Committee reviews bill to require prompt payments to nonprofits, municipalities and tribal organizations; stakeholders describe delayed-state payments

Representative Rebecca Hemshutt introduced House Bill 133 to the committee on March 25, 2025, to establish prompt‑payment requirements for the state’s grants, contracts and reimbursements to nonprofits, municipalities and Alaska Native organizations.

Bill mechanism and sponsor intent - HB133 would amend the state procurement code (cited in testimony as “Alaska statute 36.3”) to require prompt payment for satisfactory services and create timelines for interest on late payments. The draft also adds nonprofit organizations, municipalities and Alaska Native entities to provisions for prompt payment of grants and reimbursements. - Timelines cited in committee staff analysis: interest on a late payment would begin to accrue on the 31st calendar day after invoice; for federal pass‑through funds an agency would have 21 calendar days from invoice to pay without interest; for other funds an agency would have 30 calendar days. Section 3 (as described by staff) would require a state agency to pay at least 20% of a grant within 10 days of the grant’s start or award and set standards for eventual payment timing. The sponsor said the bill was modeled on prompt‑payment protections for private contractors and aims to prevent service disruptions and help small providers remain financially viable.

Stakeholder testimony and examples - Laura Wolf, president and CEO of the 4Acre Group, and other nonprofit witnesses described recurring delays: “3, 6, 9 months, more than a year in delayed payments,” across multiple departments, and said the current system forces nonprofits to float state-funded services and to report spending before receiving payments. - Stephanie Berglund, CEO of THRED (the statewide child-care resource and referral organization), described repeated reimbursements and grant delays that compress service delivery windows and stress small child-care businesses that operate on thin margins. - Carol Trem of the Alaska Municipal League explained that community‑assistance and other state payments are essential revenue for many small municipalities; for some communities those payments represent a large share of annual budgets and delayed payments can cause shutdowns or extra costs.

Administration input and fiscal questions - Tom Mayer, chief procurement officer in the Department of Administration, said the procurement office’s role would likely be limited to form changes and that individual agencies handle invoice approval and payment. He confirmed procurement does not process grants or make payments directly and said the fiscal impacts of interest payments would fall at the agency level. - Committee members pressed how interest payments would be funded and whether the administration had data on the total dollar value of delayed payments. Witnesses said there is no single state system tracking all delayed payments and that prior departmental, case-by-case fixes have failed to solve a systemic problem.

Committee disposition and next steps: Committee members welcomed the bill’s objective but asked for more information from administration finance and accounting staff about the mechanics and fiscal impact. The committee held HB133 over for additional invited and public testimony and requested further departmental input.

Ending note: Sponsors and witnesses said prompt-payment parity is intended to align state practice with private-sector prompt‑payment rules and reduce disruptions to services that many Alaskans rely on.