Legislature(1995 - 1996)
02/06/1995 01:35 PM House FIN
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* first hearing in first committee of referral
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HB 137 An Act making supplemental appropriations for operating expenses of state government for fiscal year 1995; and providing for an effective date. 1 HB 137 was HELD in Committee for further discussion. HOUSE BILL 137 "An Act making supplemental appropriations for operating expenses of state government for fiscal year 1995; and providing for an effective date." ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET (OMB), OFFICE OF THE GOVERNOR, discussed the current Administration's intent to have the full budget funded at the beginning of the fiscal year. Although, she added, that this year the five supplemental departmental requests would not be unfamiliar to the Committee. 1. The Department of Corrections is under court order to correct problems in the prisons. 2. The mental health land settlement which was accepted by Judge Greene in December, 1994, requires that the Administration establish the Mental Health Trust Authority immediately. 3. Response to last summer's Koyukuk River flood requires expenditures in excess of the amounts in the disaster relief fund. 4. She concluded that there would be serious consequences to leaving trooper positions vacant, as necessitated by the funding level approved last spring. 5. Finally, Ms. McConnell said the Legislature funded oil and gas litigation for only half of last year. Additional information relating to these requests are available to the Legislature from the Office of Management and Budget. Ms. McConnell urged the Committee to consider and pass the proposed supplementals. DEPARTMENT OF LAW NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, explained that the Department of Law's FY95 supplemental request for oil and gas litigation was originally $20.8 million dollars. Due to the BP and ARCO tax settlements, that amount should be reduced to $18.0 million dollars which will create a savings of $2.8 million dollars. Representative Martin questioned any increase request at a 2 time when most cases are being settled. TINA KOBAYASHI, ASSISTANT ATTORNEY GENERAL, GENERAL CIVIL SECTION, DEPARTMENT OF LAW, stated there are currently three major cases moving toward litigation at which time the Department is in a trial preparation stage for. One of these cases involves royalty matters scheduled for trial in Spring 1995. The remaining cases are tax matters scheduled for formal administrative proceedings. These cases are complex, involving substantial amounts of time and expense in order to prepare. Other on-going disputes include title challenges involving resource-rich lands that have high potential value to the State, the validity of a federal ban on the export of Alaska North Slope (ANS) crude oil, violations of the statehood contract affecting the recovery of oil and gas revenues from withdrawn federal lands, close monitoring of compliance with the TAPS settlement, and whether certain operating costs should be included in pipeline tariffs. Representative Martin asked if there had been an increase in the Department of Law's employees. Ms. Kobayashi stated that an increase in personnel had resulted from a TAPS settlement case. Representative Brown pointed out that most oil royalties have been settled, whereas, gas royalties are still pending. Representative Mulder asked the amount of money currently at risk in the court proceedings. Ms. Kobayashi offered to provide that information to the Committee at a later date. Co-Chair Hanley commented that ten to twelve new attorneys had been hired at the end of last year's session; he asked for further information regarding the savings resulting from that hire. Ms. Kobayashi responded that the $2.8 million dollar revenue was the savings which resulted from settling the BP case. Ms. Slagle added, the additional positions had been a cost cutting measure as a long term savings rather than short term savings. DEPARTMENT OF REVENUE Ms. Slagle noted that the Department of Revenue request would be reduced by $100 thousand dollars. She explained that there had been an amount included in the request for a RSA to the Department of Natural Resources (DNR), although there were adequate funds in that budget to cover those expenses. The Department of Revenue has requested a "fast track" supplemental for FY95 Alaska Mental Health Trust Authority start-up costs. In meetings with Deborah Smith, the Executive Director of the Alaska Mental Health Board, the 3 Administration has developed an operating budget for FY95 in the amount of $611.1 thousand dollars. That amount would be funded from the Mental Health Trust Settlement income account (1092). Representative Martin suggested that the Alaska Mental Health Trust Authority Board members should be the ones to determine the amount of needed funds. BOB BARATKO, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF REVENUE, stated that advance funds are necessary in order to furnish the equipment and reserve a space. He added, the Alaska Mental Health Trust Authority was established on December 16, 1994 and from that settlement, the Authority was then established within the Department of Revenue. Without supplemental funds, the functions and responsibilities of that Board would be delayed. Representative Martin voiced a complaint regarding the requested funds. Mr. Baratko advised that start up costs would amount to $611.1 thousand dollars. Ms. Slagle pointed out that the fiscal note for Chapter 66 had been prepared by the Senate Finance Committee. The request includes funding to contract with the Permanent Fund Corporation to manage the monetary portion of that fund which was not included in the fiscal note. Mr. Baratko responded to Representative Brown's question regarding the eleven people to be hired, three positions in Anchorage and eight positions in Juneau by April 1, 1995. Representative Brown commented that the Authority should begin office staffing with surplus furniture and equipment. Discussion followed among Committee members regarding the office space, equipment ordered and the need to man two offices located in Juneau and Anchorage. Co-Chair Hanley advised of the fiscal dilemma in that currently no Trust Authority has yet been established. In the future, the Trust Authority will provide their funding for their budgetary needs. Although, if the original funds provided by the Legislature are not spent, they would lapse back into the Alaska Mental Health Trust. Representative Navarre questioned how the number of representatives of the Board had been established. Mr. Baratko replied that eleven member seats was designated by the Alaska Mental Health Trust Board as the number projected to be needed in order to implement the purpose of the Trust Authority. He clarified that four positions had been established in statute; there would also be clerical 4 support. Discussion followed among Committee members regarding the number of people that should be considered to determine the real costs in establishing the Trust Authority. Ms. Slagle pointed out that the purpose or responsibility of the Mental Health Board would not change with the addition of the Alaska Mental Health Trust Authority. (Tape Change, HFC 16-2, Side 2). Ms. McConnell emphasized that a decision had been reached in the Weiss vs. State case. Therefore, the Department was unable to prepare a FY95 budget in the normal process. It is the intent of the Department of Revenue to begin operations of the Authority as soon as possible, thus necessitating the "fast track" supplemental request. She suggested that the request be broken into the "fast track" needs and add the remainder be allocated in the regular supplemental request. ALASKA COURT SYSTEM ARTHUR SNOWDEN, II,(TESTIFIED VIA TELECONFERENCE), ADMINISTRATIVE DIRECTOR, ALASKA JUDICIAL COUNCIL, noted that the court system would be requesting supplemental appropriations for two budgetary shortfalls. One request relates to the upcoming trial for the Arctic North Slope Royalty case. The litigation involves a dispute over natural gas royalties. In 1992, certain oil royalty disputes were resolved. The trial was scheduled to start April, 1995 and finish in September, 1995. This request is limited to costs for FY95. Mr. Snowden added, the other appropriation request would be for funding retroactive pay increases for certain magistrates. During an annual review of the magistrate classifications, the courts discovered that some magistrates had not been given pay increases as required by the Supreme Court Order. He added that the extraordinary costs associated with the Arctic North Slope Royalty case are requested and that amount would permit hiring clerical and legal support staff and paying other trial costs. DEPARTMENT OF MILITARY AND VETERANS AFFAIRS JEFF MORRISON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS (DMVA), stated that the Department would need an FY95 supplemental appropriation for the Disaster Relief Fund. 5 The need for the supplemental appropriation has resulted from the 1994 Fall flood disaster based on the Koyukuk River. This disaster will require more additional money than amounts that had been previously allocated. Mr. Morrison provided the Committee with a handout addressing the fiscal circumstances. [Attachment #1]. The handout differentiates between the Federal Emergency Management Agency (FEMA) estimated costs and the State estimated costs. The total estimated costs for the disaster would be $74.3 million dollars of which $55.3 million dollars would be covered through the federal program and $18.9 million dollars would be requested through the State. Mr. Morrison pointed out that to date $3.2 million dollars has been allocated from the Disaster Relief Fund, depleting that fund; $9.6 million dollars in federal funds have also been allocated. The Department has borrowed $4 million dollars from the FY91 Spring Floods Disaster fund; this needs to be repaid. The amount of money requested to date has been estimated in order to carry the Department through February, 1995. He added, the Department is pursuing additional funding from the federal government. None of these have been approved to date; the current estimate is based on the Department's best funding projection of participation to date. ERVIN PAUL MARTIN, DIRECTOR, ALASKA DIVISION OF EMERGENCY SERVICES, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS, stated that the federal government could respond from now up to a year and a half down the road. Mr. Morrison pointed out that the State has applied for 100% funding for the emergency situation and a 90%/10% for the non-emergency situation resulting from the flooding. He emphasized that it is important to recognize that the federal government possibly will not participate at all, which will result in 100% State responsibility. That could increase the total requested percentage above the previous amounts. Representative Martin asked if any of the losses had been insured. PETE WUERPEL, CHIEF OF OPERATIONS, DIVISION OF EMERGENCY SERVICES, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS, replied that the only place covered by insurance were a few school buildings; everything else was uninsured, and the only part of the school underwritten by disaster funds was 6 the portion that the school paid to cover their deductible. Co-Chair Hanley questioned how long the total spending for this flooding circumstance was anticipated to continue. Mr. Wuerpel stated that the goal was to close expenditures by August 31, 1995. Because of past disaster experience, the Department of Military and Veterans Affairs has established that date as the targeted goal. Discussion followed among Committee members and Mr. Wuerpel regarding individual community requests and responsibilities. Representative Martin questioned future planning of flooding sites. Mr. Wuerpel cautioned that the current flood could not be compared to that of spring break-up. The 1995 flood has been characterized by the experts as a flood that occurs only once every hundred years. Some village locations are being relocated on higher grounds. Allakaket is being reconfigured to alleviate future damage due to flooding. (Tape Change, HFC 95-17, Side 1). Co-Chair Hanley questioned the legal authority for supplemental requests anticipated in FY96. Mr. Morrison pointed out that the appropriation would be to the Disaster Relief Fund, not to the Department of Military and Veterans Affairs although, the Department will manage that fund. Mr. Morrison reiterated that the total cost of the disaster has been either spent or will be obligated by the end of May. Representative Kohring asked if preventative spending measures had been considered by the Department. Mr. Wuerpel advised that addressing erosion problems had not been attempted, although, there are structures which are being elevated for flood proofing. Mr. Morrison concluded that if the federal government provided for the requested funds, the Department would then ask for an adjustment in the regular supplemental legislation. DEPARTMENT OF PUBLIC SAFETY KEN BISCHOFF, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF PUBLIC SAFETY, explained that the Department of Public Safety requested an approval of a FY95 Supplemental Appropriation in the amount of $265.0 thousand dollars for the AST/Detachment Component in order to fill ten vacant State Trooper positions. Representative Parnell questioned if funds had been previously appropriated for these positions. Mr. Bischoff 7 stated that the positions had been authorized although there had been insufficient personnel services money to fill them. He added, since 1983, the Division of Alaska State Troopers has been reduced from 308 to 251 commissioned officers. During that same time period, three posts have been closed, while the population served by the troopers has increased 39%, and violent crimes have increased 127%. Mr. Bischoff emphasized the public policy issue at hand. Representative Parnell asked if the Department could live within the budget provided by the FY95 budget allocation. Mr. Bischoff stated they could without hiring the additional troopers. Discussion followed regarding the time and placement of the recruits and the training needed for basic service. REPRESENTATIVE IVAN IVAN asked how many Village Public Safety Officer (VPSO) vacancies there currently exists in the State. Mr. Bischoff replied that there are one hundred twenty-four authorized VPSO positions and that those positions would be employees of the non-profit corporations. The current budget, as submitted by Governor Hickell, authorized filling ninety-five of those positions. Representative Martin agreed with Representative Parnell that the request was not a supplemental request, and rather should be included in the FY96 budget request. Representative Brown asked about the vacancy rate for the Division of Alaska State Troopers. Mr. Bischoff advised that under the Hickel budget, the total Department personnel services underfunding would require $3.7 million dollars. The normal vacancy and attrition would be half that amount; approximately $1.8 million dollars would be adequate. The State Troopers represent 45% of the Department of Military and Veteran Affairs operating budget. The State Trooper budget totals $42 million dollars. He added, usually $1 million dollars is allowed for vacancy rate and attrition. Mr. Bischoff pointed out that if the Hickel budget goes forward without adjustment, there will be twenty-nine commissioned vacancies by the end of FY96. There are currently thirteen commissioned vacancies within the Alaska State Troopers. Co-Chair Hanley understood that more positions had been authorized in last years budget. He emphasized that the request was a policy call, not a supplemental request. Ms. Slagle concurred that the request was not an appropriate supplemental request. Governor Knowles has stated that there is a need for additional State Troopers on the streets. The supplemental provides a way to implement that 8 concern. The process to get the Troopers on the road will take a while and this request begins that process. Co-Chair Hanley interjected that an equal reduction must be made to the budget for the requested increase. Representative Parnell expressed support of placing new troopers on the streets although agreed that the supplemental was not the place for that request. DEPARTMENT OF CORRECTIONS MARGARET PUGH, COMMISSIONER, DEPARTMENT OF CORRECTIONS, stated that the supplemental funds would provide the resources necessary for short-term stabilization of the Alaska Correctional System and would provide resources that will keep the system out of contempt of court action relating to the Cleary Final Settlement Agreement. The FY95 Supplemental Request totals $13.4 million dollars, and an additional $2.5 million dollars. Receipt is imminent and will be recorded to the unrestricted general fund, which opens up the possibility of an add/delete supplemental request for the FY95 operating budget, or a request to the Legislative Budget and Audit Committee for approval to receive and expend the funds as a capital authorization. Representative Martin questioned the request to move the Commissioner's Office from Anchorage to Juneau. He thought that should occur in the FY96 proposed budget. Ms. Pugh responded that only four positions of the office have moved to Juneau. She reminded the Committee that there are eight professional positions which travel from the Commissioner's Office and the request would cover those costs. Representative Brown remarked that last years budget funded $43 thousand dollars for travel. That allocation was down from $125 thousand dollars allocated the prior year. Commissioner Pugh continued, the court appointed monitor payment is due by May. This appointment was listed in Section III(L) and VI(A) of the Cleary Final Settlement Agreement. The $67.0 dollars amount of compensation, which the court stated was to be paid by the Department of Corrections, was determined reasonable by the court through an analysis of the court appointed monitor's proposal of $88.4 thousand dollars and the State's counter offer of $58.7 thousand dollars. The FY95 operating budget for the Agency does not contain sufficient funds to cover those costs. The component of Court Fines increment resulted when the Superior Court found the State in contempt for exceeding court ordered prison capacities. The court ordered the State to pay $1,000 dollars per day for every day the system 9 was over capacity, and $500 dollars for every day each individual facility was over capacity. The final settlement agreement reflects a ten day period in which a facility could be over emergency capacity before a fine is imposed. Commissioner Pugh added that the State Parole Board would need $9.8 thousand dollars in order maintain an acceptable service level in non-safety areas and to function until the end of the year. She emphasized, this is a core state function. The Department must provide existing facilities with sufficient safety and security staff to handle increased prisoner populations. Operating facilities in an overcrowded condition is raising the incidents of problems in the institutions. In order to maintain a safe, orderly operation of institutions, all available security staff positions had to be filled. The existing Correction Academy budget only contains minimal funds to train the existing staff. Recruit, salaries, travel, and per diem costs associated with attending the six week academy are not included in the operating budget authorization. The requested supplemental funding is needed to pay for the fifty-one academy recruits held in the first half of FY95, which was needed to fill critical security vacancies throughout the correctional system and an additional twenty academy recruits being planned for April 1995 (FY96). Representative Brown asked the source of costs that drove the supplemental request. Commissioner Pugh stated that the cost of the academy is the cost of a recruit, paid at a range 9 during recruit status. (Tape Change, HFC 95-17, Side 2). Representative Mulder recommended the recruits pay for their own training. Commissioner Pugh reiterated that the academy has recognized savings by co-training with the Anchorage Police Training Academy. She offered to pursue options in regard to training. Commissioner Pugh stated that the Department of Law represents the Department of Corrections on all pending legal actions related to personnel. Specific information on those cases would be privileged and pertains to strategies and details of the case. The amount requested would be a minimum estimate for the cost of resolution of two cases which are close to conclusion. The request amount would be $555.0 thousand dollars and would be necessary to maintain acceptable service level in non-safety areas. Commissioner Pugh requested $99.0 thousand dollars for the 10 Correctional Industries-Administration Associated with Spring Creek ($49.5) and Wildwood C.C.($45.5) necessary to maintain acceptable service level in non-safety areas. Due to up-scaling of the Department's prisoner population at the Spring Creek and Wildwood Correctional Centers, the Alaska Correctional Industries was directed to increase the number of job opportunities and the availability of vocational instructions at the facilities. Co-Chair Hanley questioned the requested additional funds. He asked if the State was in violation with the Cleary decision and if it would face court sanctions without that appropriation. Commissioner Pugh stated that the $194.3 thousand dollars would address the general underfunding throughout the system to maintain acceptable service level in non-safety areas. She advised that the State would not specifically be in violation of Cleary, but would managerially for delivery of services and would then have to default on contracts previously entered into. HB 137 was HELD in Committee for further consideration.
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