01/31/1994 09:10 AM Senate FIN

                                                                               
  SB 243 FOUR DAM POOL TRANSFER FUND                                           
                                                                               
  Co-chair Frank  directed  that  SB  243 be  brought  on  for                 
  discussion.                                                                  
  MIKE GREANY,  Director, Legislative  Finance Division,  came                 
  before committee.   He explained  that SB 243,  sponsored by                 
  the  Legislative   Budget  and  Audit   Committee,  contains                 
  specific, remedial legislation to respond  to a concern that                 
  arose  in  November.     One  of  the  elements  of   energy                 
  legislation passed last year abolished the power development                 
  revolving loan fund and  moved the money to a  newly created                 
  four-dam-pool transfer fund.  The intent was that money from                 
  the transfer fund would flow to three receiving funds:                       
                                                                               
       1.   Power cost equalization                                            
       2.   Southeast energy fund                                              
       3.   Statewide power projects                                           
                                                                               
  Additional  legislation  contained  a capital  appropriation                 
  from the Southeast energy fund for a specific intertie.  The                 
  substantive  legislation  spoke to  flow  of money  from the                 
  four-dam-pool  transfer fund  to the three  receiving funds,                 
  "subject   to   appropriation."      No  appropriation   was                 
  subsequently made to  get the moneys to  the three receiving                 
  funds.    Legislative  Budget  and  Audit   then  introduced                 
  legislation that deleted "subject to appropriation" language                 
  so  that  the  money  would  automatically  flow  through  a                 
  transfer process from the four-dam-pool transfer fund to the                 
  receiving funds.                                                             
                                                                               
  Mr. Greany next spoke to the funding of administrative costs                 
  from transfer fund  moneys.  He  explained that moneys  from                 
  the former power  development revolving  loan fund paid  for                 
  certain  administrative   costs  in  the   past.     Current                 
  legislation does not provide for that.  If  the desire is to                 
  fund a  portion of the  administrative costs from  the four-                 
  dam-pool  transfer  fund  or  the   three  receiving  funds,                 
  legislation so specifying would be needed.  Mr. Greany noted                 
  an open  question,  concerning the  legislature's  power  of                 
  appropriation,  absent specific  statutory  authority.   The                 
  clearest approach  would be through  statute designating how                 
  administrative costs will be addressed.                                      
                                                                               
  RANDY WELKER, Legislative  Auditor, added that SB  243 would                 
  not preclude  the legislature  from appropriating  operating                 
  costs  from  the  subject  funds.   Senator  Sharp  directed                 
  attention to page 1, line 4, of the bill and  noted language                 
  allowing for appropriation of administrative costs prior  to                 
  effecting the 40/40/20  transfer.  Mr. Welker  concurred and                 
                                                                               
                                                                               
  added  that  there  is  nothing   that  would  preclude  the                 
  legislature  from   making  appropriations  "out   of  those                 
  receiving funds either."                                                     
                                                                               
  Co-chair  Frank voiced  a preference  for specific  language                 
  clarifying that administrative  costs are  to flow from  the                 
  transfer or receiving  funds rather than leaving  that issue                 
  to the budget process.  He then requested that staff work on                 
  a proposed  amendment to  the bill to  accomplish that  end.                 
  Bruce Geraghty said the department views SB 243 as technical                 
  in nature.   He cautioned against narrowing  the approach to                 
  funding energy operations.                                                   
                                                                               
  Co-chair Frank asked how the department would respond should                 
  the  legislature  disallow  general  fund  increases.    Mr.                 
  Geraghty noted that  the Alaska Energy Authority  budget for                 
  FY 94 totaled $8.4 million.   That has been reduced to $3.9.                 
  The division is  making an effort to return  several million                 
  dollars to the  general fund.   He next spoke to  continuing                 
  transfer of moneys and functions  from the Dept. of Commerce                 
  and Economic Development to Dept.  of Community and Regional                 
  Affairs.                                                                     
                                                                               
  Mr. Greany explained that the legislature has the ability to                 
  appropriate at any of the steps along  the way.  It would be                 
  clearer  to   specify  at   which  point   in  the   process                 
  administrative costs should be addressed:                                    
                                                                               
       1.   Before distribution to receiving funds.                            
       2.   As part of the receiving funds on a prorated                       
            percentage.                                                        
                                                                               
  Co-chair  Frank  advised  that the  issue  would  be further                 
  considered and brought back for discussion  at a later time.                 
  He then directed that SB 243 be HELD in committee.