House committee advances prompt-payment bill after failing to exempt nonprofits

The House State Affairs Committee on Jan. 29 advanced House Bill 133, a measure to impose prompt-payment penalties for late state payments to vendors, municipalities and other entities, after a contentious debate over whether nonprofit organizations should be exempt.

Chair Kerrick moved and the committee adopted an amendment that added intent language identifying Rural Health Transformation Fund dollars as a potential source for technology upgrades cited in the Department of Health fiscal notes. Kerrick said the change was ‘‘intent language’’ only because the Alaska Constitution prohibits dedicating funds.

Representative McCabe moved a separate amendment to remove nonprofit organizations from the bill’s automatic-penalty provisions, arguing nonprofits ‘‘often receive state funding through grants and appropriations’’ and face reimbursement, reporting and compliance processes that can delay payment. McCabe told the committee the amendment ‘‘simply removes nonprofit organizations from the penalty provisions’’ while leaving municipalities and private contractors subject to penalties.

Opponents, including Representative Holland, said nonprofits operate like businesses with payroll obligations and should receive timely payment. ‘‘If they’ve done the work, do they get paid on time? I think they should be,’’ Holland said during debate.

The committee held a roll call on Amendment 3. Representatives Henshaw, Holland, Story and Kerrick voted no; Representatives Vance, McCabe and Saint Clair voted yes. With a 3–4 tally, Amendment 3 failed and was not adopted.

Members continued to debate the bill’s fiscal notes and implementation burdens. Representative Vance urged the sponsor and finance committee to review available position control numbers (PCNs) and staffing to determine whether gaps, rather than new appropriations, were driving fiscal impacts.

Vice Chair Story moved that the committee report HB133 as amended with attached fiscal notes and authorize legal services to make technical changes. After an objection and a roll call, the committee voted 4 yeas and 3 nays to move HB133 from the House State Affairs Committee.

What’s next: HB133 will go to its next committee (finance) for further consideration of fiscal impacts, technology needs and any possible tailoring of penalty provisions.