Legislature(2011 - 2012)HOUSE FINANCE 519
02/14/2011 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB107 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 107 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 107
"An Act making and amending appropriations, including
capital appropriations and other appropriations;
making appropriations to capitalize funds; and
providing for an effective date."
1:34:29 PM
AT EASE
1:34:57 PM
RECONVENED
KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, provided an overview of the
governor's proposed FY 12 capital budget request. She
summarized that the total for the capital bill was
$1,612,598,600.
Ms. Rehfeld provided highlights of the budget. She noted
that a key component of the request was $103 million of
general funds to match or leverage over $705 million of
federal and other funds for specific projects, including:
· $623 million, Department of Transportation and Public
Facilities (DOT/PF), federal highway and aviation
funds
· $42.3 million, Department of Environmental
Conservation (DEC), village safe water projects
· $20 million, DEC, 9 municipal water and sewer projects
· $5 million, municipal harbor grant program (50/50
match)
· $65.7 million, Susitna Hydro-Electric Project (from
the balance of the Railbelt energy funds) for
Southcentral Alaska.
Co-Chair Stoltze reminded the committee that the Susitna
project would benefit Northern and Interior Alaska, and
that the Railbelt extended beyond Southcentral.
1:38:05 PM
Ms. Rehfeld continued with her list of highlighted items:
· $25 million, renewable energy grants
· $25 million, weatherization program
· $10 million, Southeast energy grant fund
· $10.5 million, access for three specific road
projects:
o Continuation of environmental work on the
corridor from the Dalton Highway to Gubik and
Umiat; $8 million requested in the FY 11 budget,
$8 million in the FY 12 budget
o Continuation of work on the Ambler mining
district access, $1.25 million
o Continuing work on western access
· $20 million, Port of Anchorage
· $20 million, Pt. MacKenzie
· $10 million, Skagway dock and terminal improvements
Ms. Rehfeld noted continued efforts on gasline development,
both in-state and the Alaska Gasline Inducement Act (AGIA)
project:
· $160 million, reimbursements under AGIA
· $5.5 million, continuation on work on the in-state gas
development project
Ms. Rehfeld noted that the legislature would receive a
report July 1, 2011 about the in-state gas project.
1:40:18 PM
Co-Chair Stoltze queried the thought process behind taking
Alaska Housing Finance Corporation (AHFC) Capital Fund
Program funds instead of unrestricted general funds. Ms.
Rehfeld responded that for the last several years, the
governor's proposal has been to take the AGIA reimbursement
out of the AHFC capital fund. She acknowledged the debate
over the funds, related to whether the funds were to be
used for matching funds or for gas development.
Co-Chair Stoltze wanted the public and policy makers to
understand that there was real money in the capital fund
that was available for other projects.
Co-Chair Thomas asked why surplus cruise ship money was not
used for the Skagway dock improvements, instead of the AHFC
funds. Ms. Rehfeld replied that the dock facility could be
used by cruise ships and by barges that remove ore. She
pointed out that the amended budget proposal would likely
have a proposal to switch funds for the project.
Co-Chair Thomas thought about 75 percent of the dock's use
was cruise ships and 25 percent for ore removal. He asked
whether the item was predicated on getting ownership from
White Pass, which owned the dock. Ms. Rehfeld answered that
she was not aware of any particular contingency related to
the project. She noted that the Alaska Industrial
Development and Export Authority (AIDEA) was involved with
the loading facility and that the item would assist that
project. She believed the project was not specific to White
Pass. She offered to get the information.
Co-Chair Thomas pointed out that the language stipulated
that White Pass was involved.
Ms. Rehfeld highlighted items related to education:
· $28.5 million, Department of Education and Early
Development (DEED), for Quinhagak, the first school on
the early development school construction grant list
· $19.9 million, DEED, for the first 14 projects on the
school major-maintenance list
Co-Chair Stoltze observed that the schools on the list
appeared to be located in Western Alaska. Ms. Rehfeld did
not have the grant list, but believed that any school
district in the state was eligible to apply for the grant.
The requests were evaluated on an annual basis.
1:44:26 PM
Ms. Rehfeld offered to provide a sectional analysis of the
bill, which contained 12 sections. She began with the
numbers section:
· Section 1: just over $1.4 billion
Ms. Rehfeld detailed that the section was organized by
department and listed in priority order within each
department. All deferred maintenance requests were at the
end of the list, except for DOT/PF projects, which were
listed by program area; within appropriations, the
community projects were in alphabetical order. She noted
that the capital books given to committee members had a
project review listing for each department; the listing had
specific reference numbers, backup page numbers, indication
of appropriation or allocation, project title, and funding
sources. The information could be used to find backup and
get more detail on specific projects.
· Sections 2 and 3 (pages 38 through 44): Summaries of
projects appropriated in Section 1, listed either by
department or total fund
Ms. Rehfeld noted that the language portion of the bill
began on page 45.
· Section 4: Legislative Budget and Audit language
appropriation. Allows that federal and other program
receipts that come in after the legislature has
adjourned can go before the Legislative Budget and
Audit Committee for consideration.
Co-Chair Stoltze pointed out that three schools on the list
he referred to earlier were in Co-Chair Thomas' district;
the remainder were in Western Alaska.
Representative Gara commented that the largest school on
the deferred maintenance list that got funded the year
prior was Service High School in Anchorage.
· Section 5 (page 45, lines 17 through 20), fund
capitalization section. Subsection (a): $160 million
requested for the AGIA reimbursement project. Through
FY 11, $185 million had been appropriated for
reimbursement of allowable expenditures under the AGIA
project; the FY 12 request would bring the amount
available for reimbursement to $345 million.
Ms. Rehfeld referred to a report provided to the committee
by the Department of Revenue containing all AGIA
reimbursements to date and the anticipated expenditures
under the program.
· Section 5, subsection (b): $100,000 Division of
Elections for polling place access and improvements.
Specific to the Help America Vote Act fund, federal
funds for election-related activities are put into the
fund, and appropriations are requested out of the
fund.
1:49:00 PM
· Section 6 (page 45, lines 26 through 31), related to
fund transfers. Subsection (a): $22 million, to go
into the Alaska Capital Income fund and a $25 million
fund transfer from the AHFC capital fund to the
renewable energy grant fund.
Ms. Rehfeld reminded the committee that the legislature had
already approved $150 million into the renewable energy
grant fund; that has been made available for 124 projects.
The Alaska Energy Authority (AEA) estimated that by the end
of the year, the renewable energy fund projects would save
2.5 million gallons of diesel annually; by the end of 2012,
renewable energy fund projects were expected to save 8
million gallons of diesel annually.
Representative Edgmon queried the $25 million threshold. He
wondered whether the number was what AEA could absorb at
the present. He noted that the list was long, and he
understood that more than $25 million had been recommended
to OMB. Ms. Rehfeld believed the original legislation that
created the renewable energy fund anticipated a $50 million
appropriation per year over a five-year period. Initially,
there was some funding made available to jump-start the
project; it took AEA a while to get the grant process in
place. She believed the program was ready to go, and the
governor's budget proposed $25 million as the starting
point. She believed the program was working well.
Representative Doogan asked for more information about
Section 6(a). Ms. Rehfeld responded that Section 6(a)
represented the income from the Amerada Hess fund income,
which was transferred annually into the Alaska capital
income fund. The legislature could choose to make
appropriations from the Alaska capital income fund.
Representative Doogan asked whether there were restrictions
on what the fund could be spent on. Ms. Rehfeld replied
that there were no restrictions.
Representative Wilson asked whether oil energy costs were
measured by kilowatt hours spent by a community. Ms.
Rehfeld thought AEA had extensive inventory of costs broken
down by community.
1:53:17 PM
Representative Wilson referred to wind projects and cost
comparisons to what was already being spent. She wondered
whether Alaska was at bottom-line savings in terms of
energy costs. Ms. Rehfeld replied that she could get the
information.
Co-Chair Stoltze referred to weatherization program
formulas and queried the plan for the $25 million. He noted
that the budget backup materials referred to the item as
the "Lyman Hoffman weatherization program." Ms. Rehfeld
stated that she was not aware of specific attribution. She
answered that the $25 million in the governor's budget was
proposed specifically for the weatherization program. The
other program was the energy rebate program, through which
AHFC reimbursed for specific energy efficiency projects.
Co-Chair Stoltze noted that the item was for a grant
program instead of the rebate program, which was considered
more of an urban program. Ms. Rehfeld answered that there
were specific eligibility requirements under each program.
Representative Edgmon noted that there was $200 million to
the weatherization program and $160 million to the home
energy rebate program ($360 million total). He asked
whether the $25 million went fully to weatherization. He
wondered whether there was still money in the queue for the
home energy rebate program. Ms. Rehfeld offered to get the
information.
Co-Chair Thomas spoke to the harbor fund. He pointed out
that for water communities, harbors were the starting point
for sport fish, commercial charters, and commercial
fishermen. He called the harbor system the "road to
resources" for fishing industry communities. He spoke to
the fact that half the requests were vetoed, even though
the program was a match program; 50 percent of the money
had to come from local municipalities. He noted that only
five harbor projects were in the budget; he felt people who
wanted to build roads to oil resources would be insulted by
such a low number.
Co-Chair Stoltze wanted a detailed explanation of the
energy programs. Ms. Rehfeld agreed.
1:58:29 PM
Representative Guttenberg believed the energy allocations
were made based on degree days, cost of BTUs, and the
extent of need. He reported that people in his community
had difficulties getting into the rebate program. He
queried the criteria used. Ms. Rehfeld offered to get
information on the allocations and balances in the
programs.
Representative Gara pointed out that the renewable energy
program was originally slated for $50 million per year. He
questioned the amount in the budget for the weatherization
program. Ms. Rehfeld responded that the original
legislation for the renewable energy fund had intent
language stating that there would be $50 million per year;
the proposed FY 12 capital budget requested $25 million.
She anticipated discussion about whether to increase the
amount to the $50 million. The FY 12 budget requested $25
million for the weatherization program, not for the energy
rebate program. She offered to provide the committee a
breakdown (through AHFC) of the funding already committed
and what was still available for the two programs.
Representative Gara asked whether the proposal was for zero
money into the home energy rebate program for FY 12. Ms.
Rehfeld responded that the FY 12 budget did not have a
request for the energy rebate program.
Representative Neuman referred to the comprehensive highway
safety plan in the budget at $400,000. He pointed out that
two of the deadliest highways were in his district, the
corridor on the Parks Highway from Wasilla to Big Lake, and
Knik-Goose Bay Road, where two community members had
recently died. He asked how the safety concerns would be
addressed in the budget. He pointed out that all the trucks
on the "roads to resources" plan used the Parks Highway.
Ms. Rehfeld responded that between DOT/PF and the
Department of Public Safety (DPS), there was a shared
effort regarding highway safety for the roads mentioned.
She added that federal highways safety funds were being
utilized for additional trooper presence and enforcement,
for outreach and education on highway safety, and for
improvements to the particular roadways. She referred to
additional funds slated through the Statewide
Transportation Improvement Program (STIP) for improvements
to the area. She thought the departments could provide more
specific details.
2:03:27 PM
Co-Chair Stoltze noted difficulty in speaking to DOT/PF.
Representative Neuman referred to the $250,000 item for the
snowmobile trail development program. He thought the tracks
program usually received over $1.5 million in federal
funds. He asked where the remainder of the money was going.
Ms. Rehfeld responded that she did not know and offered to
get more information.
Ms. Rehfeld continued with the sectional analysis.
· Section 7 (page 46, lines 1 through 5): Language
authorizing settlements from insurance claims or
losses into the general fund, appropriated into the
state insurance catastrophic reserve account.
· Section 8 (page 46, lines 6 through 11): Specific to
National Petroleum Reserve grants; $5.4 million
estimated in FY 12 from the U.S. Department of the
Interior, Bureau of Land Management, 50 percent of
federal money for sales, rentals, or leases within the
National Petroleum Reserve-Alaska (NPR-A).
Ms. Rehfeld detailed that DCCED managed the annual grant
application process for public services and facilities in
communities directly impacted by leases or development of
oil and gas within the NPR-A. She anticipated that the
amended budget would identify the grants selected through
the annual review.
· Section 9 (page 46, lines 12 through 19): Related to
the Alaska Energy Authority (AEA). Subsection (a): $2
million interest earnings from the renewable energy
fund, appropriated to AEA for program administration.
Subsection (b): Specific appropriation for the balance
of the Railbelt energy fund to be used for planning,
design, and permitting for the Susitna hydro-electric
project to complete field work for the Federal Energy
Regulatory Commission (FERC) application in early
2015.
Representative Guttenberg asked whether Railbelt energy
funds would no longer exist if subsection (b) passed. Ms.
Rehfeld believed there was a bill currently under
consideration that would change the current configuration
of the Railbelt energy fund for the specific project. If
the bill did not pass, the appropriation would take the
balance and purpose it toward the project; the fund would
not necessarily go away, unless it was decided to eliminate
it. The fund would exist until any projects or activities
appropriated through the fund were completed.
Representative Guttenberg surmised that the fund would be
empty and could be eliminated. Ms. Rehfeld agreed.
2:08:49 PM
Representative Doogan referred to Section 9(a) estimating
$2 million available for administration of the renewable
energy grant fund. He asked whether $2 million was the
total cost of administration and how the number was
derived. Ms. Rehfeld replied that AEA had used the
mechanism for the first time in the FY 11 budget; the
budget was built around a combination of individual project
management costs and the administrative portion of the
budget. She believed the $2 million would help cover the
specific costs; the fiscal note for HB 152 did not provide
AEA with sufficient funding to manage the program. She
offered to get more information.
Representative Doogan turned to Section 9(b) with a more
precise number ($65,731,100) and asked how the number was
derived. Ms. Rehfeld responded that $65.7 million was the
estimate of the available balance of the fund, although
there were projects that had not been closed out. She
offered to provide the committee with the AEA timeline that
outlined specific steps for the project. She noted that the
appropriation would get AEA partway to the FERC
application.
Representative Doogan thought projects should be financed
year-to-year and not be made capital projects. He asked for
information regarding how much of the money was expected to
be spent year-to-year. Ms. Rehfeld offered to provide him
with the AEA timeline. She addressed the issue of whether
projects should be funded through the operating or the
capital budget. She stated that timing was difficult in
larger and more complex projects. The capital budget (with
lapsing language) provided some flexibility to address
changing conditions.
Representative Doogan stated that the process was either
taking money that could be spent for something else or
making the decision to take on and complete a large and
expensive project. He did not want to back into a large
financial commitment by using a smaller portion of the
total funding needed in order to take a specific step in
the process overall. He questioned whether that was the
best approach.
2:13:59 PM
Co-Chair Stoltze referred to decisions made in the past by
the committee to fund portions of projects.
Representative Costello queried the philosophy of the
administration on the difference between using the
operating and capital budgets for certain projects. She
queried the considerations used, especially for projects
that cost year after year. Ms. Rehfeld responded that there
were several things to consider when looking at operating
and capital budgets; there was not one answer that would
fit all situations. The executive and legislative branches
had struggled in recent years with appropriations in the
operating budget that were placed in the governor's office
and then allocated out to line agencies for various
purposes, such as gasline activity and the domestic
violence and prevention funds. Funds were allocated out to
specific agencies for work within a given fiscal year, and
at the end of the fiscal year, the internal reimbursable
services agreements (RSAs) have to be reconciled to close
out the budgets. In cases where the funding was not spent,
the administration might come back to the legislature and
ask for an extension of a lapse date on an operating item.
She acknowledged that the process of managing multi-year
operating items was sometimes confusing and difficult.
Structurally, it depended on the will of the legislature as
the session went on, whether to use the operating budget in
the preferred way or use the capital budget with its
ability to flex one year to the next.
Ms. Rehfeld provided the example of funding for tourism
marketing. The FY 12 budget proposed a starting point
derived from exactly what had happened in the FY 11 budget;
a portion of a grant going specifically through the capital
budget to the Alaska Travel Industry Association (ATIA) and
then in the operating budget, putting the amount through
the qualified trade association (if not going back to the
50/50 matching requirement). The item was framed that way
as a starting point, as discussion was expected about which
direction the legislature wanted to take related to
marketing on a broader scale.
Ms. Rehfeld provided another example of a budget item that
had been discussed during the supplemental bill
presentation. The Department of Law (DOL) had two large
requests in the capital budget for oil and gas related
litigation and for the BP litigation. She stated that
timing was difficult in both the examples of tourism and
litigation. She noted an operating supplemental item of
nearly $4 million for DOL for litigations.
Ms. Rehfeld summarized that some kinds of items were
considered on a case-by-case basis. She referred to other
instances where one-time items were rolled into an
operating budget and then rolled out, which made
comparisons difficult from one year to the next. She
summarized that the administration was trying to manage all
the complexities and make sense out of them in the budgets;
ultimately the legislature would decide whether the items
were funded and where they were located in the budgets.
2:19:36 PM
Representative Costello believed that the government was
working for the public. She thought people in her district
understood that the operating budget ran the basics of
government and the capital budget was for one-time
projects. She understood the need for flexibility as
projects changed, but reminded the committee that the
public was also involved in the discussion. A constituency
might charge a legislator with reducing the growth of
government, but the capital budget was confusing to explain
in that regard.
Co-Chair Stoltze commented that it was good to start with
the premise that the two budgets were for the two purposes,
but there were unavoidable circumstances that brought the
capital and operating budgets into each other.
Representative Wilson agreed that the capital budget should
be for one-time, infrastructure projects. She pointed to
budget items in the capital budget for computer and
telephone upgrades. She was reminded of the process of
determining what was a deduction or not when filing for
taxes with the Internal Revenue Service (IRS). She likened
upgrading lighting in a house to maintenance projects,
compared to residing the house would be a major, one-time
project, comparable to a capital-budget item. She thought
capital projects were also related to creating jobs. She
asked whether capital items were considered from the basis
of whether job opportunities would be provided. Ms. Rehfeld
responded that "in the perfect world," an operating budget
would have sufficient funding to take care of year-to-year
maintenance and sufficient funding to pay for unpredictable
items like litigation costs. She believed that
collectively, government had worked hard to minimize growth
in the state agency operating budgets, which had ended up
limiting the ability of agencies to address year-to-year
needs without capital requests. She stated that there was
no "cushion" left in agency budgets to deal with more
expensive or unpredictable needs.
2:23:46 PM
Representative Wilson asked whether communities were asked
about their ability to keep building upgrades through local
budgets for clearly capital items such as schools. Ms.
Rehfeld responded that the state had an annual school-
funding formula to provide resources to school districts
for school projects, and school districts had to put on-
going maintenance and operating costs into their annual
budgets.
Representative Wilson thought there was a lot of "building
new" in the state, which created a lot of major maintenance
issues. She thought there should be a major maintenance
plan when a new facility was built. She did not think there
was such a plan, or there would not be such a need for
upgrades. She thought something was missing, especially as
state revenue was decreasing. She thought communities
should contribute to sustain expense. Ms. Rehfeld noted
that schools have to demonstrate that a preventative
maintenance plan was in place before they were even
eligible to apply for grants through the school
construction or major maintenance fund. Some of the grants
in the budgets were large and exceeded the ability of
districts to take care of the on-going expenses in their
annual budgets. She pointed to the backlog of deferred
maintenance in state facilities, and agreed that on-going
preventative maintenance programs were critical.
Representative Wilson noted that she was talking about more
than schools, but about parks and programs throughout the
state.
Co-Chair Stoltze pointed out that deferred maintenance by
definition was setting something aside; waiting long enough
would make the issue bad enough to become a capital
project. He opined that evasive behavior was being
rewarded.
2:27:24 PM
Representative Gara thought the Interior would benefit most
from the Susitna hydro project because the price of
electricity was very high in the region. He wondered
whether analysis had been made to determine that the cost
of the project would result in lower power costs, as
compared to spending less on another project. Ms. Rehfeld
responded that AEA had reviewed the issue using previous
funding. She thought AEA could provide specific analysis.
Representative Gara believed electricity produced through
diesel was expensive in Fairbanks. While the Susitna
project would reduce rates in the northern Railbelt, it
would not necessarily reduce rates in the lower part of the
region.
Co-Chair Stoltze commented that no community had regretted
getting on hydro, because it resulted in long-term
stability.
Ms. Rehfeld continued with the sectional analysis.
· Section 10 (page 46): Grant to Life Alaska Donor
Services for the Anatomical Gift Public Awareness and
Transplantation Fund
· Section 11: Lapsed provisions for the sections of the
bill related to fund capitalizations, which do not
lapse (Sections 5, 6, and 7). Sections 8 and 9 were
capital projects. Named recipient grants also do not
lapse, unless a capital appropriation was otherwise
stated.
· Section 12: Effective date of the bill: July 1, 2011
2:30:39 PM
Representative Edgmon wondered whether there would be an
energy hearing in the finance committee. He stated that he
wanted one.
Co-Chair Stoltze responded that an energy hearing would be
set up for the committee.
JAMES ARMSTRONG, STAFF, REPRESENTATIVE BILL STOLTZE,
presented some Capital Projects Submission and Information
System (CAPSIS) data. He noted that the committee's
submission deadline had expired February 11, 2011. He
provided data compared with numbers from past years to
provide perspective: Two years prior, there were 1,117
project requests; one year ago, there were 1,439; this year
there were 1,576.
Co-Chair Stoltze reported that CAPSIS had improved the
recording of capital project requests. Everything was
digital and online and the system removed the necessity for
the cumbersome binders. He noted that communities, non-
profits, and legislators could call the Senate or House
Finance Committee Co-Chair's offices (Senator Stedman or
Representative Stoltze) to get a password to submit the
requests.
Co-Chair Thomas queried the total amount of the capital
requests. Mr. Armstrong responded that the governor's
request for FY 12 was $1.68 billion. In FY 11 the 1,439
requests equated to over $2.5 billion.
Mr. Armstrong explained that all offices could view
statewide requests on CAPSIS as well as projects in
specific districts. The deadline for the members to present
capital budget priorities would be Monday, February 28 at 5
p.m. He noted that there would be a technical training
session for staff.
Representative Joule commented that he was grateful that
earmarks were still alive and well, as they were sometimes
more representative of the needs of the districts.
| Document Name | Date/Time | Subjects |
|---|