneau Chamber of Commerce, Fairbanks Economic Development Corporation, Fairbanks Chamber of Commerce, Disability Management Employer Coalition. That, that organization is a nationwide industry group that helps small businesses or businesses in general administer paid leave. They were really instrumental with, with walking us through the bill and seeing where places that we could help businesses, small businesses in particular.

Um, that's all I have. Thank you. May I? So I know that the Alaska Chamber of Commerce kind of came out against this, but then the other thing I was— unless they changed their point of view, but I'm asking specifically, did you go to small businesses themselves that have 50 or more individuals and say, hey, do you mind if we do this? Representative Hall.

Through the co-chair, Representative Allard, when I met several times with the Anchorage Chamber of Commerce they were— there were many representatives of small businesses who were there. And there has been an ongoing dialogue when it comes to what they would like to see. And I will say that when I met with the Alaska Chamber of Commerce on Monday with their Legislative Affairs Committee and I walked through exactly what you were seeing on your screen right here, they did not come out against what, what you see before you. They did have concerns about the solvency of the paid parental leave program as far as like, is it going to be a benefit that needs to be taken away because it— the fund was not able to remain solvent over the long term. But for the most part, like, I don't really want to speak for them, but they did not come out against these recommendations that are on the screen in front of you.

May I? Representative Ballard. Thank you. So I don't know what you mean by many. And that— I know every single business, and I probably spoke to about 40 because they were not having this, were very concerned and not on board to do it.

So I'm just kind of bringing it back to ask you again, did you actually speak to any individual businesses? Because I don't know that they would speak up, and I'm just wondering if they gave you any letters of support or anything that I'm missing. Representative Hall. Through the co-chair, Representative Allard, I would have to dig in to see who within the letters of support, of which we have many, have actually said that they see that, that, that they agree with this. But I will say my understanding is the information that has been out there on social media when it comes to whether businesses should support or not support this bill, that is an old version of the bill.

That is not necessarily business friendly. So I am not surprised whatsoever that they would come out against a previous version of this bill. But again, through the co-chair, Representative Allard, these recommendations right here are based on business feedback. And just for clarification, absolutely. The new version I'm referencing.

So that's okay. Thank you. I appreciate your honesty and your candor. Oh, Chair Foster. I just would like to reiterate for the committee that version L that is before the committee does not include these recommendations that are on the screen.

Correct. Thank you. But these recommendations have been out. Representative— for the record, that was Representative Allard. And next we've got Representative Hall.

Through the co-chair, Representative Allard, the policy recommendations that are on the screen currently are in no version of HB 193. And that is what this conversation is about, is for the Finance Committee to consider these policy recommendations and any other that they deem to consider. Thank you. Okay, um, and so in the lineup I have Representative Galvin, Stapp, Bynum, and then after that we'll go to the Department of Labor presentation And then we'll come back in the end to questions for sponsor and anybody else who's, who's presented. So with that, Representative Galvin steps in.

Bynum. So Representative Galvin. Yeah, thank you so much. I appreciate seeing this list. I presume that this is a list of what would become or could become friendly amendments.

Is that correct? Through the co-chair, Representative Galvin, that is correct. Thank you. I really appreciate your doing the homework on that and helping us have a sense of what you know that industry and particularly, I mean, the Chamber represents thousands of businesses. So that really does help a lot.

I appreciate that. What I am going to ask you, just a couple of more specific questions about this list. Number one, if I may, moving it The duration from 8 to 26 to 8 to 12. In that— do you mean in that range or do you mean that the employer gets to decide between those two ranges? Rep. Sandmuller.

Through the co-chair, Representative Galvin, the bill in its current form is 8 to 26 weeks and that is with giving the Department of Labor and Workforce Development the authority to choose based on fund solvency what the duration should be. Okay, thank you. And if I may follow up— Representative Gelman, thank you. On—. And there is one bullet here that says provide an option for small and seasonal employers to opt in.

Very much appreciate that. I could imagine that they might be able to even attract employers— employees offering this optionality? What would that look like, I guess, is my question, or would the Department of Labor be better to explain that? I'm just trying to understand. Does that mean they buy in, or just how does that look?

Representative Hall? Through the co-chair, Representative Galvin, I would defer to the Department of Labor and Workforce Development because they would be administering the program. Thank you, and I can ask that later then. Another follow-up, if I may? Representative Gelman.

The exemption of this from the sweep. Typically, I thought that would mean it would need to be in some form of a constitutional amendment if we were to have the fund isolated from a sweep. And I'm curious to know if you know what that would look like. Representative Paul. Through the co-chair, Representative Galvin, I am not a financial expert, but my understanding is that it would mean instead of the paid parental leave program being in the general fund, it would have its own separate fund in the Treasury.

Okay, and I think I can follow up maybe with Department of Law or someone on that to find out how we set up a fund that makes it preventable from a sweep. I think this is an important piece of it and I appreciate you putting it in here so that we know there is predictability around that. I have one last question, if I may. Rep. Galvin. In here on the second-to-last bullet is Alaska taxable wage base.

I presume this is like an AGI or from our federal tax form.

Is that where they would be drawing this?

Through the co-chair, Representative Galvin, my understanding is that that would be a more appropriate way to inflation-proof.

The benefit is through the taxable wage base and not CPI, but the Department of Labor is far more qualified to answer that. Okay, thanks. Thank you. Now it's becoming a little more clear to what, what the intent is, and I think that's all I have. Thank you so much.

Okay, and just a clarifying question on that point, Representative Josephson. Well, I once dabbled intensely in this issue of avoiding sweeps. What's been happening lately since the Superior Court decision by a judge named Garton is if you call something a separate fund that typically insulates it from the sweep. But also, if it's a fund that is wholly available at all times, that is, we've delegated to an agency the right to spend it as needed, that's typically not sweepable.

It's not static and therefore it's dynamic and therefore it's not something that can be swept. I'm not explaining it well. There's a case called Hickel v. Cooper. It's super complicated, but the Supreme Court tried to explain all of this. Thank you.

Representative Stout. Yeah, I think, co-chair, I think I'm going to just echo comments of co-chair Josephson. So I think, one, it's not our money, so it would be weird for us to sweep it into the general fund. So it's not actual revenue deposits, right? Somebody else's money that we're basically holding as a pass-through.

But yeah, I'm assuming you're meaning that it doesn't require any legislative appropriation to spend, which is Sickle v. Cooper. So I would imagine it's basically not sweepable. I don't think we've ever swept the UI fund, so— because again, it's not our money. So it would be a little weird if we stole the people, employers' money and put it in the general fund. But I do have a couple of questions here.

Through the Chair to Representative Hall, thank you for being here. Thank you for this bill. It's been a big nerd-out pleasure of mine to go through all the complicated changes. I will say regarding the weekly benefit, it's been a while since I heard this, so remind me why we're using a fixed number rather than a percent of salary like we would normally in a disability—. Or through the chair.

Representative Hall, through the co-chair, Representative Stapp, I am not qualified to answer that question. I believe the Department of Labor would be better qualified to answer that. I don't know. Okay. And I will go through a couple of these and I guess we will just skip to the— fast forward the movie to get to the Department of Labor.

I—.

How do—. The taxable wage base, how do we get that? There is no income tax in Alaska, right? So in theory, we don't have access to people's tax information. I know Labor collects data on people.

How do we know? Through the chair. And secondly, you might not know, what do we do with individuals, in this case let's say maternity leave, who are on disability insurance with this payment? How does that work? Through the chair.

Representative Paul. Through the co-chair, Representative Stepp, I don't know the answer to your first question. I would defer to the department. Secondly, The bill in its current form is meant to run concurrent with other leave options. I can't really speak definitively to disability insurance, though.

Although my chief of staff, Joan Wilkerson, may know that answer. Ms. Wilkerson, if you could put yourself on the record. For the record, my name is Joan Wilkerson. I'm staff to Representative Hall.

Through the chair, Representative Stepp, all other benefits available are—. PPL runs concurrently with them, and the same would be true of disability. In terms of the actual mechanics of how that's done, it's best deferred to Paloma Harper and her staff at DOLWD. Okay. Just a quick follow-up, Mr.

Chair. Representative Steyer. Yeah, I'll follow up. So most people might not know, but short-term disability insurance actually covers pregnancy. It's considered a sickness disability, and they have rules regarding that, how much they can get.

So usually most people get maximum benefit for that. But in the event they're receiving another benefit, typically that creates a problem where you've got to ratchet one of them down because there's some— federal law regarding the amount of salary you can get on disability. So that's why I asked the question through the chair. Thanks. It's just common.

Okay. And I think it might be best to have Department of Labor come up here sooner rather than later, I think. But we're going to go to Representative Bynum, and then we'll go to DOL. Thank you, Co-Chair Foster. Through the chair, Representative Hall, thank you for being here.

You know, a lot of changes that we've been going through on this bill. It's obviously complex. I think the biggest change was the last time, I believe, bringing Version L was creating a parallel path program. I guess my question about the recommendations that are here in front of us, is this something that you intend to bring forward as a committee substitute for the bill, or are you looking for us to have debate on the general concepts of these elements to decide whether or not you want to do a committee substitute, or would this then be subject to us having amendments? What would— what is the intention of the— what is your intention on the bill, Representative Hall?

Through the co-chair, Representative Bynum, I would look to the will of the co-chairs and committee. I'm— if a CS makes sense to me to, to save the committee's time, but I understand that there may be competing concerns about any of the recommendations that are before you. Okay. Co-chair Foster, the reason I ask is because these are bulleted point items, but actual application in law can be quite complicated and might rise to other questions, and I would hate to try to go through the development process of creating sections of the bill just through committee process without understanding what the intent is. So just a comment on that.

I guess one other quick question through the chair. Representative Bynum. Thank you. You gave us the list of stakeholder meetings. My understanding of this is that this is just informing the committee that these are the people that you talked to.

This is not necessarily an implicit endorsement of the bill in any way. And that if there were going to be endorsements of the bill from these organizations or other, they would be included in the packet and if not included in the packet would be ultimately included in the packet. Is that accurate? Representative Hall? Through the co-chair, Representative Bynum, yes, that is correct.

Thank you. I— the list of stakeholder meetings that are before you are just that. It's to socialize the concept, receive feedback, and it— just because they're listed here does not mean that they fully endorse what is before the committee. Thank you. Okay, let's go ahead and have Ms.

Paloma Harbour as well as Mr. Lannon Weller come up and maybe walk us through your presentation. I think that'll be— clarify maybe some of the questions, or at least we can ask them if needed.

Do you need to say something? [SPEAKING SPANISH] I'm thinking it may not be long, but one second. Brief it is. Finance back on record at 2:08 PM. Ms.

Harbor, if you could put yourself on the record.

Thank you, Co-chair Foster and committee. For the record, Paloma Harbor, Director for the Division of Employment and Training Services with the Department of Labor and Workforce Development. And here with me is Lennon Weller. Will you introduce yourself? Absolutely.

Again, Chair Foster, members of the committee, for the record, my name is Lennon Weller. I'm an economist for the Department of Labor. With the Department of Labor and Workforce Development's Research and Analysis section, and I function as the actuary for the unemployment insurance system. Great, thank you.

So just again, Pluma Harbor, to clarify, these are— this is some information on the current version of the bill, version L, which again doesn't include any of those policy recommendations, and this is just information based on what we thought questions were related to the bill, but we're happy to present additional information at your request. Got a— Rep. Samstapp, do you have a question? We talked to the presentation. OK, you—. Yeah, I have a few questions, Coach, but I'll wait till after the presentation if there is one.

OK, Ms. Harbor. OK, so this slide Um, is meant to show you how employee taxes are changing under the current version of House Bill 193. Um, at this time in, in statute, there's a minimum tax to employees of 0.5%. Of that, 0.25% goes to the Technical and Vocational Education Program. 0.1% Goes to the State Training and Employment Program.

And the residual 0.15% goes to the Unemployment Insurance Trust Fund. Under House Bill 193, the Technical and Vocational Education program remains the same, as well as the State Training and Employment Program contribution, but the 0.15% that previously went to the trust fund now goes to the new Paid Parental Leave program. So we just wanted to clarify that for everybody. Uh, there will no longer be employee contributions to unemployment insurance. Under this bill.

Uh, Representative Stapp.

Yeah, thanks. Sorry, Coach, I can't make that that far. Um, so how do we capitalize the UI fund? Through the chair. Through the chair, Representative Stapp.

There's still employer contributions to the Unemployment Insurance Trust Fund. Alaska is only— is one of only 3 states that currently require employee contributions to unemployment insurance. And so that's why we have the flexibility with the employee contributions to use them in different ways. And that's— so that the employee contribution would be going away, but employers would still contribute to unemployment insurance.

Okay, thanks. Okay, Ms. Arbor. It's zero. So this slide shows what's happening with employer taxes under this legislation. So currently employers pay a minimum tax of 1% to the Unemployment Insurance Trust Fund.

This legislation would allow that employer tax to go to zero when the trust fund solvency warrants it and economic conditions, and instead employers would contribute a new tax of of 0.1% to the State Training and Employment Program and a new tax to the Paid Parental Leave Program of 0.2%. Those new taxes would only be at that percentage when UI taxes are at zero. So as UI taxes ratchet up, employer contributions to Paid Parental Leave would start ratcheting down and then employer contributions to STEP would start ratcheting down.

The next slide is a better picture that might help that be more understandable.

So this shows how House Bill 193 would work in total taxes for the employer. So as I mentioned previously, currently employers are paying us a minimum tax of 1%. Under this new legislation, they would be paying a tax of 0.3%, again, when trust fund solvency warrants it. And so they— their contributions to UI go down to zero. So here you're seeing in 2027, calendar year 2027, under this legislation, their unemployment insurance contributions would be zero, their state training employment contributions would be 0.1%, and their paid parental leave contribution would be 0.2% for a total tax of 0.3%.

Is that clear? Then as they are needing to give to unemployment insurance again, their contributions to STEP and paid parental leave start going down. As I mentioned, paid parental leave currently is the one being drawn down first and then State Training Employment Program. So that's why you see paid parental leave start to drop off first and then eventually state training employment program contributions drop off as unemployment insurance contributions increase.

Is that complicated enough? Representative Stepp. Thank you, Co-Chair Foster, through the Chair. No, I'm not— it's not complicated. Just line go up because fund solvency go down, I think, is is the basic way to explain it.

Therefore, that is the tax rate on the employer in order to have the UI fund solvent. Is that correct? Through the chair. Through the chair, Representative Stab, that is correct. And again, currently all employers are paying a 1% tax, which is higher than that bar by 2040.

So currently all employers are paying a 1% tax. In this scenario, they'd be paying on average— the average employer, which I'll show later all the tax classes, but the average employer would only be paying 0.84%. So that's less than 1%.

Just follow up, Mr. Co-Chair. I think Co-Chair Foster, through the Chair, is there any, like, is there like maybe a smoothing way to do that? Or, you know, rather than the kind of steep decline? Through the Chair. Ms. Arbor.

Through the Chair, Representative Stapp, I believe Representative Hall has one of her policy recommendations that would maintain a higher level contribution to UI in these beginning years so that you don't see the, the sharp increase in future years and you don't see the quick decline to the paid parental leave program. But that's still one of those policy recommendations that has not yet been adopted. Okay, thanks. Okay, Representative Bynum. Thank you, uh, Co-Chair Foster.

Through the chair, just really quick, um, so under what's being presented here, just so I understand it, the employee contribution portion goes completely away, and then the, the tax basically just remains with the employer, and it would basically be just a little bit less than what it currently is now. What would the tax be without the new programs implemented? Ms. Herber. Through the chair, Representative Bynum, I did not bring that with me. It would stay at zero for a time.

Maybe, Lennon, did you— do you know off the top of your head?

I—. Go ahead, Mr. Weller. Again, for the record, Lennon Weller. Through the chair, Representative Bynum's Bye. So, if I could explain a little bit more of the interaction between these two programs, it might help you to kind of understand how one is working with the other.

There is really no offset from employee— or employer, rather, UI contributions needed to fund the program. What, in essence, this bill does is drive down that minimum rate to zero for cost recapture and solvency need, and so that it allows rates to meet exactly what the fund needs, one, to both recapture costs and to keep the trust fund in our solvency target range. And so what— So from a UI standpoint, where the rebalancing happens is one, a result of rates being allowed to fall or to meet the exact revenue needs while also simultaneously, at least in this version of the bill, increasing benefit costs, which of course helps to accelerate that rebalancing of the program. So if you were to keep, say, the schedule proposed here, the 817 max, with the current indexing to it, this is where you see the results that we're displaying here, where within a matter of about 4 or 5 years, the fund has rebalanced, meaning it's back into target solvency range. And again, just for the record, that's between 3 and 3.3% of covered wages.

And also that the recost recapture rates are now meeting exactly what we need, meaning they are not subject to that 1% minimum. They are collecting exactly what we need from taxable wages to meet those recapture rates. And so essentially what you are seeing here would be the rate that I guess employers would be paying in absence of this program would be equivalent to the blue line in the first 4 years and then meeting that purple line going forward. Because again, there's no offset to what's needed for UI the way that the bill is written. It's that UI financing is held first, and then these other training programs— or training programs and paid parental leave program would come secondarily.

So essentially UI gets first take at whatever is needed and then with whatever is left you get some additional revenue on the employer side for these two specific programs. So essentially you are creating rate space by reducing that minimum from 1% down to zero. A quick follow-up. Representative Bynum. Thank you.

Thank you, Co-Chair Foster. So what I was really trying to get at is the reason that we— I believe the only reason we have this bill in front of us to begin with is because we have more money in the unemployment fund than we can use, and it's overcapitalized. So the way we resolve or fix that problem is that we lower the rate, and that's lowering it either to the employer or to the employee. But what we've done now is we said, well, we've got all this extra money, let's do something new. And that's what I'm really trying to get at.

If we didn't do something new and we wanted a stable fund, what would the rate be? That way I understand how much these new programs are actually costing us. That's what the question really— go ahead— I was trying to get to. Not the complexity of balancing the fund long-term with the implementation of the bill. Mr. Weller?

Through the Chair, Representative Bynum. Specifically, if you ignored the other changes to the bill in terms of paid parental leave and changes to STEP and just looked at the changes to the UI financing system, meaning those two provisions, reducing the minimum to zero—.

Eliminating the employee contribution. Eliminating the employee— thank you— contribution so that 100% of cost recapture was shifted to employers along with this benefit schedule increase, you would still see a 0% rate for employers in 2027. And again, if you look at the blue line, that rate then would be somewhere in the range of about 5— maybe 3 to 5 hundredths of a percentage point in the second year. Growing as— and again, as, as costs begin to, you know, increase to a new baseline, right, with that new maximum and indexing, and as the reserve ratio falls back to where it needs to, you end up with stabilized rates at somewhere a little north of 0.8%, which is still, of course, about 0.2% less than what they're currently paying and what they will be paying in 2027. Without any changes.

Ms. Harber. If I could, just a couple points that we made, and I'm sorry, we're, we're going to step 10 on you all without having started at step 1 with the whole system, um, because we've presented on this fund in other committees and just weren't thinking. Um, no change to the UI Trust Fund, no change at all to the system. We could go to 2040 without any employer or employee contributions and still be 1% above target solvency, which is like $170 million more than we need. So if you made no change, that doesn't make the most sense, right?

When you could give employers some tax relief or, or something.

One of the things that this bill contemplates is a benefit increase, because again, that hasn't happened since 2009. And again, that's another piece of the unemployment system. So that's where you get at what is the right benefit increase, right? This bill has it at 817. The higher that benefit increase and the more rapidly it grows, the sooner you have to have employers contribute and the higher that contribution goes, right?

If you go down to 5.25 as one of the policy recommendations from Representative Hall or even a 4.70, those employer contributions have to kick in a little bit later. [NOISE] And they won't go up quite as high. One of the other policy recommendations again that the department would make is that if you are going to index benefits that you not index it with CPI or Consumer Price Index. That you index it with wages. And just for a little, little clarity, that's average wage in the state.

So that we do have that data, and we would— change in wages would be how we would recommend you index the benefits, because the benefits are supposed to be a wage replacement, you know. So anyway, those— I hope that helps build some clarity. Okay, if you could please proceed with the presentation. Oh, we've got a question. Representative Hannon.

Thank you, Co-Chair Foster. Just, Ms. Harbor, the recommendations from Representative Hall call it the Alaska taxable wage base, and you use the phrase average wage in the state. And I want to know, are those interchangeable? Because some of our confusion in exploring this bill has been the terminology. And so I just need to make sure to be able to track that.

—Those are interchangeable. Through the chair, Representative Hannan. We call it the taxable wage base because we use the average wage in the state to calculate the taxable wage base, which is 75% of the average wage in the state. So we look at the prior fiscal year and say, okay, the average wage in the state was $72,332.45.

So then the taxable wage base is $54,249.34. Thanks. Round it up to $54,200. Representative Pannon, following up just to drill down on the clarification. Thank you, Co-Chair Foster.

So if someone were contemplating an amendment to the bill, is the appropriate phrase for the legal standard the Alaska taxable wage base or the average wage in the state? Through— you want to— through the chair, there is language that's in a different bill being considered by a different body that is very specific to the percentage change in the average wage used in Alaska statute, whatever, to calculate the taxable wage.

Does that—. Go ahead, Lennon. Mr. Chair, Representative Hannan, just to clarify whether or not you use the average annual wage or the taxable wage base, because they're both driven by the same components, the percentage change would be identical, just to clear that up. So whether or not you point it to one or the other, the resulting outcome in terms of rate of change would be the same.

Okay, thank you, Chair Foster, for indulging me, because as you know, sometimes we hear it from from, say, the economist and then we're translating to legal what we're after and want to make sure that we are addressing the same thing in the same verbiage. Thank you. Representative Tomaszewski. Thank you, Co-Chair Foster. Thanks for being here.

Just one real quick question on the target solvency range. Is there thought or are you looking at increasing that with added benefits? Will you do that, or are you going to keep that target solvency range at the same even with added benefits? Ms. Herbert? Thank you, Chair.

Representative Tomaszewski, the statutory target solvency range is actually in statute, and it has proven sufficient in the past, you know, when we've gone through economic downturns. So we don't currently contemplate any change to that. Insolvency range. But something that, um, Lennon has spoken to previously, or maybe not in this, not in a committee, is just the fact that as you increase benefits schedule, right, especially if you're increasing it based on Consumer Price Index and not wages, but our taxable wage base is a wage-based, right, and that, that's how we get our revenue into the trust fund. If your revenue base is on one measure and your expenditure base benefits is indexed to another measure and they diverge, then you— there's a lot more pressure to get that solvency range correct, right?

If, if revenues coming in at a slower pace than expenditures, then that solvency range is much more critical, and we don't know what the right solvency range would be under that, those conditions. So follow-up, Representative Tomaszewski. So this particular legislation doesn't address the size of the— or the target solvency range. It only is increasing the benefits. Through the chair, Representative Tomaszewski.

That's correct. Thank you, Mr. Weller. Yeah, thank you. Uh, through the chair, uh, just to add on to that, Representative Tomaszewski, that it would be worth considering the higher you raise that maximum benefit amount to be, especially if you go beyond historic maximums that have been in place, that you might consider looking at adjusting that reserve ratio target.

There are federal targets out there— measures, that is— such as the average benefit— average high-cost rate and high-cost rate that they use for solvency standards, and that kind of looks at kind of a history of high-cost cost periods relative to wages in the economy to make sure that your reserve ratio is meeting, you know, those needs. And so certainly, the higher, obviously, you increase that maximum, that creates greater exposure and could, you know, in some certain circumstances, create higher exposures than we've certainly ever seen if you, you know, increase that schedule substantially. So I would certainly, you know, encourage that if it was— that if it was desired to raise the benefit amount, you know, certainly substantially, which you could consider 817 to be, that you might consider also doing some analysis on what a more appropriate reserve ratio would be given that kind of exposure range out into the future, especially if you're going to be indexing that benefit amount. Representative Tomaszewski. That makes perfect sense to me.

So if it would be interesting to nerd out on that type of information at some point. Thank you.

Okay. And just in terms of time management, we'll go with this bill for about another half hour until 3 o'clock, and then the last half hour from 3 to 3:30, we'll take up the next bill. So with that, Ms. Harper, if you can proceed with the presentation. Thank you.

So this slide is very similar to the one prior, and it was meant to try and speak to Representative Josephson's question. I don't know that I understood your question accurately, so if I am not responding to it, please let me know. But so this— the first slide here, slide 4, was the current version of the bill. Slide 5 is if the maximum weekly benefit schedule was changed to $525 and indexed to CPI still on an ongoing basis, what would it look like for each of these programs? And you'll see the picture did change slightly.

It's, it's a modest change, but it's there. The— in 2027, The UI tax again would still be zero. The State Training and Employment Program tax would be 0.1%, and the Paid Parental Leave Program tax would be 0.2%.

The increase in the unemployment contribution would be slight, or just barely there in 2028, so the Paid Parental Leave contribution would go down just slightly. They kind of meet in the middle in 2029 at 0.1%-ish for each of the programs. So it just brings those— what Representative Hall has been referring to as those snapback provisions. It just gives you a little bit longer timeline before the contributions snap back to UI. So that's— okay.

Any questions?

Please. Please proceed. Okay. Thank you. So this is another way of looking at that.

This is the state training and employment program revenue projections under each of those scenarios, the current version of the bill and a 5.25% version. This just shows you kind of the difference in the STEP revenue, the state training and employment program revenue, under each of those scenarios and how they diverge a little bit until all employer contributions are are no longer being given to the State Training and Employment Program, and it's 100% employee contributions from then on. So this— the reason it's so high here is we do have employer contributions. They finally go away, and then you're left with employee contributions. And that's really the difference between 817 and 525.

Okay, the same thing for the Paid Parental Leave Program. As I mentioned, current— the current version of the bill draws down the paid parental leave program before the state training employment program, and you'll see that happen again more rapidly under 817 and then less— slightly less rapidly under 525.

Okay.

Oh, and then this was the slide that we were providing just to This slide is just to show the difference between changes in wages year over year and changes in CPI, Consumer Price Index, year over year and how different they are and why it might not be a good idea to use wages for one part of the system and CPI for the other part, just because they are so different. Any comments on this slide? I think we've covered. Okay. Thank you very much, Ms. Herbert.

While you're up here, maybe if we could just do a walkthrough of the 3 fiscal notes that we have. Sure. And let's see here. Are you doing the first 2 and then Elizabeth the last one? Thank you.

Go ahead and start with— if you could just note the control code at the bottom of the fiscal note that you're referring to. Yes, I— I don't know where it is. I had it right before the meeting. Sorry. I think, Mr. Anderson, you might have a copy.

I have one.

Thank you so much. I'm sorry.

Oh no, these are not the correct versions. This one is. Okay, I can do—. I think we're just about there. Yeah, there's—.

We should go at ease, but just so the public knows, there's like 70 pages on our desk, so. Right. I don't have the work on one. Thank you so much. Brief at ease.

I think, Ms. Herber, are you okay now? I am. Okay. I need a brief at ease. Okay, brief at ease.

Okay, I don't have—. I only have Okay, House Finance back on record at 2:36 PM. And, uh, Ms. Harbor, if you could walk us through the fiscal notes. I believe you've got two, and then we'll go to someone else for the third. At least that's what I've got here.

And if you could, um, note the control code at the bottom of your fiscal notes. Okay, again, for the record, Paloma Harbor. Um, so the first fiscal note I'm looking at is control code H-O-W-A-X. Briefities.

House Finance back end.

House Finance back on— House Finance back on record at 2:37 PM. And Ms. Harber, we left off with you walking through the fiscal notes, and I believe the one you're starting with is probably OMB component 2276. Is that correct?

Yes, Chair Foster. And if you could repeat the control code. H-O-W-A-X.

Okay. And as you mentioned, OMB component number 2276, the unemployment insurance component. So this fiscal note shows the revenue, the new revenue to the State Training and Employment Program resulting from this legislation of $11.3 million, the new revenue to the new designated general fund account, or the Paid Parental Leave Program, of $39.5 million. And then the costs associated with collecting the paid parental leave program. Unemployment insurance is 100% federally funded and can't— well, the UI grant cannot be used to cover the costs of collecting state funds.

So the state fund would have to cover those costs. Those are personal services of $375,300, contractual services of $137,400, and commodities of $1.2 million. $2,000 For a total of $513.9 million.

Does anybody have any question on this fiscal note? Representative Tomaszewski. Yes, thank you, Co-Chair Foster. So how many— I don't see any full-time positions in here. Is that— Ms. Harper?

Through the chair, Representative Tomaszewski, one of the things about this legislation is it uses our existing existing unemployment insurance tax process for collecting the new tax. And so we would be allocating a percentage of our tax staff to this new fund. The cost has to be distributed equitably based on workload. So UI would incur the majority of those existing staff costs, but the new program would pay a share. So there is no new staff needed.

It is just that a portion of their costs would would have to go to this new program. Okay, thank you. Okay, see no further questions. Uh, next fiscal notes. Okay, it's component number 344 and the control code is VKEIG.

Okay, so this is for the workers' compensation component. The department has determined that it made more sense for the workers' compensation division to administer the paid parental Relief Program. And so this, uh, has a one-time estimated capital cost of $10 million, um, and then an ongoing operating cost of $98— or $980,800 for personal services, $467,500 for contractual services, $27,000 for commodities or supplies. And then benefit costs of $18,773,400 in the first fiscal year, growing to $37,546,800 from FY 2028 through FY 2032. I would just state that that benefit cost is based on how much revenue might be available in the fund to go towards benefits.

It's not necessarily— the department has no good way of estimating what the actual cost would be for this program because we don't have it currently and we don't have the data to really come up with a good estimate. Questions on this fiscal note? Representative Hannan, then Tomaszewski. Thank you, Co-Chair Foster. Ms. Harbor, so right now the fiscal note is the version of the bill which has up to 26 weeks of benefits.

So I presume it was calculated on 26 weeks. So if we say we went to 13 weeks, just to make it easier for me because I'm not an economist, would it be half that amount? Ms. Harbor?

Through the chair, Representative Hannan, I don't know what the actual cost would be, but that would be a rough estimate. Okay. I would say if there is language added to the bill that allows us to spend based on demand, which again would make the fund not sweepable, if that language were added to the legislation, then we could pay benefits, uh, when the costs higher without having to come for a supplemental and try and get that number exactly right.

But the way it is now, it would have to be budgeted, and it would be budgeted at about that amount. I didn't track— excuse me, Senator Hannon, could you explain that to me one more time? Ms. Herber. Yes, it might be easier to think about it like we have the Workers' Compensation Benefit Guarantee Fund, and there's current language in that statute that separates it as a fund outside of the Treasury, which makes it not sweepable. And there's language in the budget bill that says we can increase the budget authority if benefit costs exceed what's budgeted, and that allows us to then spend if benefit costs exceed the projected $37 million or half of that.

If demand is higher, then we can actually cover those benefit costs without having to come back to the legislature for a supplemental. But it's limited to benefit costs. Okay. Thank you. Representative Tomaszewski and then Stepp.

Representative Tomaszewski. Thank you, Co-Chair Foster. I was just I was just interested in the technology resources needed to create an interface. So you have it as between $2 and $10 million. So that's going to be— that's not represented in this fiscal note?

Or— Co-chair, through the chair, Representative Tomaszewski, it's on the first page of the fiscal note. It's underneath the main body, it's the second line, says estimated capital costs $10 million. That is for a system that we don't know exactly, right? Okay. And then follow-up, follow-up.

So the full-time employees, where do they, where do they fit in? Ms. Harper. Thank you. Through the chair, Representative Tomaszewski. Thank you.

I forgot to mention the positions. There are 5 full-time positions in this component. That's a rough estimate, again, not knowing the actual workload. It's based on our Fisherman Fund program that we administer through the Workers' Compensation Division. They have about that many staff for that program.

And so that since this is a brand new benefit program, we'd have to have staff to adjudicate the claims, to investigate potential fraud, all of the fun things that go with a new program. Okay, thank you. Okay, we got Representative Stepp and then Hannon. Representative Stepp. Yeah, I think, uh, Foster, through Chair to Mr. Harbor, um, okay, so the bill has language on page 5-ish, depending on what version, regarding accelerated benefit options and coordination of benefits, right?

So I'm curious if How low a rate would we go and how short a window would we have to shorten this thing to kind of get maximum life cycle out of this program? Let's say obviously some of the recommendations was like $475 and we have 28 weeks. But if you modeled it, let's say 8 weeks or 10 weeks, I mean, how much juice do we get out of the program? Through the chair. Ms. Harper.

Through the chair, Representative Stapp. So I'm just going to I'll say from the— reiterate again, we don't have— Department of Labor doesn't have great data. We don't have data on the number of individuals that would qualify for this program because we don't have how many— we can tell you how many workers there are that work for— that are covered by unemployment insurance, but we don't know how many births there are for those workers. So we are missing that key piece of information to give a good estimate. —Of all.

We did do some analysis with the information we have, which includes fertility rates and birth estimates by age group and average wage for each of those age groups to try and get some kind of an estimate. But it's not— yeah, it's a really rough estimate. Representative Stout. I'm just curious here, Chair, couldn't you just get I mean, in theory, the amount of 1-year-olds on the PFD and kind of project that going forward would be a fairly decent estimate, I imagine. Through the chair.

Through the chair, Representative Stapp, we did look at that. Like, if you looked at all births in the state, there's 10,000 births in the state. And if you assumed both parents— or there's 2 parents, for one thing— and that both parents would claim the benefits and the full maximum number of weeks at 26 weeks, I mean, you get a cost of, I think, $110 million. Is that— no, it's not in this. No.

But that— this is assuming— oh, I'm sorry. This is assuming the fertility rates. You had it in— I have it somewhere, but it's about like $110 million or something. It's quite a— significant, but obviously not all 10,000 births are for working Alaskans that would qualify for this program, and not all of those births would have two parents that would claim under the program. And, you know, so you have to build some assumptions as you work on a cost analysis.

So that's, that's one of them. It's a, it's a difficult thing to gauge. What we did do, as I mentioned, was an analysis that looked at age groups. Specifically, we started with of females, how many females in the state in the age group of 15 to 19, and at a fertility rate of 62.3 per thousand, that's 776 births estimated for that age group of females. And then we said, okay, assuming for every female there's also a male that would— might claim for that birth as well.

And so in total, for each of the age groups, we had a total number of births we might estimate based on fertility rates of 5,571. So it's just a method. We didn't want to not do any analysis. So if there were 5,571 births and both a male and a female was eligible for the program for each of those births and based on the average wage for those individuals, so each of those wage groups, what could the potential cost be? And then we had it broken out by assuming 100% of those individuals claimed, 75%, 50%, 25%.

So it could range significantly from $10 million to $40.2 million. And what you'll see is that even in the high revenue years, you're not going to reach that high estimate of $40 million. And once you no longer have employer contributions and you're at $20 to $25 million in revenue, you're hoping that you're at 50% of those births claiming. Representa staff.

Thank you, Co-Chair Foster, through the Chair. I appreciate the super detailed answer. It was great. I have a— I'm going to try to do this one really simple, though. I'm just thinking about the fiscal note, Section 2310.730, page 5, accelerated benefit option.

Rather than, like, accelerate benefits and pay weekly, would your potential cost of your distributions go down if you just paid in lump sum? Through the chair. Ms. Harper. Through the chair, Representative Stepp, I don't think I understood the question.

Representative Stepp. Currently how the bill works, through the chair, is you get paid weekly while you're out on paternity leave. You have an accelerated payment option. I can take like double the money week 1 and then I get diminished. Rather than do all that, what if you just did a lump sum payment for 8 weeks?

Or something like that? How would that work mechanically? And when that would change your fiscal assumptions? Through the chair. Ms. Harper.

Through the chair, Representative Stapp, I cannot speak to that off the cuff. I would have to look at it. Yeah, follow up, Mr. Co-Chair. Representative Stapp. Yeah, so when I see $10 million on a software program as a guesstimate, that freaks me out because we're not very good at building these software systems.

Systems in Alaska. I mean, some of them would cost the entirety of the UI fund right now if you looked at how much money we've spent on them. So I'm very wary about anybody in state government trying to do any software stuff through the chair. So I don't know if there's— is there a better way of mechanically making distributions that don't involve a state payment system through the chair? Ms. Harbor.

Through the chair, Representative Stapp. To make payments, you would have to go through a system.

Yeah, there is— yeah, there would be a capital cost associated with this unless you use just the state accounting system, and I don't think it is made for benefit payments. So you would have to be using either a public assistance system or the PFD system or some system that already exists. But then you have the programming costs associated with creating a brand new program within that system. So you'd still be looking at millions of dollars more. So, how does the state collect UI from employers currently?

Yep, through the chair, Representative Stapp. We use our unemployment insurance mainframe system, and it is a COBOL-based system. Oh gosh. Yeah. And so it is in need of replacement.

Okay. All right, I'm done with this line of questioning. Thanks, good chair.

Okay, next up I've got Rupson Niphanen.

Okay, okay, so that was the fiscal notes, uh, the second and the third fiscal note I believe will be Ms. Elizabeth, um, Vanesky. And with that, if you could put yourself on the record.

Hi, this is Elizabeth Danaski. For the record, I am the Division Director for Finance, and I'm here to talk about— I'm sorry, can you guys hear me? Yes, we can. Let me do a sound check. We can hear you.

Okay, great. So I'm here to talk about fiscal note for control number KVTIV. V. For OMB component 59, we're putting in a $0 fiscal note because the work that we would need to do for this is just establishing the fund within the accounting system and working with Department of Labor to manage the fund. Ms. Daneski, the control code that we have is TUWCR with a date of February 20, 2026. What date do you have?

Oh, I think I have an older version, um, through the chair. So, um, I think the newer version's the same as well, though it's still a zero-dollar fiscal note establishing a subfund within the general fund. Okay, so the, the dollar amount would be the same, but something must be different, and I'm guessing something in the analysis, which probably is not substantial, but is there anything that jumps out at you in terms of what might be different in the analysis on the second page?

Nope. I believe our work is still going to be remaining the same on that. Okay. Maybe if we could have either the sponsor or my staff, Mr. Anderson, just double-check that, make sure there's nothing really substantial and in terms of the differences between the old version and the new version. I think the most important thing though is they're just a zero fiscal note.

Oh, looks like you might have an answer right now, Mr. Anderson. Go ahead, if you could put yourself on the record. Thank you for the record. Brody Anderson, staff to Representative Foster. Correct, the fiscal note dated February 20th, 2026, control code TUWCR does reflect the same information that the previous fiscal note that the director is referring to.

It is identical. Maybe just a quick question. Why the need for a new fiscal note if there are no changes, Mr. Anderson? Is there other reasons for that? Yes, through the chair, to the chair, because we have a new fiscal year that begins.

Every new fiscal year triggers redoing of every previous fiscal note for the previous session. Good to know. Thank you. Okay, with that, um, we are back to questions for the sponsor, uh, or Ms. Harber, uh, on the bill. Do we have any questions?

Seeing none, um, let's see. It looks like we've heard this bill, uh, May of last year, March of this here about a week and a half ago. We've had public testimony. We've reviewed the fiscal notes. So I'm going to go ahead and set an amendment deadline for next Wednesday.

That's May 6th at 5:00 PM. And let's see, Ms. Representative Hall, I don't know if you want to add anything before we move on to the next bill. No? Okay, great. Okay.

Representative Bynum. Thank you, Co-Chair Foster. Mr. Baker. So we had a list of— a list of many changes. Was there going to be— I was just curious.

It felt like those were some really good recommendations that were probably part of this process, but coming through this process. So it sounds like we are going to just move forward without taking those under consideration, and if we do take them under consideration, they would come through amendment?

Representative Hall, maybe if you could come up. My understanding was that those were potential amendment ideas for folks, and I do understand the possible need to maybe want to do a little more deep diving into some of those ideas. But Representative Hall, your intention with regard to the policy recommendations, if you could speak to that. Through the co-chair, Representative Bynum into the committee. I'm very happy to work with anybody who has amendments, ones that are listed or otherwise.

Okay. Representative Bynum. Thank you, Co-Chair Foster. The reason I bring it up is because it's like, here's a list of suggestions, we think these are probably good ideas from industry, and then if you're just leaving it to me to then go do the work for the amendments, Things could get pretty, pretty sideways on this bill when we go through the amendment process. I think that having a process or having knowing what we want to have in front of us from the bill sponsor is probably more appropriate than just letting us have at it.

But that's going to be up to the bill sponsor. Very quickly, Rep. Sam Shraggi, and then, uh, Representative Shraggi, did you have—. Yeah, thank you, Coach Foster. I just wanted to look to the bill sponsor for clarification whether these stakeholder policy recommendations are all recommendations endorsed by the sponsor, or if the sponsor intends to instead work with committee members to advance ones that are in fact supported by the bill sponsor. Representative Paul, through the co-chair, Representative Schrag, I do support the amendments— or I'm sorry, the policy recommendations that are— that we've been discussing today.

Paul, Representative Schrag. Okay, and since it sounds like we're not going to go the committee Ms. Tootraut, can I assume that you'll work with committee members to the extent that you want to advance specific amendments? Through the co-chair, Representative Sharkey, I would love the opportunity to do that.

Representative Pannen. Thank you, Co-Chair Foster. I'm going to go one step further. Would it be possible that you, as the sponsor of the bill, might even work to get some sponsor blank drafted amendments crafting these policies in the appropriate place so that we are not going to ledge legal and sending them on a squirrel chase that they don't need to go on. Representative Paul, through the co-chair, Representative Hannon, that process has already begun.

Excellent. Thank you. I think before we go to Representative Josephson, maybe what we'll do is we'll keep the amendment deadline in place. With flexibility. So if folks need a little more time, they want to offer an amendment but need to do a little more work on it, we will shoot for Wednesday, but with the understanding there will be some flexibility there.

Representative Josephson.

Yes. I guess that the recommendations that leap out at me running counter. I mean, I know this— the sponsor wants good governance and something pragmatic and functional, and that's, that's great, and we need that. But in the middle of the list, I guess one of the confusions I have is, for example, it's bullet 3— looks like 6— provide an option for small and seasonal employers to opt in.

Clearly you can't mean that they would opt into an increase in the weekly benefit. That can't be what you mean. You must mean the PPL. Representative Halt. Through the co-chair, Representative Josephson, yes, that means opting into the paid parental leave program.

Okay. Follow-up? Follow-up? And then the one above that, bullet 5, set a threshold excluding employers with 50 or fewer employees. That just strikes me as a real problem, given the nature of the bill.

In Alaska, that's like half the businesses or better.

Again, I think you mean exclude them from the PPL part. Representative Hall. Through the co-chair, Representative Josephson. Yes, it means an exclusion from the paid parental leave program. And I will say my original— my preference originally was for the employee threshold to be at about 20 or 25 employees.

However, based on the feedback that we received from the business community, that was rather untenable for them. And so That's why I'm suggesting on this list that we do set that threshold for 50 employees, but with the opportunity for businesses that have fewer employees to be able to opt in. To me, I see that as being a really pivotal policy move when it comes to this paid parental leave program, so that if a business does want to opt in and offer this benefit to their employees, then they can follow. And the opt-in there would be out of benevolence, essentially. That is, um, in the nature of wanting to make happy employees.

Representative Hall. Through the co-chair, Representative Josephson. In short, yes. I mean, businesses are trying to find ways to attract employees, attract workers to Alaska. The paid parental leave and paid family medical leave policies are— the number of states that are opting into that are growing, and we see that as a competitive advantage for businesses here in Alaska to recruit and retain Alaska workers.

Okay, thank you. Okay, Representative Step and then Galvin. Yeah, thank you, Co-Chair Foster. Through the chair to Representative Hall, okay, I'm going to form a rather strange alliance, I think, with Co-Chair Josephson. I'll actually probably argue that recommendation seems to me a little at odds of a section of your bill.

And that's going to be the coordination of benefits section. So in the bill, you say an employer may require that payments for paid parental leave under the statute may be made concurrently or coordinated with payments of— or leave provided under short-term disability or a separate bank of time. And then you say the employer may not be required to use or exhaust any accrued vacation, sick leave, or other paid time off before or while receiving paid parental sick leave. The reason I bring that up is larger employers are going to generally have far more robust benefit packages. So saying you want to coordinate benefits with paid sick leave and then exempting the small employers who are probably not going to have PTO, not going to have short-term disability, not going to have any other types of benefits, is kind of essentially— I mean, all you're doing is kind of looking to enhance like a big mega-corporation's benefit package.

So if it were me, I would actually try to go the other way. I'd try to make this a de minimis benefit for the small employers and then give the large ones the opt-out without coordination of benefits. And the reason I would do that is because they're already almost certainly going to have some sort of robust benefits package for their employees if they're of a certain size, right? And that would just be my two cents, and I'd love to get your thoughts on that through the Chair. Representative Hall.

Through the co-chair, Representative Stepp, if I'm following your thinking correctly, I believe bullet 3 on the list of stakeholder policy recommendations may address part of what you're sharing, which is accepting businesses that already have a leave program as good as or more generous than the paid parental leave program. Yeah. Follow-up through the chair. Representative Stepp. Yes.

So again, if you were to do both of them, Right? So almost all employers— I mean, I do this for a living, so I can tell you almost likely that employers over 50, especially over 100, are already going to have a benefit system that's probably a little bit more robust than this. And then if you exempt the ones under 50 at the same time, the question now becomes, is anyone on the program at all? Because the only ones I could see that would actually not have some sort of benefit structure are going to be your small employers in this scenario. Chair.

Representative Hall. Through the co-chair, Representative Stapp, that is something to ponder, and I appreciate you bringing that up. Yeah, of course. Thanks.

Um, we may have to represent— so we got a pass. And Representative Bynum. Thank you, co-chair Foster. Uh, through the chair, Rep Hall. Representative Hall, uh, just briefly, if we could get a response off the record to the committee what the impact of FMLA is with these programs.

I know many employers have paid leave programs, but they also require their employee to be on FMLA when this happens, and when they do go on FMLA, they are required to burn their leave. So I just would like to know how that might coordinate with this plan, and we can take that off as a response back to the committee, please.

Okay, um, I think we better jump right into our next, uh, next bill here. And so, Representative Hall, uh, thank you very much for your time here. I'm just going to take a real quick 30-second brief at ease so I can get some coffee, and we'll be right back. Brief at ease.

They were at 26. Okay, I'll call this meeting of the House Finance Committee back to order at 3:07 PM on Thursday, April 30th. And next up we have House Bill 1. HB 1, and that is by Representative McCabe and his staff, Alshiva Almeida. And if you'd like to maybe put yourselves on the record and walk us through the bill.

Thanks. Good afternoon, Chair Foster and members of the committee. For the record, I'm Representative Kevin McCabe. I represent House District 30, which is Big Lake and follows the Parks Highway all the way up to Anderson as well as Point McKenzie. Thanks for the opportunity to present HB 1.

This committee is very familiar with this House Finance heard and passed this legislation in 2024. It was HB 3. It passed out of the House to the Senate and made it through Senate State Affairs to Senate Finance, but stalled there due to budget priorities at the end of the session. HB 1 before you today is substantively the same bill with the inclusion of amendments adopted in House State Affairs this session that clarifies language and addresses concerns raised by stakeholders. So this is not new territory for this committee.

It's a refined version of legislation you have already thoroughly vetted. To recap, HB 1 is about constitutional fidelity and financial freedom. Article 1, Section 10 of the United States Constitution explicitly recognizes gold and silver as legal tender. This bill aligns Alaska statute with that constitutional authority. Specifically, the bill recognizes gold and silver as legal tender in Alaska to the fullest extent allowed under federal law.

It ensures that money itself is not taxed as a commodity. It protects individual, individual choice. Across the country, states are revisiting sound money policy. Alaska should not fall behind. This version reflects collaboration and some refinement.

It incorporates amendments adopted in House State Affairs to clarify original intent and address operational concerns. At this point, I'd like to hand it over to my staff, Elsheba Almeida, to give you an overview of the changes made via amendment in House State Affairs, if that's okay. You could put yourself on the record. Yes, good afternoon, Chair Foster, members of the committee. For the record, my name is Elsheba Almeida, staff to Representative Kevin McCabe.

The changes in version N make 3 substantive clarifications applied across 4 statutory regulatory sections. First is the municipal tax clarification. The bill narrows the exemption so that boroughs and cities may not tax the ex— intrinsic gold or silver value contained within specie, while preserving municipal authority to tax dealer premiums, services, or collectible value. Second is that there is no mandate to accept specie. The bill expressly states that no person or government entity is required to accept gold or silver as legal tender.

Third is the expanded legislative study. The Legislative Budget and Audit Committee study now includes consumer protections and consumer behavior related to the sale and use of specie. That concludes the changes made in the House State Affairs Committee. Thank you for your attention, and I'll hand it back to the representative. Great.

Thank you very much, Representative McCabe. Thanks, uh, uh, Co-Chair Foster. And, uh, to highlight one more change, as members know, AML previously testified in opposition to this bill, and after working through those concerns and adopting the clarification in state affairs, AML is now not opposing the bill before you today. They've submitted a qualified non-opposition letter recognizing the improvements made in state house— in House State Affairs and the refinements in this version. That letter is included in your packet.

And I would like to say for the record that I appreciate Executive Director Nils Andreassen's engagement and the professional dialogue that he had in an attempt to make this bill a better bill. That collaboration strengthened the bill and reflects how sound policy in this body should be developed. It helped clarify the scope of this legislation both in what it does and what it does not do. So let me be clear about that. What HB 1 does not do: HB 1 does not create a state currency.

It does not mandate acceptance. It does not eliminate municipal authority.

And for some fiscal context, Alaska does not have a state sales tax, and local municipalities do not track precious metal sales separately. So the precise fiscal impact is indeterminate. Given, given the limited volume of these transactions in Alaska, any potential local revenue impact is expected to be minimal. You see that noted in the fiscal note. This bill ensures that gold and silver specie are not treated as taxable commodities, but consistently with other lawful forms of money, including U.S. currency.

Bottom line is that HB 1 does not attempt to reform federal monetary policy. It simply provides Alaskans with an additional lawful option. It restores constitutional clarity. It protects individual choice. It treats money as money.

This bill comes back to this committee as a bill you have already supported, now clarified and strengthened. In closing, Alaska would become the 12th state now to reaffirm gold and silver as legal tender. 46 States have eliminated state-level sales taxes on precious metals. 14 States have ended capital gains taxes on precious metals. This is a growing national trend across a broad range of states.

So, uh, I think we should move Alaska forward with this bill. And with that, Mr. Chair, I thank you and I'm happy to take any questions. Great. And what I'd like to do maybe first is we do have one invited testifier and then just two fiscal notes, and then we'll come back to questions.

So with that, Mr. JP Cortez, I see you're online calling in from Charlotte, North Carolina. If you can put yourself on the record, state your name and your affiliation and give us your testimony.

Yes, sir. Can you hear me? Yes, we can. Perfect. Uh, my name is JP Cortez.

I'm the executive director of the Sound Money Defense League. Uh, Chair Foster, co-chairs, and the rest of the members of the House Finance Committee, thank you very much for the opportunity to testify today. The Sound Money Defense League is a grassroots public policy organization focused on gold and silver policy at the state and federal level since 2014, with supporters in every state including Alaska. On behalf of the Sound Money Defense League, I strongly urge you to vote yes on House Bill 1. This measure ensures that gold and silver coins and bullion remain tax-free and reaffirms them as a legal tender in the state.

I want to thank Representative McCabe for carrying this bill and for being a champion on this issue for many years. Gold remains a reliable hedge against inflation with thousands of years of price history, which is why the authors The US Constitution specifically prescribed gold and silver as money. As inflation rages and the nationwide cost of living crisis worsens, dozens of US states have adopted policies to reduce barriers to buying, selling, and using gold and silver as money if they choose to as an alternative, reaffirming their status— this is to remove taxes on the metals, to reaffirm their status as legal tender, to establish gold reserves, and and more. Just this year, more than 70% of all U.S. states in the country considered or are considering gold and silver legislation. I'd like to highlight the, um, letter that was brought up by Representative McCabe of qualified non-opposition from the Alaska Municipal League and the fiscal note which reports none, uh, to minimal estimated cost to the state.

The reason this tax is inappropriate is because investments are typically not subject to sales tax. Alaska, I believe, at the state or local level does not charge for— does not charge a tax on purchases of stocks, bonds, ETFs, currencies, any other financial instruments. And so gold and silver are held as savings or investment, and that's why a sales tax on them would be inappropriate. It's also— I would like to point out that gold and silver investors typically aren't fat cat wealthy individuals. This is typically an asset that is purchased by those of middle or modest means.

People who want to invest in gold or silver that are wealthy have plenty of electronic and much more convenient ways to do so using apps or using various other means. But buying physical metal is typically something done, you know, on a weekly or biweekly basis in small amounts. So this doesn't cost the state anything, but it does result in a big statement in support of sound money and realignment with the U.S. Constitution. And that's why I strongly urge you to vote yes on House Bill 1. Thank you very much for your time.

I urge you to vote for this bill, and I'm available for any questions. Thank you. Great, thank you very much. Um, while we've got Mr. Cortez online, and I realize it's probably late over there, if we have any questions from the committee? Seeing none, uh, thank you very much, Mr. Cortez, for your Invited testimony.

Next, we are going to go to the two fiscal notes that we have here, and the first is from Sally Cox, Director of the Division of Community and Regional Affairs. If you could put yourself on the record and walk us through the fiscal note that you have.

And actually, it looks like she is not online, but maybe Sandra Mahler, will you be speaking to that?

Yes, Mr. Chair. This is Sandra Moler, Director of Division of Community Regional Affairs. I believe the committee does have a copy of our fiscal note. It is a zero fiscal note.

And we do not foresee any fiscal impacts to the division because of this legislation. Okay, Ms. Muller, and if you could just state your position over there at the— yeah, at Commerce. Sorry, this is Sandra Muller. I'm the Director of the Division of Community and Regional Affairs. Okay, and if I could just confirm the control code that you have at the bottom right of your fiscal note, is that GESGB?

Yes, that's correct. Great, thank you. Do we have any questions of the committee? Seeing none, we do have one other fiscal note. Mr. Anderson, if you could come up and speak to that one.

Thank you. For the record, Brody Anderson, staff to Representative Foster, before the committee today is the fiscal note For HB 1, Department of Administration Appropriations, Centralized Administrative Services Allocation Finance, OMB Component 59, dated 4/24/26, control code O-W-D-E-R. This fiscal note reflects a zero fiscal note.

And the department has acknowledged that there will be minimum impact to the Division of Finance in the state of Alaska's accounting system and can absorb all of the exist— and will be able to utilize all existing resources to implement this bill. Great, thank you. Do we have any questions regarding this fiscal note? Okay, hearing none, do we have any questions for the bill sponsor just regarding the bill Representative Pannon and then Galvin. Thank you, Kochef Oster.

Representative McCabe, I want to just go to the definitions and affirm and walk out a scenario of, say, somebody who's buying and selling gold. You know, one of those, we buy your gold jewelry or we sell gold nuggets.

By the definitions in the bill of legal tender and specie, would those transactions be subject to local sales tax or not? I'm Representative Gaffney. Through the chair, Representative Hannan, if you are buying and selling gold as a collectible, yes, they would be subject to sales tax if you're— if they're charting the premium above what it would be. So say that you have a 1-ounce gold coin or gold bar and it is It's got some decorative etchings on it or some scrimshaw type of thing on it or some— and it's being— gold is $5,000 an ounce and this is being sold for $6,000. The amount above $5,000 an ounce, so this— the $6,000— the $1,000 would be taxable as a collectible because you are obviously not using it for sales.

So it's much like— and I think I've used this example before— if you have a sheet of $2 bills, right, you can— you used to be able to buy those as collectibles. There's 5 $2 bills in there. Normally they would be worth $10 if you cut them up and used them. But if you buy them in the store because they are collectible, they are worth more than that, and you would pay a tax on what they're worth more than the $2 bills. Follow-up?

Follow-up? But I want to clarify and go to So the gold buyer, it's not coins and it's not bullion, but buying gold nuggets or selling gold nuggets subject to local tax jurisdiction or not subject to it by the definitions used here. Through the chair, Representative Foster, Representative Hannon, if you hand somebody a gold nugget and you agree that the price of the— it's a 1-ounce gold nugget and you agree agree that it's worth $5,000 and you are buying $5,000 worth of goods, so you are doing a $5,000 trade, essentially, for 1 ounce of gold for $5,000 worth of goods, then none of that would be taxable. If you just go to buy a $5,000 1-ounce coin and you pay $6,000 for it, then that transaction would be taxable. I'm going to go one step further because maybe you've noticed in my community, in my community, there are a lot of jewelry stores.

So— and it happens that, you know, a strong tradition in Alaska is Gold Nugget Jewelry. So if the store says the Gold Nugget necklace we're selling is an ounce of gold and therefore it's priced at $5,000, the spot market price, you're saying that would not be subject to tax because it's being sold at the metal weight value. Representative McCabe. Through the chair, Representative Hannan, there's one more criteria for this to be considered legal tender. It has to be marked with the amount.

So for instance, these species are 1/200th of a troy ounce of gold, and it also has to be marked with the quality of the gold. So whatever karat gold there is at 994 5. A gold nugget would not necessarily be marked that way. Right. Then that's one more.

That's where I was trying to get to under your definitions, because it's— so it's got to be commercially weighed and stamped for purity to be exempt from taxation, not just gold jewelry that says 24-karat gold ring. Representative McCabe. That's correct. Okay. Thank you.

Okay. Representative Galvin. Thank you, co-chair. And I have a couple of questions. One is, when you were writing the bill, did you— was it considered to expand the definition to other precious metals like platinum or palladium?

And if not, would sales and purchases of these precious metals still be subject to local and municipal taxes? Representative McCabe. Through the chair, Representative Galvin, the U.S. Constitution specifically, specifically calls out gold and silver. So the U.S. Constitution says that a state cannot mint its own money except it may use gold and silver as legal tender. So palladium or any— none of that would qualify.

Okay, perfect. And then Just a couple more, if I may. Representative Galvin. Thank you.

In the scenario that we just heard from Representative Hannan, how would you decide what the current market value is? Is it— because I know gold prices fluctuate daily, so what price is used then? Representative McCabe. Through the Chair, Representative Galvin. So I envision it working the same way if you are in an overseas hotel and you bring a dollar into the hotel or $20 and they typically have a price that you change your dollars into Hong Kong dollars or RMB or whatever or lira, whatever you are changing your dollars in.

That would be— so, a vendor that decided to use these would have a sign say, "Goldbacks today are worth this amount of money." And you You would bring in your gold back and that would be— and it's based on the daily spot price, as you say. And it would— so, it's an agreement between the buyer and the seller. If you are not okay with that, just like if you were not okay with the hotel price in a foreign country, then you just wouldn't do the transaction in gold and silver. Merchants are not required to accept it and you're not required to use it either.

And thank you. Through the chair, would there be any oversight on that, or is it just gentlemen's agreement, so to speak? Representative McKenzie, through the chair. Representative Galvin, no, no real oversight. It's, it's a voluntary transaction.

The merchant's not required to accept them. It's a— and like I say, you're not required to use them. So it's really no oversight needed. You just say, I'm not going to accept that. And I'm not going to use my gold backs for this transition because you want too much today.

Okay. And through the Chair, another follow-up in looking at the changes of the bill. I was just wondering why is legal tender still included in the bill when the current version of it states that a person or government entity is not required anymore, no longer required to accept gold or silver specie as tender. To me, I think of that as the meaning of legal tender. So I'm not sure if we need to have those words still here.

Representative McCabe. Thanks. Through the chair, Representative Galvin, I don't, I don't know that they're necessary other than the fact that that's sort of what we're talking about is making these legal tender. So we are legally authorizing somebody in the state to use these as legal tender. You wouldn't— so an example I always use is if you want a $100 bill and you take 5 $20s in, you don't get taxed on that transition because both of those are considered legal tender.

It would be the same with these if you brought them in and you brought some dollars in to change them into these, you wouldn't be taxed on the transition because both of them are considered legal tender. Does that make sense? So in that sense, it's kind of a circular way around that. But— Representative Kellerman. Thank you.

I appreciate that concept, but the definition of legal tender implies that it may be used. And so I could see, you know, why isn't the bill more of a simple prohibition or exemption of gold and silver bullion products from local and municipal taxes? To me, that's very clear. And I think it makes a lot of sense, frankly. And I'm just trying to help understand why we're working— we're kind of doing some cartwheels or word gymnastics, if you will, in ways that make it a little bit fuzzier.

Representative McCabe. Through the Chair, Representative Galvin, I suppose that's one way of skinning that cat is just to say, well, any gold is not required to be taxed or you can't tax any gold, but this as specie and as legal tender has some tighter restrictions on it, such as the purity and the weight that we talked about. So, just, I don't know how you— that would be a pretty different bill, I think, than this one. And frankly, this is modeled after Texas, I believe, the bill that Texas put in for this. So— And final.

Representative Gallagher. And so, in the Texas bill, are they— is it similarly adjusted? Like, this one has been adjusted, which I can— which is really what brought me to the question, is that tender, the word tender, legal tender, because it no longer is required to be received. That's what made me think. And I just wondered, is Texas also in that same category?

Have they made adjustments accordingly? Representative McCabe, through the chair. Representative Galvin, I don't think it's been adjusted. I'm not sure Texas has been adjusted, and I haven't really checked back to see if that was— if that was changed. So, okay, thank you.

Got Representative Bynum and then Josephson. Sure. Thank you, Co-Chair Foster. Thank you, Representative McCabe, for bringing this forward. I don't have any questions for the bill sponsor.

Pretty straightforward bill. I won't have any amendments for this bill and would be— when we get to that point, I'm happy to see the bill not be in our committee anymore and become the problem of the Rules Chair. So, Representative Josephson. Yeah, I, I'm seeing here through the chair, Representative McCabe, Article 1, Section 10, and sure enough it says restrictions upon powers of states. They may not make anything but gold and silver coin a tender in payment of debts.

Is this— what is the motivation for your constituents that want this? I mean, I know they don't need one. It's allowed, at least as written here. But is it sort of a survivalist thing or a fear of a Great Depression or a respect for the Founding Fathers? Or how would you describe it?

Representative McCabe. Through the Chair, Representative Josephson, I'd say a little bit of both. I think the person that brought this to me, one of my constituents, has sort of a prepper survivalist mindset where he wants to provide a hedge against inflation of greenback in his safe, but he couldn't afford to buy 1-ounce gold coins at a time. And the smaller ones, the 1/10-ounce one, 1/10-ounce ones are kind of small, and something like a GoldBac like I have here is easily purchasable. I think the $1.50 one right now is about worth about $4 or $3.50, maybe a little bit more with the price of gold today.

And you can buy those, you know, 2, 3, 4 at a time, and they store nicely in a safe, and you don't have to have a bag of gold. And so some, some folks like that, and the average person can actually— in fact, when we started talking about this now 6 years ago, I think the price of gold was less than $1,800 an ounce, and now it's about $5,200 an ounce. So if you had been buying these consistently and putting them in your safe, you would be fairly wealthy right now. So it's a little bit of all of that. Okay.

Thank you. Representative Schwalke. Yeah, thank you, Co-Chair Foster. I guess maybe just first to clarify, I know the House Finance Committee has heard this bill before in the prior legislature. I was not here at the committee at that time, so I guess I haven't passed this out yet, but I do remember it back in the 32nd legislature and Community and Regional Affairs.

I think you'll remember I was not supportive at the time, but I do want to commend you, Representative McCabe, for the work that you've put into this bill and in the State Affairs Committee. Your work with the Alaska Municipal League. I think you've made great improvements to the bill. Admittedly, I still don't necessarily see a lot of the motivation that some have behind this, but I understand that for your constituents it is very important. To you, it's very important, and I just appreciate the work that you've put into it.

I don't have any amendments that I would have for it. I think the zero fiscal notes give me a lot of comfort And I don't know what the committee is going to want to do with this, but I feel pretty comfortable with it. I would prefer to see it move along like my colleague here rather than sit in our Finance Committee and jam things up, for lack of a better term. So anyways, just wanted to commend you for your work on this bill and let you know that this go-around I'll probably end up being supportive at the end of the day. So thank you.

Okay, perhaps— did you have a question? Uh, yeah, well, I just want to thank the sponsor for bringing this again and let my, you know, motivation be known. I mean, we have 5 co-sponsors on this committee of this bill, and I'd like to see it moved out as well, especially considering the number of days we have left in the session. I think it's a good thing if, if it's the will of the committee to just go ahead and move it out. As a courtesy, I like to just double-check with folks to see, does anybody intend to offer any amendments?

I don't see that being the case. And so if there was an interest to move it, I would certainly support that. Do we have— do we have a question? Making sure that there's not discomfort from any committee members, but I'm not seeing any, so Yes, I would like to make a motion in that case. Just double-checking the room here.

Okay, Representative Sharagi, if you'd like to make a motion, I'll entertain that. Working to get the work order here, Co-Chair Foster. Give me just a moment. All right, very good. I've got it here.

Yes, thank you. Co-Chair Foster, I would move House Bill 1, work order 34-LS0001, HB 1 backslash N from committee with attached fiscal notes and individual recommendations. And did you say CS for HB 1? I did not say CS, but I did refer to the work order. But if you'd like me to restate the motion, I'm happy to.

I think we've got enough clarification on the record for that. And so I think we may have an objection. Representative Jimmy, okay, would you like to speak to your objection? Okay, okay. With that, Madam Clerk, we are going to call the roll in a minute, and that is for CS for House Bill 1, which is version N. And Madam Clerk, if you could please call the roll.

Representative Hannan. Yeah. Representative Tomaszewski. Yes. Representative Moore.

Yes.

Representative Stapp. Pass. Representative Gelvin. Pass. Representative Jimmy.

No. Representative Bynum. Yes.

Representative Hannan. No.

Representative Stapp? Yes.

Representative Galvin?

No.

Representative Josephson? No. Representative Schraggy? Yes. Representative Foster?

Yes.

6 Yay, 4 nay. And so on a vote of 6 48 for an A. CS for House Bill 1, which is version 34-LS0001/n, passes out of House Finance Committee with attached fiscal— let me restate that. CS for House Bill 1, which is version 34-LS0001/n, 01/n is passed out of House Finance Committee with attached recommendations, with attached fiscal notes and recommendations. And if folks could stick around to sign the yellow committee report. Representative McCabe, any parting words?

No, just thanks, Chair Foster. I appreciate it. I appreciate the discussion and everybody's questions. It's great. Thanks.

And I know you're tired of seeing this So maybe some of that was for this. No comment. Okay. Thank you very much. And so with that, our next meeting is scheduled for tomorrow.

I believe it's still on for 9 a.m. Is that correct? It's 9 a.m. And at that meeting, we'll hear a presentation from the Alaska Housing Finance Corporation. So if there's nothing else to come before the committee, we'll be adjourned at 3:36 p.m.