Legislature(2007 - 2008)HOUSE FINANCE 519
03/11/2008 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB54 | |
| SB256 | |
| Adjourn | |
| HB311 | |
| HB54 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 311 | TELECONFERENCED | |
| + | HB 54 | TELECONFERENCED | |
| + | HB 357 | TELECONFERENCED | |
| + | HB 414 | TELECONFERENCED | |
| + | TELECONFERENCED |
11:53:55 AM CS FOR SENATE BILL NO. 256(FIN) am(efd fld) An Act making supplemental appropriations, capital appropriations, expropriations, and other appropriations; making an appropriation to the senior benefits payment program; amending certain appropriations; ratifying certain expenditures; and making appropriations to capitalize funds. Co-Chair Meyer MOVED to ADOPT work draft 25-GS2009\W, Kane, 3/10/08 as the version of the bill before the Committee. There being NO OBJECTION, it was adopted. 11:54:54 AM SHARON KELLY, STAFF, REPRESENTATIVE MIKE CHENAULT, stated that the House draft contains $4.415 billion general fund dollars, a reduction of $5.313 million dollars in federal funds and a reduction of $40.868 million dollars other funds. 11:56:05 AM Ms. Kelly pointed out the two packets of available information, one labeled Total House changes, including a summary sheet of the bill and changes from Sec. 1-32, excluding Sec. 13-15. There is a separate packet showing Sec. 13-15. (Copies on File). There are five changes to the operating section of the bill. • Sec. 1-3 Salary contract funding. The draft adds appropriations to cover the Non Covered employees in the Executive, Judicial and Legislative branches. Those increases are normally tied to the Supervisory Unit. The increased amount to $9.986 million general fund dollars. • Sec. 4-6 Enterprise Technology Services (ETS) adjustments, no changes were made in the work draft. • Sec. 7-9 The House draft adds: (A) - Department of Revenue adds $100 thousand dollars for implementation of HB 2001. The Department's requested amount was reduced because the master auditors have not been hired yet. (B) Department of Transportation and Public Facilities requested dollars to cover increased fuel utilities, lease and commodity costs. The funding amount was $1.875 million dollars. (C) Department of Transportation and Public Facilities requested $393.9 thousand dollars to cover arbitration settlements. (D) University of Alaska was funded at $1.390 million dollars to cover increased fuel costs. The University requested general funds to cover 100% of fuel increases, however, the increment funds 60% of the amount requested in the supplemental and funds 80% of the fuel costs. The FY09 funding requests will fund fuel at the appropriate ratio between General Fund and other University fund sources. 11:57:46 AM Representative Kelly questioned the numbers used to determine University fuel costs. Ms. Kelly advised they are about $1 million dollars short on the request. Representative Kelly asked if that was the final decision. Ms. Kelly explained that was the determination; however, there are other supplemental items coming up in the capital budget. 11:59:24 AM PETE ECKLUND, STAFF, REPRESENTATIVE KEVIN MEYER, addressed the capital portions of the bill. • Sec. 10-12 A $1.1 million dollar addition to Department of Commerce, Community and Economic Development for climate change grants ranging from $50-$100 thousand dollars to help communities plan for erosion problems. • A similar request for $230 thousand dollars was made by Department of Environmental Conservation to help fund the Governor's climate sub-cabinet, created through an executive order (EO). The House is working with the Senate to have them include $184 thousand dollars to be added to the operating bill as a one time item. 12:00:12 PM Mr. Ecklund continued the overview of capital items. He explained that Co-Chair Meyer's office went over the criteria and guidelines the Governor used to determine the vetoes made in last year's capital budget from a letter dated 2/8/08. All items were reviewed from that veto. The office attempted to be as consistent as possible in applying the guidelines to the vetoed projects. A narrow and conservative view was taken on the projects being added to the draft to guarantee that they met those guidelines. He admitted the exercise was subjective. Mr. Ecklund continued. All House members were invited to discuss projects in their districts & how they met the Governor's guidelines. Some project titles were slightly modified & changed the recipients of school district projects. Some dollar amounts were modified downward as appropriate. From that point, the committee substitute was drafted. The total added by the House is $69.227 million general fund dollars and $750 thousand federal funds. 12:02:54 PM Mr. Ecklund pointed out additional funds added to the following departments: • Department of Environmental Conservation reappropriation requested by the Governor for $17.19 million dollars for village safe water funds. A new account was established, sweeping the General Fund, federal funds and the Alaska Housing Finance Corporation (AHFC) funds from projects that have been completed or cancelled. The Department will use the following method to redistribute those funds, with previously legislatively appropriated projects, with no change in scope. The oldest came first & prioritized in the same year as before. • The effective dates have been added back into the bill in Sec. 36-38. 12:03:42 PM Representative Gara summarized that the capital budget items listed in the proposed budget total $69.977 million dollars. He asked how much more that amounted to from what the Senate had proposed. Mr. Ecklund replied that it was $17.5 million dollars higher than the Senate number. Representative Gara inquired if that information had been listed in the packet. Mr. Ecklund stated in was included in the distributed handout. (Copies on File). Representative Gara asked if there was a list. Mr. Ecklund explained that the packet contains three various scenarios. The information sought by Representative Gara is contained in the "House Changes" material, indicating all projects added by the House. 12:04:31 PM Co-Chair Meyer noted through Page 14, includes the House additions; after Page 14 are House & Senate combined. Representative Gara asked if there was a comparison between what the Senate proposed and that of the Governor. Mr. Ecklund advised that the Governor did not propose any of the listed items. Discussion followed between Mr. Ecklund and Representative Gara regarding the crafted projects. 12:06:15 PM Co-Chair Meyer clarified the approach taken. The only items being reconsidered in those sections are items vetoed by the Governor last year. Last year, the Governor vetoed about $200 million dollars of projects. Of that, the major portion was from the Rail belt Energy Fund monies. Of the $69 million, $50 million were projects vetoed that the Senate also supports reconsideration of. The House determined other projects not included by the Senate, but still meting the Governor's guidelines. The House proposed draft does include those items. 12:07:51 PM PUBLIC TESTIMONY CLOSED 12:08:32 PM Representative Gara discussed inclusion of the $10 million dollar port expansion project. He asked how that number had been determined. Co-Chair Meyer noted the amount had been submitted by the Municipality of Anchorage (MOA) and that it had been vetoed last year by the Governor. He emphasized the importance of the Port of Anchorage to the entire State, pointing out that 80% of the goods sold throughout Alaska come through the port. The program is matched through the federal government. The port needs to be prepared in order to be able to address the pipe for the Gas Pipeline. Representative Gara reiterated how the specific amount had been determined. He pointed out that there have been no hearings since the project was vetoed. He requested a determination of the actual amount before it is awarded. Co-Chair Meyer reiterated it would be a federally matched option. He had faith that Mayor Beguich and the Anchorage Assembly had placed the item as their #1 priority. He e did not question the request. The project is important to the entire State. 12:11:52 PM Vice-Chair Stoltze recalled that after the veto, the Mayor commented that the funding is a critical part of supporting the war effort & our national security. The port project was ratified in agreement and was included in the Senate approach. 12:13:11 PM Representative Gara reiterated the question regarding the correct funding amount for the port project. He realized the port is an important project; however, there has been no analysis that the $10 million dollars is the correct amount. He voiced concern when comparing that number to other necessary State funding projects. Co-Chair Meyer argued that an email had been sent to all member's for submitting their considerations of important issues. He stipulated that the concern should have been discussed last week. Representative Gara maintained that budget issues must be discussed publically rather than inside the Chairman's office. Co-Chair Meyer fully supported the request by MOA, emphasizing that the issue has had public hearings. All the office meetings had been scheduled to review projects. He elaborated that the Committee should not now be dissecting this issue. He did not want to see the process held up. He added the blue book, distributed to all members's, highlights all the detailed items for the Anchorage projects. 12:15:59 PM Representative Gara ascertained that the requested item had not shown up in any public forum this year; he wanted to see a hearing on the issue. The item had not been presented in a House Finance Committee bill or meeting until today. He realized that it is a priority of MOA and that he does support the project. He pointed out that when he requests money for projects, they are analyzed closely, and he maintained that all project requests should also be as closely considered. 12:17:26 PM KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, noted that there are many pieces to the supplemental program, particularly the Senior Benefits Program and requested by the Administration for early consideration. She indicated the Administration's concern with last year's vetoed projects being included in the current bill. The Administration has attempted to work diligently with both bodies to come up with an overall spending plan for the next two fiscal years. Ms. Rehfeld understood the legislative frustration with the Governor's vetoes last summer and hoped that the Legislature and the Governor could continue to work together on determining an overall level of spending. Co-Chair Chenault noted the Legislature has been attempting to work with the Administration and will continue to do that through the process. 12:19:33 PM Representative Gara inquired if each project had been run individually through the Governor's Office. Ms. Rehfeld responded that the Administration had not addressed specifics of any project & whether or not they would meet the Governor's criteria. The Administration is attempting to determine the appropriate level of spending & if that can be agreed upon, they realize there will be changes and additions to the Governor's proposed budget. She hoped to come to agreement on the overall size of the budget and not the individual projects. Representative Gara addressed identifying the overall level of spending and how much the Governor would accept in terms of the extra capital projects. Ms. Rehfeld responded that there has been no discussion about specific dollar amount of legislative discretionary projects. She maintained the need to determine an overall budget target. 12:22:08 PM Representative Gara asked if the Governor had been presented information on the port expansion since the veto was made. Ms. Rehfeld noted that the request originated from Governor Sheffield and was in the amount of $20 million dollars a year, for five years. Governor Palin included $10 million general bond dollar proposal in the FY09 budget. She did not know if the Legislature had determined from where to take the funding. 12:23:25 PM Representative Nelson noted she supports the proposed supplemental bill, which she believes is appropriate. The bill includes a large amount of money for the Revenue Sharing Program, the weatherization program and money for the heros list to those communities needing to cover increased retirement costs. The vetoed capital projects from last year's budget were unanticipated and consequently, the proposed supplemental is an unanticipated budget dealing with unforeseen costs and disasters. Many communities have bedded the recommendations out, including public hearings, prioritizing their requests. She added that for many of the projects, time is of the essence especially for those in remote Alaska. Representative Nelson added that the current Administration is on of the most powerful by Constitution in the Nation. Currently, the Legislature is in a 90-day session and constitutionally, the Legislature is the appropriating body. The Legislature recognizes that there is a large surplus and that the State has a lot of unmet needs in terms of major maintenance and capital projects. It is appropriate to spend some of that money for the life, health, education and safety needs within the State. She reiterated her support for the proposed bill. 12:26:36 PM Representative Hawker addressed the changes made in the Senate version adding $3.6 billion dollars into the budget reserve accounts. He asked if the Administration was supportive of those appropriations into savings. Ms. Rehfeld commented that the Governor is comfortable with the idea of saving. The CBR is an important element to any savings plan. The Governor proposed last year that the entire surplus go into the CBR; however, there is a broader issue with the addition of many significant pieces. There exists a lot of dynamics within the legislation. 12:28:42 PM In response to Representative Hawker, Ms. Rehfeld clarified that the $2.6 billion dollar appropriation into the CBR is an area she believed the Governor would be supportive of. They had not discussed the use of the Statutory Budget Reserve. Representative Hawker inquired about the Administration's position on the $300 million dollar appropriation to the Weatherization Program through Alaska Housing Finance Corporation. Ms. Rehfeld advised that the Administration has had conversations with Alaska Housing Finance Corporation and that there is a great deal of support for increasing funding available for those programs. She could not guarantee that $300 million dollars is the number that the Governor would support. 12:31:04 PM Representative Kelly noted that the combination of the $300 million weatherization in addition to the annuity revenue sharing, brings the State close to ½ billion dollars. He asked if the Administration would prefer that the savings be increased by that amount. Ms. Rehfeld clarified the need for a "bigger picture discussion". Energy is one of the big considerations including the Energy Fund and a funding source for Revenue Sharing. The Governor does support the pieces of the bill, but wants to address the overall procedure. 12:32:58 PM Co-Chair Meyer agreed with comments made by Representative Nelson that the supplemental request is large @ $4.3 billion dollars, noting that the key is the $3.6 billion dollars appointed for savings. He added that last year, when the capital items were vetoed, the State did not have the extra oil tax dollars. The State now is in a different environment. Representative Thomas echoed the comments made by Representative Nelson. He identified the surplus money available to the State. He reiterated the inconsistencies where vetoes were made last year. The State is ahead of revenue expectations. 12:36:28 PM Representative Nelson understood that the proposal is large and that the State is constitutionally required to reimburse the CBR. In previous comments, she expressed that the Legislative Branch is the appropriating body; she hoped that the two bodies could get past the disagreements and be non-adversarial. The House has been the Body that takes a more temperate approach to resolving conflicts. 12:37:40 PM Representative Gara agreed that there are projects that meet the health and safety guidelines issued by the Governor, but that there are some that do not. He maintained that there is a disconnect in the budget when not funding certain operating budget items and then over- funding in the capital budget. He maintained that the decisions are a matter of leadership, emphasizing that there are important projects in the State that do not get funded. He urged that priorities be ranked. 12:39:15 PM Representative Nelson MOVED to ADOPT Amendment 1. Co-Chair Chenault OBJECTED. Agency: Department of Commerce, Community and Economic Development Municipal Grants AS 37.05.315 Project: Platinum Solid Waste Landfill Design & Build Amount: $732,000 Funding Source: General Funds Representative Nelson noted that the Department of Commerce, Community and Economic Development, Project of Platinum Solid Waste landfill design and build (HD38) in the amount of $732 thousand general fund dollars. She explained that the new landfill is needed to serve both the community and the new $30 million seafood processing plant that coastal Villages Region Fund (CVRF) is building in Platinum construction of the plant is already underway, with the facility for 126 processing employees completed in 2007. The new plant is expected to open for operation in 2009. The plant is largest capital project in the 15-year history of the Western Alaska community Development Quota (CDQ) Program, funded entirely by CVRF. Representative Nelson WITHDREW Amendment 1. Co-Chair Chenault realized that the issue needs to be addressed as it provides an opportunity for jobs in rural Alaska. He offered to continue to work with Representative Nelson. 12:41:27 PM Representative Nelson MOVED to ADOPT Amendment 2. Co-Chair Chenault OBJECTED. Representative Nelson explained the amendment. Co-Chair Chenault pointed out that there are a number of communities that are having similar problems; there are discussions happening with the Corps of Engineers for federal funding. He noted he is working with Representative Joule at this time. Representative Harris agreed that the bill was not the appropriate vehicle for addressing the problem. The Legislature has attempted to deal with the erosion issues for quite a period of time. He stated that the Corps of Engineers is putting the project out to bid and is looking for matching funds. Evacuation of the areas will happen sooner or later. He recommended inclusion of the concern in the capital budget. Representative Nelson stated that recognizing the strong sense of cooperation and the money placed into the supplemental for Department of Commerce, Community and Economic Development grant, she WITHDREW Amendment 2. 12:46:10 PM Representative Crawford MOVED to ADOPT Amendment 3, 25- GS2009\VA.1, Kane, 3/11/08. Co-Chair Chenault OBJECTED. Representative Crawford explained the amendment would do away with the appropriation to the Statutory Budget Reserve and places it instead into the Constitutional Budget Reserve (CBR). 12:48:56 PM Representative Crawford read from the statute that establishes the budget reserve fund: "There is established as a separate fund, the State treasury, the budget reserve fund. The budget reserve fund consists of appropriations to the fund, money received by the State that is subject to the appropriation limit under (b) of this section and exceeds that limit may be appropriated to the budget reserve fund." Representative Crawford maintained that the proper place for those funds is the CBR and encouraged that the dollars be placed into that fund. Additionally, he added his support to the legislation proposed by Representative Samuels. Co-Chair Chenault clarified that it has been proposed to place the $1 billion dollars into the Statutory Budget Reserve and $2.6 billion dollars in to the CBR. He maintained that any dollars not spent through the budgeting process are true savings. He understood the complications of withdrawing money from the CBR with the ¾ voting system. He stated that there are two savings accounts within the CBR; one short term and one long term, which allows the opportunity to look further forward in the budget process. Co-Chair Chenault maintained his OBJECTION to Amendment 3. 12:54:54 PM Representative Crawford hoped there could be more discussion because of the long term effect for the State. He characterized the Statutory Budget Reserve (SBR) fund as a deferred spending account. He emphasized that the CBR is a fund that is better thought-out in how to administer the fund. Only taking 25% a year is problematic. He asked if the fund would continue infinitely. Co-Chair Chenault pointed out that if the Legislature is only able to withdraw 25% of the SBR in one year, perhaps the entire amount should be placed into that fund, because if left in the CBR, 100% can be accessed in any given year. Representative Gara advised that it does not matter what the SBR states, it is a statute and no one can tell the Legislature how to spend their money next year. Any account is only advisory and is non-binding. He stated that Amendment 3 is correct, which proposes placing $3.6 billion dollars into the CBR, which is where it would stay because it could not be accessed without a super majority vote. By placing those dollars into the SBR, the money could be withdrawn next year. He supported the recommendation made by Representative Crawford. 12:58:28 PM A roll call vote was taken on the motion. IN FAVOR: Nelson, Crawford, Gara OPPOSED: Stoltze, Thomas, Harris, Hawker, Kelly, Chenault, Meyer Representative Joule was not present for the vote. The MOTION FAILED (3-7). 12:59:14 PM Representative Gara MOVED to ADOPT Amendment 4. Co-Chair Meyer OBJECTED. Representative Gara explained that the amendment emphasis the previous point made that there are a lot more important things that the State could accomplish with directed dollars in the capital budget. He pointed out that there are 48 other states that provide more aid to people attempting to get vocational education than Alaska does. Roughly 70% of Alaska kids do not go to college. He believed that some of the surplus money should be used for creating opportunity instead of putting it into capital projects. He maintained that some of the proposed projects are not public safety, health or education related. The amendment proposes deleting $2.5 million dollars for the Port of Anchorage expansion and placing those dollars into the Department of Education and Early Development, Alaska Postsecondary Education Commission, (new) Alaska Advantage Education grants. He added that the Alaska Student Loan program provides a $2.5 million dollar dividend that should stay within the corporation for financial aid for Alaska students. That is how it was proposed by the Governor. He pointed out that Co-Chair Meyer's maintains those dollars should instead be placed into the Capital budget. 1:01:14 PM Co-Chair Meyer responded that ASLC dividend as well as the dividends form the other statewide corporations have been placed into the capital budget versus operating budget because once they are in the operating budget, they become ongoing funding obligations. The dividend amounts are not known from year to year & are typically used in the Capital budget. Amendment 4 places them into the Department of Education and Early Development, Alaska Advantage Education grants. Representative Gara pointed out that Alaska is the only state that does not provide money to low income students. Co-Chair Meyer argued that Alaska is the only state that pays a Permanent Fund Dividend (PFD), which can be applied to State tuition, which [Alaska University tuition] is in the lower third nationwide. Co-Chair Meyer mentioned the top-ten scholars program, an incentive program not discriminating between economic classes. He maintained that keeping the dividends in the capital budget was appropriate. 1:03:31 PM Representative Nelson noted that she supports the intent of the amendment, but maintained that the budget under consideration is the supplemental budget for unanticipated costs of the State. She stated she would be a no vote on the amendment. Co-Chair Chenault noted that he had been working with Representative Gara on the issue. He pointed out that 300 low income college students did receive funding, which is 24% of the money spent in that program. The remaining dollars went to students over 25 years old. He noted that his original intent of the advantage program was for the younger students, not those over 25 years of age. He agreed that the program is worth discussing and probably worth funding through a different vehicle. 1:06:39 PM Representative Crawford agreed that both young & old students need help in pursuing their college education. Every year there are students in the scholars program that have to drop out because it only pays the tuition and not other living costs. He concurred that it is not correct that a State such as Alaska, does not do more than any other state in the Union for their student's educational concerns. 1:09:08 PM Representative Gara addressed the dividends coming from the Alaska Student Loan Program, which have always totaled more than $1 million dollars; that is not a reason to place it in the capital budget every year. He pointed out that 90% of the students that qualified for the low income aid did not get it. There is not the funding available to provide an education option to most low income students. He maintained that a $2.5 million dollars grant dedicated to a specific class of students would be a great enhancement. He added that 75% of the vocational education in the State is provided at the University. Representative Gara WITHDREW Amendment 4. AT EASE: 1:11:45 PM RECONVENE: 1:12:20 PM Co-Chair Meyer MOVED to REPORT HCS CS SB 256(FIN) out of Committee with individuals recommendations. There being NO OBJECTIONS, it was so ordered. HCS CS SB 256 (FIN) was reported out of Committee with a "do pass" recommendation.
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