Legislature(2007 - 2008)HOUSE FINANCE 519
02/21/2008 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB310 || HB312 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 310 | TELECONFERENCED | |
| *+ | HB 311 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 312 | TELECONFERENCED | |
| += | HB 273 | TELECONFERENCED | |
| += | HJR 28 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
February 21, 2008
1:41 P.M.
CALL TO ORDER
Co-Chair Chenault called the House Finance Committee meeting
to order at 1:41:36 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Harry Crawford
Representative Les Gara
Representative Mike Hawker
Representative Reggie Joule
Representative Mike Kelly
Representative Mary Nelson
Representative Bill Thomas Jr.
MEMBERS ABSENT
Representative John Harris
ALSO PRESENT
Representative Ralph Samuels; Representative Sharon Cissna;
Representative Peggy Wilson; Representative Scott Kawasaki;
Representative Bob Buch; Sharon Kelly, Staff, Representative
Mike Chenault.
PRESENT VIA TELECONFERENCE
There were no teleconference participants.
SUMMARY
HB 310 An Act making appropriations for the operating and
loan program expenses of state government, for
certain programs, and to capitalize funds; making
supplemental appropriations; and making
appropriations under art. IX, sec. 17(c),
Constitution of the State of Alaska; and providing
for an effective date.
HB 310 was HEARD and HELD in Committee for further
consideration.
HB 312 An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing
for an effective date.
HB 312 was HEARD and HELD in Committee for further
consideration.
1:42:14 PM
HOUSE BILL NO. 310
An Act making appropriations for the operating and loan
program expenses of state government, for certain
programs, and to capitalize funds; making supplemental
appropriations; and making appropriations under art.
IX, sec. 17(c), Constitution of the State of Alaska;
and providing for an effective date.
HOUSE BILL NO. 312
An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date.
Co-Chair Meyer MOVED to ADOPT work draft 25-GH12015\M,
Bailey, 2/20/08, as the version of HB 310 before the
Committee. There being NO OBJECTIONS, it was so ordered.
Co-Chair Meyer MOVED to ADOPT work draft 25-GH12008\C,
Bailey, 2/20/08, as the version of HB 312 before the
Committee. There being NO OBJECTIONS, it was so ordered.
1:43:34 PM
Co-Chair Chenault noted that copies of the bills and agency
summaries were available online for review. There will be
public testimony taken on the bills on Friday, Saturday and
Monday (2/22, 2/23 & 2/25).
Co-Chair Chenault discussed the amendment process and
observed that the proposed committee substitute contains
$4.291 billion General Fund dollars. The Governor's amended
bill totaled $4.392 billion dollars, equaling a savings of
$101.45 million dollars between the two proposals.
He pointed out that two joint finance committee meetings had
been held discussing the differences between the Governor's
and Legislative Finance Division (LFD) fiscal summary.
Following discussions, the four Finance Co-Chairs brought
forward a letter to the Governor, requesting that budget
amendments be submitted to help reach a common starting
point for the FY09 budget comparisons. No amendments were
received nor was contact made by the Administration to
discuss the items.
Co-Chair Chenault advised that the Chair's office instructed
the Legislative Finance Division (LFD) to include a column
labeled GAMDADJ (Governor's Amend Adjustment) column. He
noted that Ms. Kelly would review the changes added to that
column.
1:46:18 PM
Co-Chair Chenault continued subcommittee's chairs were given
the following instructions:
· Start with the adjusted base.
· Review impact statements requested from the departments
relating to funding change requests.
· No new programs added and will be addressed at full
finance meeting.
· Did not accept any fuel adjustments, which will be
addressed in the Language section.
· Review language pertaining to each department and make
any appropriate recommendations to the Co-Chairs.
· Review personnel services & do not add any new
positions if vacancies exist; review the administrative
positions to determine if overhead can be cut.
· Review Travel costs.
· Look at how department funds computers because some
departments receive a base allocation for replacement;
some do not.
· Review Mental Health Trust Authority (MHTAAR) requests.
He pointed out that the MHTAAR fund continues to grow.
They then turn those programs over to the State
requiring General Fund dollars. He noted that even
though the program continues to grow, State funds are
anticipated to decline, which should be discussion with
the Mental Health Trust Board, determining the base
funding they can provide and when those programs would
be turned over to the State for funding. He advised
that discussion will continue through the budget
process and during the interim.
· Assist the Governor in keeping the increases to a
minimum in an effort to control State spending.
Co-Chair Chenault noted that the subcommittees recommended
cuts totaling almost $90 million dollars; the largest was
made to the Department of Health and Social Services in the
amount of $34.8 million dollars.
He added many subcommittee chairs and members expressed
frustration in an inadequate short time to review the
budgets.
1:49:06 PM
Representative Gara asked if the changes were to the
Governor's budget or the Governor's amended budget.
SHARON KELLY, STAFF, REPRESENTATIVE MIKE CHENAULT, explained
that she would address that during her comments. She
pointed out that the original Governor's bill was submitted
on December 10, 2007. She noted there had been two House
Finance meetings to discuss the differences in the
presentation. The four Finance Co-Chairs requested that the
Governor submit amendments in the interest of reaching a
common starting point, allowing for the FY09 budget to be
comparable to the FY08 budget. Copies of that letter are
posted on the House Finance Committee website. None of the
requested amendments were received; consequently, a new
column on the handout labeled GAMDADJ was added. (Copy on
File).
1:50:24 PM
The letter to the Governor requested that four items be
addressed:
· Consistent use of funding sources: Corporate dividends
including Alaska Industrial Development and Export
Authority (AIDEA), Alaska Housing Finance Corporation
(AHFC), Alaska Student Loan Corporation (ASLC) & the
Alaska Capital Income Fund (ACIF); all of which are
traditionally reserved for capital projects were
replaced with General Funds. These transactions total
$49.3 million dollars, and were incorporated into the
GAMDADJ as net zero. The dividends were removed and
replaced with General Funds.
· Consistent treatment of capital & operating items:
Five items considered capital items were removed from
the work draft totaling $114.9 million dollars.
Thirteen items considered operating items but listed in
the capital budget were not included. In discussions
with the Office of Management and Budget (OMB), four
remained in the capital budget, subject to committee
approval and the other nine items were removed from
capital budget.
· Consistent linkage between the year of the
appropriation and the year of the expenditure: Four
items proposed by the Governor were supplemental budget
items and were removed from the bill, which includes
the $1.75 billions dollars to the Public Education
Fund, the $450 million dollars to the Teachers
Retirement System Fund (TRS), $5 million dollars to the
Information Service Fund and $223.7 million dollars to
the Constitutional Budget Reserve (CBR).
1:51:58 PM
· Full exposure of expenditures: The Co-Chairs requested
the Governor to fund the Public Education Fund in the
manner the Legislature was seeking & prefunding one
year of education in the budget. To fund FY2010
education, requires an additional appropriation of $4.1
million dollars added to the draft. Increases due to
the Education Task Force legislation will be added
through the fiscal note process.
· Requested an amendment funding TRS at the full
contribution level: A transaction adding $43.9 million
dollars has been added to the draft. The only changes
between the Governor's amended proposal are the net
zero replacement of corporate dividends in the Capital
Income Fund with General Fund dollars.
1:52:50 PM
Ms. Kelly reminded members that the subcommittees began work
at the beginning of session. Due to numerous fund change
requests from other funds to General Funds, the departments
were requested to provide impact statements to assist the
subcommittees in that work. The information is posted on
Legislative Finance Division (LFD) web page.
th
She noted that on February 13, the Governor submitted 189
budget transactions for the operating budget. Some were
considered by the subcommittees. All subcommittees closed
th
out by February 19. Amendments not included in the work
draft will be added during the amendment process or in the
Senate process at the time of the Conference Committee.
1:54:56 PM
Ms. Kelly commented that the language changes came to the
bill including recommendations from the subcommittees and
changes made by the Co-Chairs. She noted the attached
spreadsheet, which outlines the changes made: "Summary of
Language Sections in the Operating Budget (HB 310)". (Copy
on File.) She provided an overview of the changes indicated
in the handout:
· Governor's bill sections
· Committee substitute sections
· Topics
· Actions
2:03:21 PM
Ms. Kelly recapped what had been included in the work draft.
It was modified from the original amended Governor's bill by
the proposed amended adjust net zero transactions including
the subcommittee and Co-Chair changes to the language
section.
She pointed out that HB 312, the Mental Health bill, was
generated from transactions in the operating bill (HB 310).
Some changes were automatically generated to coincide with
what happened in the operating bill. In addition, one
change was made to HB 312 in the customary fashion with one
capital item removed. All items will become subject to
conference considerations. The item removed was located in
Section 3 under (HESS), the mental health essential program
equipment for $250 thousand dollars.
Ms. Kelly stated that LFD would up-date their website
reports as relating to the committee substitute. She
indicated that there were over 4,000 transaction included in
the bill and offered to answer questions from the Committee.
2:04:31 PM
Representative Crawford requested further information on the
following changes:
· Section 12(e), which removed a $450 million dollar
supplemental appropriation to the Teachers Retirement
System (TRS).
· Section 18, the Governor's fuel trigger, which extended
the table to $99 dollars or more, while modifying the
payout schedule and revised allocations for certain
agencies.
· Section 26, a change for Kodiak.
· Section 27, removal of the Constitutional Budget
Reserve (CBR) deposit.
Ms. Kelly referenced Section 12(e), noting it was a
supplemental request and should not be in the operating
budget. With regard to Section 18, the fuel trigger last
year, was increased to $59 dollars, which was not enough for
the departments with the price of oil moving closer to $100
dollars a barrel; hence, the price was moved closer to the
$99 dollar scale.
Representative Crawford asked what the fuel trigger was.
Ms. Kelly explained that a couple years ago in the budget
process and given the price of fuel as high as it was,
instead of having the departments adding it into the base,
as it increased and perhaps declined, it would not be
removed from the base. The departments were requested to
keep their FY04 level. With the addition of a trigger,
provides an appropriation delegated to the Governor's
office, to be spread between the departments. The main
purpose was that it not be added to the base.
Ms. Kelly addressed the question regarding Section 26 on
Kodiak. She noted that the request had not been enough to
issue a Capital Improvement Project (CIP). The Co-Chair
determined that rather than issuing dollars, it would be
more preferable to offer it as a grant for purposes of an
addition to the community jail.
2:07:28 PM
Representative Hawker corrected Ms. Kelly; the acronym is
Certificate of Participation (COP) not CIP.
2:08:22 PM
Ms. Kelly added that Section Q indirectly appropriates $2
million dollars to the Kodiak jail. The appropriation is
intended to substitute for the $2 million dollars that
Kodiak would have received from the proceeds of the COP.
In response to Representative Crawford's query on Section
27, the CBR, which is addressed by two items. The first
removed dollars from FY08 & removed it from the bill because
it was not in the supplemental. The second item was removed
as those funds will automatically be directed to the CBR.
2:09:16 PM
Representative Joule referred to the Governor's Section 23®,
regarding the removal of the bulk loan fund. Ms. Kelly
explained that it was removed and was placed into the bulk
Revolving Loan Fund. It was determined that since it was a
revolving loan fund, the payments should fill the fund
without continuing appropriations. She stated that they had
not received any information for additional requests.
2:10:21 PM
Representative Gara asked for more information on Section
29, the CBR and the difference between what the Governor
proposed in relationship to what the committee substitute
proposes. He noted the two items, one a supplemental and
one a sweep. Ms. Kelly explained that there had been a FY08
supplemental appropriation, which would sweep funds into the
CBR. That was removed; the funds will automatically sweep
for FY09 unless there is language in the bill that sweeps it
to another account. Problem could occur if a dollar amount
is included if it is an incorrect number. The preference is
for an automatic sweep to the CBR.
Representative Gara understood that the Governor proposed a
CBR deposit for savings. He asked what had happened to that
request. Ms. Kelly responded that was not part of the bill;
that money will go to the CBR savings.
She added that the proposed amount from the Governor was
$155.3 million dollars FY 09; the sum for FY08 is $223.7
million dollars.
2:13:21 PM
Representative Gara concluded that the Governor had proposed
in total roughly $378 million dollars be moved to the CBR;
he noted that those deposits had not been included in the
committee substitute. Ms. Kelly stated that the deposit
that relates to the FY09 budget is in the bill because it
will automatically go into the CBR not including language
having the money swept to another account.
Representative Gara indicated that $155.3 million dollars
had not been taken out. Ms. Kelly responded it had been.
She added that the FY08 amount would also sweep into the
CBR. It is the same for FY08, with excess money going into
the CBR. As long as there is not language in the operating
bill that has it swept somewhere else. Co-Chair Chenault
interjected that any funds that are unencumbered for a
specific issue, if it is unencumbered, it sweeps
automatically to the CBR.
Representative Gara expressed concern whether those dollars
would actually go into the CBR. Co-Chair Chenault advised
that in the proposed bill, there is no language to sweep any
money into any other fund; all unencumbered money will be
swept into the CBR.
2:16:20 PM
Co-Chair Chenault added that if the price of oil drops,
there might not be the amount of funds to put into the CBR.
Money could be placed into that fund ahead of time, which
would require a three-quarter vote to take a draw from that
account.
2:16:56 PM
Representative Gara referred to Sections 4 & 5 and asked how
much of the Alaska Housing Finance Corporation (AHFC) funds
were removed from the operating budget for placement in the
capital budget. Ms. Kelly stated that $49.3 million dollars
was transferred. Co-Chair Chenault pointed out that those
funds are traditionally used in the capital budget.
Representative Gara asked if removing those funds, dollars
from the Alaska Student Loan and the Alaska Industrial
Development and Export Authority (AIDEA) dollars, would not
unfund previous proposals made by the Governor. Ms. Kelly
stated that the Governor's amended adjust only changes the
funds from the dividend funding source to General Funds.
2:19:02 PM
Representative Gara asked about the other two dividends from
AIDEA and ASLC. Ms. Kelly advised that:
· AHFC amounted to $11.8 million dollars
· AIDEA amounted to $23.8 million dollars
· ASLC amounted to $2.755 million dollars
· Alaska Capital Income Fund consisted of two increments
of $9.6 million dollars & $845 thousand dollars
In response to Representative Gara, Ms. Kelly noted that the
Alaska Capital Income funding source was initially included
in the operating bill, which funded the Department of Law
gas-line work for $9.6 million dollars. That was changed to
the General Fund in the Governor's amended adjust and then
was changed in the committee substitute from a multiple year
transaction to $5 million dollars, a one time item.
Representative Gara did not agree with that proposed logic.
2:20:56 PM
Representative Gara questioned Section 22 and the removal of
the Ocean Ranger Program. Ms. Kelly explained that section
identifies certain items which need to be addressed by the
Legislative Budget and Audit (LBA) Committee for additional
appropriations. Rather than having the program go to LBA,
because their funding source is not General Funds, the
appropriation was moved above their anticipated needs.
Representative Gara questioned if the proposed level of
funding would exist for the program as indicated by the
Governor and be just a different funding source. Ms. Kelly
replied that the appropriation had been increased. She
offered to research & provide those numbers to the
Committee. Co-Chair Chenault added that it would not be a
fund source change, while allowing the program access to the
receipts without going through LBA.
2:22:19 PM
Representative Gara referenced Section 11, pointing out that
the Governor had proposed forward funding schools an
additional year; the work draft removed that funding. Ms.
Kelly explained that Section 12(a) had a capitalization of
the Public Employees Federation (PEF) fund from FY08 for
$1.75 billion dollars, which was removed. Section 12(b)
includes the $1 billion dollars for the PEF. Section 21(t)
funds the PEF funded.
2:23:04 PM
Representative Gara asked about the funding for the School
Incentive Program. Ms. Kelly clarified that in the
Governor's bill, the component had been left open-ended; the
Department of Education and Early Development stated that
the $4.8 million dollars would fund what was necessary for
performance bonuses for next year. Representative Gara
argued that was not the number that the Department had
provided to him.
2:23:59 PM
Representative Gara pointed out that the Co-Chair had
removed the Governor's recommended appropriation for the
Head Start program. Ms. Kelly advised that item had been
removed during the subcommittee process.
Representative Gara asked if the items deleted during the
subcommittee process were not been included in proposed bill
draft. Ms. Kelly clarified that the handout only addresses
the language section of the bill. The subcommittee
determinations were posted on the on-line website with
accompanying narratives.
Representative Gara requested an information comparison to
what has been proposed by the Governor versus what the
committee substitute proposes.
2:25:22 PM
Ms. Kelly referenced the agency summaries, which provide the
General Fund Governor's adjust proposal and the House
subcommittee proposed. The total amount equals $101 million
dollars, and indicates all the transactions taken out from
the Governor's proposed. Representative Gara argued that
the graph does not indicate which items have been removed,
only the total agency budgets. Ms. Kelly understood that
the LFD could provide that information requested.
2:27:01 PM
Representative Gara pointed out that funding for the
behavioral health grants over the past number of years had
declined and that the Governor had proposed to return
dollars to those grants in the FY09 budget. He did not see
that inclusion. Representative Hawker clarified that had
been fully addressed during the closeout report from that
subcommittee. Representative Gara requested further
clarification. Co-Chair Chenault offered to provide that
information.
2:28:18 PM
Representative Crawford asked about concerns related to the
CBR and the approximate estimation of unencumbered funds
remaining for FY 08 & FY 09. Ms. Kelly would not know about
FY 08 until the new tax was in place; FY 09 numbers amounted
to the direct appropriation; however that number was
overstated because the Department of Corrections had not
included funding they needed for leap year. The
appropriation needs to be increased by $100 million dollars
and then reduced by $15.0 thousand dollars. She
acknowledged that it is difficult to project with such
volatile oil prices.
Representative Crawford inquired if there were a "place
holder". Ms. Kelly stated that the best information
available is that the Governor had $155.3 million dollars;
the committee substitute decreased the bill by $100 million
dollars for a total of $255 million surplus. Representative
Hawker pointed out that estimate was based on a price of oil
@ $66.32 per barrel. He maintained that there is a
"cushion" in the budget.
2:32:12 PM
Representative Gara requested further identification from
the work submitted by the subcommittees on behavioral health
grant concerns and how it would differ from that proposed by
the Governor. He acknowledged the difficulty in attempting
to understand the complexity of the budget. He emphasized
that the subcommittee reports should be available.
Representative Gara emphasized that he wanted that
information on the record. Co-Chair Chenault reiterated
that the information is available on the website.
Co-Chair Chenault related concerns resulting from the
pressure of the narrowed time allocation and the 90-day
session process.
HB 310 and HB 312 were HELD in Committee for further
consideration.
2:38:01 PM
The meeting was RECESSED to Friday, February 22, 2008.
| Document Name | Date/Time | Subjects |
|---|