Legislature(1995 - 1996)
03/31/1995 09:00 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL 100
"An Act making appropriations for the operating and
loan program expenses of state government and to
capitalize funds; making appropriations under art. IX,
sec. 17(c), Constitution of the State of Alaska, from
the constitutional budget reserve fund; and providing
for an effective date."
HOUSE BILL 101
"An Act making appropriations for operating expenses
for certain programs for which the costs are derived
from mandated formulas or criteria, and for expenses
for certain leases and contracts for state services and
operations; and providing for an effective date."
DEPARTMENT OF ADMINISTRATION (DOA)
Representative Kohring MOVED to adopt Amendment #6(B) which
would provide for an additional BRU to the Public
Broadcasting Commission in order to distribute all the radio
grants. There being NO OBJECTION, it was adopted.
FRONT SECTION
Co-Chair Hanley MOVED to adopt Amendment #1. He explained
that Amendment #1 would provide the necessary technical
changes to various departmental corrections. There being NO
OBJECTION, it was adopted.
Representative Martin MOVED to adopt Amendment #2 which
would transfer $300 million dollars from Alaska Housing
Finance Corporation (AHFC) to the general fund.
Representative Grussendorf spoke against the amendment
questioning the affect it would have to AHFC with such a
large withdrawal. Co-Chair Hanley voiced his concern with
withdrawal of such a large amount and the impact that would
have on the bond rating.
Representative Martin commented that at this time, the total
AHFC portfolio was $9.7 billion dollars. He stated that a
cash flow does exist in that agency and that it should be
placed into the general fund. Representative Kohring
OBJECTED. He stated that such a large amount withdrawn from
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the corporation would have a negative impact on the national
bond rating. Representative Martin argued that Alaska is
the richest State in the Union and should not be concerned
about credit ratings. Representative Kohring disagreed with
Representative Martin noting importance of the credit and
bond rating which would be negatively impacted through
Amendment #2. He recommended requesting an analysis from
the rating agency.
A roll call vote was taken on the MOTION.
IN FAVOR: Martin
OPPOSED: Mulder, Navarre, Parnell, Therriault,
Brown, Grussendorf, Kelly, Kohring,
Hanley, Foster
The MOTION FAILED (1-10).
Representative Brown MOVED to adopt Amendment #3 which would
deposit $3.591 million dollars from the oil and hazardous
substance release prevention mitigation account (AS
46.08.020(b)) into the general fund. These funds would not
be deposited into the storage tank assistance fund (as
46.03.410). Representative Mulder OBJECTED.
Representative Therriault concurred that the funding source
was being raided. Representative Brown pointed out that
this money would not be taken from the same source as that
referenced by Representative Therriault.
A roll call vote was taken on the MOTION.
IN FAVOR: Navarre, Brown, Grussendorf
OPPOSED: Mulder, Parnell, Therriault, Kelly,
Kohring, Martin, Foster, Hanley
The MOTION FAILED (3-8).
Representative Grussendorf MOVED to adopt Amendment #4.
Representative Therriault OBJECTED. Representative
Grussendorf explained that the proposed amendment would
reduce the cut to the marine highway services by $200
thousand dollars. Amendment #4 would allow for
transportation needs by Alaskans serviced by the M/V
LeConte, the M/V Aurora and M/V Bartlett. He advised that
transportation is a necessary function for commerce, school
and family activities. The "feeder" vessels are the ones
that serve Alaska and the local residents. The proposed
reduction in service would effect all of the small
Southeastern communities and services to the communities in
Prince William Sound.
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A roll call vote was taken on the MOTION.
IN FAVOR: Navarre, Brown, Grussendorf, Foster
OPPOSED: Parnell, Therriault, Kelly, Kohring,
Martin, Mulder, Hanley
The MOTION FAILED (4-7).
Representative Brown requested discussion regarding the
approaches being considered to the following four amendments
(Amendment #5, #6, #7 and #8). She voiced concern that the
monetary terms of the union contracts before the Legislature
had not been included in the budget and consequently were
not funded. She recommended that the Legislature support
the collective bargaining process. Representative Brown
stressed that these contracts must be funded and included in
the budget.
Representative Brown noted that Amendment #8 would have the
least effect on state government; it would directly add the
money necessary to effect the contracts. She understood the
amount needed would consist of $6.8 million dollars general
fund, $898 thousand dollars federal funds and $4.4 million
dollars in other funds. Amendment #8 would add in the
amount of money necessary to address that concern.
Representative Brown explained that Amendment #6 would
provide a net zero approach. Through Amendment #6, the
necessary funding would be provided through the personal
services line in all departments by a 1.04% increase. She
continued, Amendment #7 was similar to Amendment #6,
although the funding source would come from reducing all
lines in all departments by .4%.
Representative Brown concluded, Amendment #5 would delete
from the bill, the language in Section #36. The effect of
the amendment would require that each department funding
those union employees, be responsible to absorb those costs.
(Tape Change, HFC 95-76, Side 2).
KATHLEEN STRASBAUGH, GOVERNMENTAL AFFAIRS, DEPARTMENT OF
LAW, discussed the legal repercussions of the contracts.
Co-Chair Hanley understood that if the budget is passed
without any language regarding the contracts, essentially,
the contracts would be approved and the money would have to
be "eaten" within the departments.
ALISON ELGEE, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, reiterated that if there is no action by the
Legislature, the impact will be felt on the areas that house
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those employees.
Ms. Elgee provided the Committee an overview of the terms of
the contracts. The transmittal memo outlines the most
significant change in the contracts to the 40/hour work
week. Also, all contracts include reduced overtime costs.
Representative Brown MOVED to adopt Amendment #8 which would
fund the entire $12.256 million dollars. Co-Chair Hanley
OBJECTED, commenting that at this time, three separate
appropriation bills are being drafted to address the
concern. Representative Brown questioned what would happen
if none of the proposed pieces of legislation passed. Co-
Chair Hanley responded that the contracts would then not be
approved and renegotiation would occur.
A roll call vote was taken on the MOTION.
IN FAVOR: Brown, Grussendorf, Navarre
OPPOSED: Parnell, Therriault, Kelly, Kohring,
Martin, Mulder, Foster, Hanley
The MOTION FAILED (3-8).
Representative Brown MOVED to adopt Amendment #7 which would
add a new section consisting of $12.256 million dollars to
fund the Supervisory Unit, Labor, Trades and Crafts and
Inlandboatman's Union of the Pacific collective bargaining
agreements originating from the various sources. She asked
to amend the amendment by changing the general fund amount
to $6,892,094 dollars and the other funds to $4,464,975
dollars.
Representative Brown explained that the amendment would
reduce all lines and all funding sources by .404% to all
departments. Co-Chair Hanley OBJECTED.
A roll call vote was taken on the MOTION.
IN FAVOR: Brown, Grussendorf, Navarre
OPPOSED: Therriault, Kelly, Kohring, Martin,
Parnell, Hanley
Representatives Mulder and Foster were not present for the
vote.
The MOTION FAILED (3-6).
Representative Brown WITHDREW Amendments #5 & #6. There
being NO OBJECTION, it was so ordered.
Representative Martin MOVED to adopt Amendment #9. Co-Chair
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Hanley OBJECTED for purposes of discussion.
MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
explained that the amendment would provide for funds which
remain in the Statutory Budget Reserve to go to balance the
FY96 budget. He added that the language of the amendment
would cap the amount allowed to be taken from that fund at
$45.8 million dollars.
Representative Martin explained the intent of Amendment #9.
Mr. Greany noted that previously adopted language indicates
that any recovery will be appropriated back to the original
fund source. He noted that Amendment #9 would clarify the
amount returning to the Statutory Budget Reserve.
Representative Martin explained the intent would be to
demonstrate to the "people" of Alaska that there was an
attempt to balance the budget.
A roll call vote was taken on the MOTION.
IN FAVOR: Martin
OPPOSED: Brown, Grussendorf, Kelly, Kohring,
Mulder, Navarre, Parnell, Therriault,
Hanley, Foster
The MOTION FAILED (1-10).
Representative Martin MOVED to adopt Amendment #10. Co-
Chair Hanley OBJECTED for purposes of discussion.
Representative Martin stated that deleting Section 10 would
prevent usage of the Constitutional Budget Reserve until it
was "really" needed.
Mr. Greany explained the "cash flow" situation. He stated
that the language in the existing section specifies that any
amount needed to balance the fiscal year budget, would come
from the Constitutional Budget Reserve. He specified that
the monthly draws should not exceed the yearly balance.
Representative Brown questioned the sum of money being
appropriated. Mr. Greany suggested that the most likely
amount which would need to be taken from that fund would be
$400 million dollars. Representative Brown pointed out that
would include funding for education which was not included
in the operating budget.
Co-Chair Hanley WITHDREW the OBJECTION. There being NO
further OBJECTIONS, Amendment #10 was adopted.
Co-Chair Hanley discussed Amendment #11 which would delete
"on" in Section #37 and insert "for the fiscal year ending".
Co-Chair Hanley MOVED to adopt Amendment #11.
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Representative Brown asked the effect of the language
change.
(Tape Change, HFC 95-77, Side 1).
JAMES BALDWIN, ASSISTANT ATTORNEY GENERAL, CIVIL DIVISION,
DEPARTMENT OF LAW, explained that the change was a technical
amendment. He added that a state accountant opinion had
been consulted, although added that there will not be a
clear resolution regarding the language change until it is
reviewed by the Supreme Court.
Representative Brown recommended that use of the dedicated
funds should be prohibited. Mr. Baldwin noted that the
dedicated funds are directed toward revenue sources coming
into the State. He stated that prohibition applies to
earmarking those funds for a specific purpose. There being
NO OBJECTION to Amendment #11, it was adopted.
Discussion followed among Committee members addressing the
interpretation of the courts intent regarding the dedicated
funds. Co-Chair Hanley stated that the Legislature will
make policy calls regarding "swept" funds.
Representative Martin MOVED to adopt the new Intent Language
STATEWIDE
Representative Martin MOVED to adopt Amendment #1 which
would address departmental travel costs. He provided the
Committee with a travel cost breakdown. [Copy on file].
Representative Grussendorf reminded Committee members, as a
result of the reduced departmental budgets, more agency
traveling will be required to reach the outer areas of the
State. Representative Parnell noted concern that Amendment
Representative Mulder voiced his opposition that such a
drastic motion would increase supplemental requests next
year.
Representative Martin explained the intent would be to
address the departmental use of lapsed funds. Co-Chair
Hanley clarified that the lapses referenced by
Representative Martin referred to unauthorized travel
expenses, although remarked that it was legal for the
departments to shift money in the contractual lines. He
agreed that the subcommittees should be looking at the
travel components for each department, although, agreed that
the amendment would create a drastic impact.
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Representative Brown OBJECTED to adopting Amendment #1.
Representative Mulder advised that the referenced funds
would not be lapsing funds.
(Tape Change, HFC 95-77, Side 2).
Representative Navarre elaborated that the departments need
to have the authority to move funds in order to address
existing problems. He emphasized that many of the
departments inabilities to properly function result from
legislative actions. He asked Committee members to be aware
of the impact of the proposed amendment. Co-Chair Hanley
disagreed, commenting that the intent would not remove
flexibility. He recommended that the department travel
should show in the personal services line.
Representative Brown asked the total lapse for FY95
contained in all lines. Representative Martin was not sure.
He stated that a Budget and Audit Committee report
stimulated curiosity regarding the travel component. A $13
million dollar disparity existed in the departmental travel
component. Representative Navarre reiterated that the
Executive branch of government must have a certain degree of
flexibility in order to manage efficiently.
A roll call vote was taken on the MOTION to adopt Amendment
IN FAVOR: Martin
OPPOSED: Kohring, Mulder, Navarre, Parnell,
Therriault, Brown, Grussendorf, Kelly,
Foster, Hanley
The MOTION FAILED (1-10).
Co-Chair Hanley explained that Amendment #2 would propose a
departmental "slim fast"; he added that the policy contained
in the amendment was first proposed by the Administration.
If adopted, the agencies would still retain the option of
paying staff at their original range and step, but would be
short the general funds. He noted that it was not his
intent to offer the amendment, although, had submitted it
for discussion and emphasized once again all options need to
be considered in order to make the necessary substantial
reductions to the budget.
Representative Brown asked if back-up information had been
updated in order to indicate the new positions coming into
service.
ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR, noted that the
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administrative salaries have not yet been updated. She
explained, that "run" is usually provided in November,
adding that it is a major and complicated process.
DEPARTMENT OF ADMINISTRATION (DOA)
Co-Chair Foster MOVED to adopt Amendment #7 which would add
funding to the Kotzebue Technical Center for operational
grants in the amount of $400 thousand dollars.
Representative Martin OBJECTED.
A roll call vote was taken on the MOTION.
IN FAVOR: Navarre, Brown, Grussendorf, Foster
OPPOSED: Martin, Mulder, Parnell, Therriault,
Kelly, Kohring, Hanley
The MOTION FAILED (4-7).
STATEWIDE
Representative Mulder MOVED to adopt Amendment #3.
Representative Brown OBJECTED. Representative Mulder
explained that the effect of Amendment #3 would add an
additional $350 thousand dollars into Alaska Tourism
Marketing Council (ATMC) for advertising.
Representative Grussendorf spoke against reducing the
components suggested in order to make the ATMC increase
possible. Representative Brown agreed with Representative
Grussendorf. She stressed that the additional components
had each been discussed on subcommittee level and that there
were good reasons for taking no additional reductions.
A roll call vote was taken on the MOTION.
IN FAVOR: Mulder, Parnell, Therriault, Kelly,
Kohring, Foster
OPPOSED: Navarre, Brown, Grussendorf, Martin,
Hanley
The MOTION PASSED (6-5).
Representative Mulder MOVED to report CS HB 100 (FIN) out of
Committee with individual recommendations. Representative
Navarre OBJECTED. He commented that the Minority had been
disappointed process of accommodation within the operating
budget. He elaborated that the minority intended to offer
amendments on the full House floor. He warned that
statewide needs are not being adequately addressed.
Representative Grussendorf reprimanded the Committee on the
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priorities established in the final House Finance Committee
version of the budget. He noted unresolved issues of
concern for all the departments.
Representative Brown voiced appreciation on the decorum of
the Committee, while noting many items which were not
correct within the budget. She pointed out that subsidies
to business had been singled out above the needs of many
Alaskans. The budget is not sufficient in emergency health
services, public safety, the Office of Public Advocacy, the
Department of Law and the Department of Fish and Game. She
concluded that she did not agree with the priorities of the
forthcoming budget.
Representative Kelly countered that the Majority should not
have their motives questioned as they assume the
responsibility to clean up the "mess" made by the minority
over the years. Representative Grussendorf responded that
basic problems resulted during the "watch" of the former
Administration. He pointed out that the intent of the
Legislature should be to increase economic development
within the State, although noted that with the proposed
budget, those agencies which could be of most service have
been dramatically cut.
Representative Navarre added that the budget process had
been driven by a "number". Consequently, many important
areas of the budget were not addressed. He pointed out that
the impacts will be felt throughout the State.
Representative Navarre reprimanded Representative Kelly for
his perspective on the budget crisis stating that it was a
misrepresentation of history and fact.
Co-Chair Hanley stated that it was critical to realize that
the budget process had been a tough decision in making
reductions. He emphasized that reductions are necessary.
(Tape Change, HFC 95-78, Side 1).
Co-Chair Hanley added that additional new revenues for the
State will be essential.
Representative Navarre agreed that the goal of the session
was to achieve a budget supported by both the Majority and
the Minority. The goal was to create a budget which the
House could support and pass. He emphasized that the
Minority represent concerns statewide and pointed out that
there was little accommodation and objectivity in reaching a
budget agreement between both parties.
A roll call vote was taken on the MOTION to move the bill
from Committee.
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IN FAVOR: Parnell, Therriault, Grussendorf, Kelly,
Kohring, Martin, Mulder, Hanley, Foster
OPPOSED: Navarre, Brown
The MOTION PASSED (9-2).
CS HB 100 was reported out of Committee with a "do pass"
recommendation.
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