Legislature(1997 - 1998)
1998-02-11 House Journal
Full Journal pdf1998-02-11 House Journal Page 2284 HB 397 HOUSE BILL NO. 397 by the House Rules Committee by request of the Governor, entitled: "An Act making supplemental appropriations; making, amending, and repealing capital or other appropriations; making appropriations to capitalize funds; and providing for an effective date." was read the first time and referred to the Finance Committee. The Governor's transmittal letter dated February 10, 1998, appears below: "Dear Speaker Phillips: The FY98 supplemental appropriations bill I am delivering to you today is essentially in two parts: the "regular" supplemental and a one- time opportunity to catch up on major unmet needs for our children without increasing state funds over what was budgeted for this year. The second part is particularly gratifying. Thanks to the efforts of Senator Murkowski in securing an increase in the rate at which the federal government matches our state funds for Medicaid (known as FMAP), Alaska has $22.8 million this year which it can reallocate to our children. With these and $1 million in reappropriated funds, I propose to: - repair Head Start facilities around the state; - build public health centers in Kenai and Bethel; - provide our public health nurses and child protection workers with adequate communications equipment and vehicles; - bring more state buildings and mental health trust beneficiary facilities into compliance with the Americans with Disabilities Act; 1998-02-11 House Journal Page 2285 HB 397 - strengthen our efforts against domestic violence with improved monitoring of sexual predators, training, and computer systems; - build juvenile detention and treatment facilities in Anchorage, Mat-Su and Ketchikan; - keep our National Guard Youth Corps program going despite reduced federal dollars; - address the serious problems of inhalant abuse among children; and - grow the Alaska Children's Trust so more earnings will be available for community programs that prevent child abuse and neglect. As we have discussed, Alaska is faced with a clear choice in how to use its $22.8 million FMAP dollars in FY98 and the $30 million more it will receive each year in FY99 and FY00. The new federal match rate will be up for review and reauthorization in three years. If the Legislature decides to take it simply as a budget savings, this short- term choice is almost certain to jeopardize Alaska's long-term benefits from the new federal Medicaid rate. Senator Murkowski made this very clear when he was in Juneau last month. He didn't manage to convince Congress to change the Medicaid rate just so Alaska could cut its budget. He ultimately prevailed on the basis that our health care costs are higher and we need more federal dollars to help those who need our assistance. That's also the basis on which I was able to convince the President to overcome his own OMBs advice and cancel his intended veto of the increased federal dollars to Alaska. Do we really want to risk $30 million annually from the federal government for years to come in exchange for a one-time "savings" in the FY98 or 99 budget? That would certainly be penny wise and pound foolish. And it would leave many important needs unmet. The reallocation of state matching funds for Medicaid will help us make a difference in children's lives. However, the other part of the supplemental is no less important. Nearly $22 million is necessary to address natural and economic disasters that hit Alaska this year -- $13 million for fire suppression, almost $5 million for the Bristol Bay fisheries collapse, $2 million for floods and other natural disasters, and 1998-02-11 House Journal Page 2286 HB 397 $1.7 for the ferry blockade by Canadian fishermen. More than $4 million is needed because of prison overcrowding, increased costs of community residential center beds and inmate health care. (This is on top of the Cleary fines and implementation of the judge's February 6 order to bring prison populations down to emergency capacity levels by May 1. A special appropriation to fund the plan and pay the fines will be introduced later this week.) To secure recent appropriations by the federal government for harbor improvements in three Alaska communities, I recommend you approve $3.6 million in matching funds. When the state budget was passed last May, the fate of these federal funding requests was unknown. We were able to reduce the level of state funds needed by insisting the communities pay half of the required matching funds. One of the first budget discipline commitments I made upon taking office was to bring supplementals under control and to acknowledge to the public up front that some adjustments would be necessary before year-end. Although this year's supplemental is larger than what we needed the last two years, we have indeed made significant reforms to the prior practice of spending as though supplementals were automatic and unlimited. My predecessor identified a staggering total of $80 million in "needed" additions to the FY95 budget. This year's amount is largely due to unexpectedly large costs for disasters, increased federal match requirements and prison overcrowding. Even so, the general fund supplemental is only 1.6% of the total general fund state budget. The budget plan released by the majority last May included a place holder of $16.5 million for supplemental appropriations, the level recommended earlier in my own budget plan. My plan acknowledged that the Legislature was funding some of the annual budget in the supplemental rather than in the primary operating budget bill. It anticipated the legislative underfunding of leases ($1.4 million), constitutional and statutory legal defense obligations (nearly $1 million), and an "average" level of additional expenses for fire suppression, natural disasters and judgments/claims. However, when the Legislature reduced the oil and gas litigation appropriation by $2 million with the expectation of a supplemental, it did not make a corresponding increase to the budget plan level of $16.5 million. 1998-02-11 House Journal Page 2287 HB 397 Since the state's litigation work brings hundreds of millions of dollars in settlements to our state coffers, we can ill afford not to fund it adequately. (Another $300,000 is required by the Department of Law to defend constitutional challenges to the two laws limiting a woman's right to choose which I vetoed as unconstitutional but which were overridden last session.) The first section of this bill highlights several critical issues needing immediate funding. For instance, we should not begin the next Youth Corps class in March unless we have reasonable assurance that the state funds to complete the four-month class are forthcoming. Community residential center beds will cost more under new contracts and we need assurance the increased expense will be approved. Although it would make sense to address all supplementals well before the end of the session, the items in Section 1 are of particular urgency. Since the Administration and Legislature have brought control to the supplemental budget process, it would be appropriate to take the next budget discipline step and have the Legislature approve the supplemental in a timely fashion, well before the end of the session instead of barely ahead of the FY99 budget. I look forward to working with you on a responsible supplemental budget for FY98, one that maintains budget discipline but also takes advantage of the unique opportunity we have to wisely reallocate the funds we used to spend matching federal Medicaid dollars. Sincerely, /s/ Tony Knowles Governor"