House finance subcommittee reviews Department of Revenue FY26 budget request, probes staffing, fees and new rent accounting

The House Finance Subcommittee for the Department of Revenue reviewed the department’s FY26 operating request on Feb. 19, 2025, examining staffing levels, fee structures and new accounting for state facilities rent.

The hearing, chaired by Co-Chair Foster, featured Commissioner Adam Crum of the Department of Revenue and Administrative Services Director Janelle Earls, with executives from the Alaska Permanent Fund Corporation and Alaska Housing Finance Corporation available to answer questions. Committee members pressed the department on vacancy rates and how recent systems and organizational changes affect auditing, benefit payments and administrative costs.

The discussion centered on a handful of budget and policy items that committee members said merit follow-up. Commissioner Adam Crum described recent accomplishments including procurement of the DAIS (dividend application information system) for the Permanent Fund Dividend Division and a class/salary study in Child Support Enforcement that reduced vacancies. Janelle Earls walked members through the department’s organization and division-level requests, emphasizing that much of the department’s operating budget is funded by other state and corporate receipts rather than unrestricted general funds.

Why it matters: the Department of Revenue administers the permanent fund dividend, state tax collection and treasury functions and oversees several quasi-state entities. Staffing and fee decisions affect payments to Alaskans, retirement fund returns and the department’s ability to collect revenue or process benefits.

Key takeaways from committee questions and departmental answers

- Staffing and vacancies: Earls said the Permanent Fund Dividend Division has 64 full-time positions and three regional offices (Anchorage, Fairbanks, Juneau), with a January 2025 vacancy rate of roughly 3 percent (about two positions). The Child Support Enforcement Division has 92 full-time positions; a recent class study covering 107 specialists produced a two-range salary increase and reduced vacancies and turnover by roughly 16 percent. The tax division was reported to have 94 full-time positions. The Long-Term Care Ombudsman’s office corrected an earlier figure: it currently has six full-time staff and requested one additional full-time position to handle increased facility visits and investigations.

- Audit capacity and new systems: Members asked whether the Tax Division has adequate staff for proactive collections (including rental-car taxes). Commissioner Crum answered that the division covers a diverse tax base and “yes, we do,” but staff and the department deferred a specific audit-hours follow-up to provide data on whether the newly implemented TRIMS (Tax Resource/Revenue Management System) has led to an uptick in audit hours.

- Permanent Fund and APFC compensation: Devin Mitchell, executive director of the Alaska Permanent Fund Corporation (APFC), explained the corporation’s incentive compensation practice and reported last year’s incentive figures: a $3.7 million maximum potential payout adopted by the board, $3.245 million authorized in the budget and $1.782 million actually earned. APFC’s FY26 request increases the maximum potential payout to $4.055 million. The subcommittee also discussed APFC’s practice of third-party travel reimbursements for investment diligence; APFC said the request will make those payments more transparent in the budget but is not an increase in travel.

- Retirement fund management fees (ARM board): Commissioner Crum reported that the Treasury/Alaska Retirement Management Board cost structure is materially lower than peers, citing FY24 fees of about 41 basis points versus a peer median of 56 basis points — a difference Crum estimated at roughly $40 million annually for the system as a whole. Committee members asked the department to provide the exact basis-point calculation and the percentage that a cited FY26 authority (about $12 million) represents of the management fee total.

- Alaska Housing and new Alaska Sustainable Energy Corporation (ASEC) request: Alaska Housing signaled it may apply for up to $20 million in federal energy infrastructure funds for a recently formed subsidiary (created by HB 273). Committee members asked whether the federal award would contain an administrative carve-out to cover fund management; Alaska Housing said it intends to claim available indirect or administrative costs when the federal opportunity is specified.

- Permanent Fund Dividend (PFD) operations and fraud/postage costs: Earls said the PFD Division requested additional personal services authority for FY26 because filled positions have increased; the division also faces a postage cost increase of about $23,000 after the USPS raised first-class metered mail by 5 cents in July 2024. Committee members asked for data on the volume of fraud investigations, staff assigned to fraud work and the number of applicants initially denied and later awarded PFD after appeal; the department said it would provide those figures.

- State facilities rent accounting: The budget includes new components to record state facilities rent consistent with AS 37.07.020 (annual facility maintenance, operations and repairs). The department described a new internal structure that will route rent payments through a state facilities rent component and rebuild costs back to divisions, including the Long-Term Care Ombudsman, Alaska Housing Finance, APFC and Revenue’s core divisions. Committee members requested clearer cross-departmental accounting showing whether the new line items merely reclassify existing rent payments or increase net expenditures and asked for a consolidated trail showing where interagency rent payments appear as income to recipient departments.

Follow-ups and directions from the hearing

- The department agreed to provide detailed follow-up on several items, including: (1) whether the TRIMS implementation has increased audit hours; (2) a precise breakdown and percentage for ARM board management fees and the $12 million FY26 authority; (3) counts of PFD fraud staff and prosecution/case numbers; (4) counts of PFD eligibility denials that were later reversed on appeal; (5) clearer documentation of the state facilities rent reclassifications and where the corresponding receipts are recognized; and (6) additional comparisons showing FY25 management-plan numbers alongside the FY26 adjusted base and governor’s request so members can perform apples-to-apples comparisons.

What the committee did not do: there were no formal motions, votes or decisions recorded in the transcript. The subcommittee concluded by requesting written follow-ups and adjourned at 5:12 p.m.

Ending note: Committee members asked the department and Legislative Finance to supply additional slides and written details so the subcommittee can reconcile adjusted-base calculations with FY25 management-plan figures and better track one-time versus base changes in future meetings.