Legislature(2009 - 2010)HOUSE FINANCE 519
01/29/2010 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB300 || HB302 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| = | HB 300 | ||
| + | TELECONFERENCED | ||
HOUSE BILL NO. 300
"An Act making appropriations for the operating and
loan program expenses of state government, for certain
programs, and to capitalize funds; making supplemental
appropriations; making appropriations under art. IX,
sec. 17(c), Constitution of the State of Alaska; and
providing for an effective date."
HOUSE BILL NO. 302
"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."
1:37:20 PM
FY 11 GOVERNOR'S BUDGET OVERVIEWS: DEPARTMENT OF NATURAL
RESOURCES
Representative Gara corrected a mistake made at yesterday's
meeting regarding graduate programs at the university
level. He spoke in support of Fairbanks as the flagship
campus.
1:41:16 PM
TOM IRWIN, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES,
referred to a handout entitled, "Alaska Department of
Natural Resources - House Finance Committee Overview". He
began by stating the Department of Natural Resource (DNR)
mission: Develop, conserve and maximize the use of Alaska's
natural resources consistent with the public interest.
1:43:41 PM
Commissioner Irwin listed the department's divisions,
offices, and boards and commissions, as shown on slide 1.
He referred to chart 1 on slide 3, which shows DNR's
priority programs.
Co-Chair Hawker expressed appreciation for the detailed
spreadsheet on the department's organization.
Commissioner Irwin described the sections of the pie chart
which show budget allocations by priority. The programs
provide resource opportunities for resource development. He
highlighted the blue section - 40.1 percent of the budget,
the largest section related to natural resource
development. The next largest area is wildfire management -
22.4 percent.
1:47:56 PM
Commissioner Irwin turned to slide 4 to detail the current
status of the FY 10 budget. The adjusted base operating
budget for FY 10 is $133 million. One-time items, the
Mental Health Trust Land Office and multi-year operating
appropriations, increase the FY 10 budget by $12 million
for a total of $145 million. This includes funding for
DNR's portion of the AGIA implementation. He noted that
over half of the budget is general fund - 53 percent.
Federal dollars make up 11 percent, and the remaining 36
percent is in the "other" category. He detailed the "other"
category items.
Co-Chair Hawker noted an anomaly between the Mental Health
Trust budget and the way state agencies handle their
budgets. It results in what would appear to be an increase
in the agency budget by $2.3 million. He pointed out that
the perceived increase is not an actual increase. The
Mental Health Trust Authority operates on a zero-based
budget. The appearance of the extra millions is not new
financing.
1:50:33 PM
Commissioner Irwin listed the number of permanent and non-
permanent positions in the department. The department
employs between 900 and 1,000 Alaskans, less in the winter
and more in the summer. He highlighted several jobs. The
main DNR offices are in Anchorage, Juneau, and Fairbanks.
There are typically around 130 vacancies or about 11.5
percent of total positions. He spoke of job classes and pay
differential. He noted the challenge of having to recruit
for certain jobs.
Co-Chair Hawker asked which categories were difficult to
fill and if the legislature could help in any way.
Commissioner Irwin gave an example of the difficulty of
finding fire fighters. He spoke of the necessity to compete
for certain jobs due to the complications of modern life.
Co-Chair Hawker wondered if there was difficulty filling
higher-paid positions. Commissioner Irwin reported that
there were problems with losing college-trained workers,
and finding highly skilled, top-level workers.
1:58:33 PM
Representative Joule pointed out that the commissioner rose
from the ranks. Commissioner Irwin agreed that industry
experience was important, but sometimes it is difficult to
afford to hire those workers. He maintained that both are
needed.
Representative Austerman agreed that this was a problem
throughout departments and warrants a separate discussion.
Co-Chair Hawker noted that collective bargaining
negotiations were pending and several labor questions
should be considered by the committee.
Representative Kelly related the conversation to hiring for
the pipeline. He commented on the current job picture
nationwide. He has heard that it is hard to find hires for
top people.
Commissioner Irwin reported that his top people have not
gone to the federal government, but there is competition
across the board. Co-Chair Hawker commented on the ability
of salary overrides for exempt positions, which has helped
to retain some positions.
2:02:55 PM
Representative Joule wondered if positions could be moved
up in order to fill openings as needed. He wondered if
there were more out-of-state applicants. Commissioner Irwin
said he has not seen more non-Alaskan applicants.
Representative Joule had heard rumors about out-of-stater's
moving north.
2:03:54 PM
LETA SIMONS, DIRECTOR, DIVISION OF SUPPORT SERVICES,
DEPARTMENT OF NATURAL RESOURCES, addressed Representative
Joule's question. She noted a problem in filling upper
level forestry jobs. She offered to provide data on failed
recruitments from outside the state.
Representative Salmon asked how fires are screened.
Commissioner Irwin replied that all fires from the previous
year are examined and the management plan is reviewed. Not
every fire is put out. He shared statistics on lightening
strikes. He clarified that some forest fires need to burn
out in order to prevent fires in the future. He related
that he does not meddle in the management of fire fighting,
but leaves that up to the experts who have significant data
for their use. He spoke of a concern about the smoke damage
from fires.
2:10:31 PM
Commissioner Irwin explained that Fairbanks is easy to
protect from fires; however, Anchorage is not. Fire
fighting plans are continuously being updated.
Representative Kelly asked what the criteria are whether to
fight a fire or not. He thought that fires were not fought
for smoke. Commissioner Irwin explained that some fires
were fought for smoke due to potential health problems.
Representative Kelly thought that the message should be
communicated honestly as to which fires would be fought and
why. He shared a personal story.
2:14:16 PM
Commissioner Irwin emphasized that there would be fires
that cannot be stopped.
Co-Chair Hawker commented that supplemental budgets are
anticipated for fire fighting. He expected a $35 million
request. Commissioner Irwin thought it would be about $40
million.
Ms. Simons clarified that the budget would end up being
around $40 million or more, but the actual supplemental
would be the same amount as the emergency declarations,
which total $35 million.
2:16:22 PM
Commissioner Irwin turned to slide 5 - recent highlights of
DNR. He noted that the department received $8.5 million
from North Slope lease sales, an increase of $2 million
over 2008. He termed it a positive pattern. He said the
department has collected $20 million from royalty
settlement negotiations. ExxonMobil completed drilling and
casing the surface section of its first production well at
Pt. Thomson. The department continues to support the
development of a pipeline to deliver North Slope natural
gas to markets outside of Alaska. ExxonMobil joined
TransCanada to progress the Alaska Pipeline Project. The
legislature has allowed the department to move forward with
AGIA. He spoke highly of TransCanada.
2:20:19 PM
Commissioner Irwin reported on a trip to Houston to gather
information about the open season. He spoke highly of
ExxonMobil.
Representative Austerman requested information about the
Federal Stimulus Act.
Commissioner Irwin related that there was $10.7 million
left of Stimulus money. The department is planning on
spending the funds on putting Alaskans to work this coming
summer in various projects. He spoke of two benefits from
Stimulus money. One is putting Alaskans to work and the
other is training that will also benefit the fire season.
Representative Austerman asked if the money would be spent
this summer. Commissioner Irwin said it would.
2:22:32 PM
Co-Chair Hawker clarified that the Stimulus money bill
passed last year approves funding until June 30, 2010.
There is language in HB 300 that continues the funding into
the subsequent fiscal year. Commissioner Irwin pointed out
that the $10.7 figure is from the Federal Stimulus Act.
Representative Fairclough inquired if the amount is $8.5
billion or $5.7 billion in FY 09, as reflected on slide 5.
Commissioner Irwin said it is $5.7 billion. He stated an
intention to generate more money. Representative Fairclough
requested an update on the AGIA process as it relates to
First Nation issues.
2:24:45 PM
Commissioner Irwin informed the committee that the issues
are significant; however, the NPA TransCanada right-of-ways
are well-grounded. Representative Fairclough wished for a
timeline for permits. She recalled that the Alaska Native
claim took a significant amount of time. Commissioner Irwin
offered to provide updated Alaska Pipeline Project
information to the committee in order to answer
Representative Fairclough's questions.
Representative Fairclough asked if there were 8.3 million
acres of new state land. She wondered if the goal of a
million acres of transfer had happened. Commissioner Irwin
believed the goal was 1.9 million acres. He pointed out
that Alaska has gained as much ground the last four years
as the size of Massachusetts and Connecticut combined. He
noted that getting land has its burdens. Native
corporations and the state over-selected lands. He thought
11 million or 12 million acres were over-selected.
Co-Chair Hawker inquired about the RS 2477 rights of ways.
He recalled that the legislature used LB&A to manage that
process because it believed that the administration was not
pursuing land rights of ways with vigor. He requested the
department's take on the issue.
Commissioner Irwin explained the process that would be
required to settle the RS 2477 issue. He thought it would
require a lawsuit. He predicted it would be a $2 million
lawsuit.
2:30:44 PM
Commissioner Irwin addressed Representative Austerman's
question regarding abandoned wells. He related how DNR
worked with the Pearl bankruptcy. A buyer in the form of
Cook Inlet Energy was found. Representative Austerman asked
if the industry posted a bond. Commissioner Irwin said that
DNR has a fund that was used. The reality is there is not
enough protection in some areas of the state. The fund is
not sufficient for today's risk.
2:33:06 PM
Representative Gara clarified that he voted against all
taxes except for a fair share for oil tax.
2:34:14 PM
Commissioner Irwin turned again to recent highlights of the
department. He spoke of successes when permitting mine,
land, and water projects, such as Kensington, Red Dog, Fort
Knox, Pebble, and Donlin Creek.
Commissioner Irwin spoke of contracts with state parks to
replace toilet facilities. He discussed the needless damage
that happens in state parks.
Co-Chair Hawker recalled a capital development improvement
plan for state parks. He wondered if DNR's budget supported
that plan. Commissioner Irwin stated that he supports the
governor's budget. This administration has put in another
step to move forward on parks maintenance. He offered to
find out if the budget keeps up with the original statewide
plan.
Representative Austerman thought "user fees" were
necessary. He complimented the work that James King does.
Commissioner Irwin described how other governments manage
their parks with donations.
2:39:37 PM
Representative Foster appreciated work that the department
does on park maintenance, especially the toilet facilities.
Commissioner Irwin shared that the facilities are great
looking.
Representative Gara brought up a concern about the expense
of state park use. He wondered about guided float trips on
the Kenai River and a survey which could lead to an
exclusion from using the river. Commissioner Irwin replied
that the department has made no decisions regarding the use
of the Kenai River. He shared some history about the Kenai
River's impaired fishery and the restrictions imposed. The
state must continue to manage such issues fairly.
Representative Gara noted that did not want to see half of
the float trips reserved for non-Alaskans. Commissioner
Irwin stressed that he works for all Alaskans.
2:44:34 PM
Co-Chair Hawker spoke of a universal challenge involving
the loss of federal funding authority. He questioned
whether the state should continue to supplant federal money
with state funds. He questioned if the state should support
things like the Alaska Volcano Observatory (AVO), by
supplanting federal monies. Commissioner Irwin thought it
was critical to continue to support this issue. He
supported his view with statements about air traffic
safety.
Co-Chair Hawker asked if the state is actively pursuing
this issue. Commissioner Irwin replied that it is a matter
of safety first, business second. He termed it a small
amount of money for safety.
2:48:45 PM
Ms. Simons added that the request for the FY 11 budget is
for $300,000. The goal is to have DNR maintain their
funding efforts for AVO. American Recovery and Reinvestment
Act (ARRA) funds which have stepped in to pick up the slack
are short term funds. Co-Chair Hawker believed that the
$1.5 million in ARRA funds were approved at the December
LB&A meeting.
Commissioner Irwin wondered if it was a philosophical
question about replacing federal funding.
Co-Chair Hawker questioned if the state was aggressively
seeking to replace federal funds.
Representative Joule commented that the department had been
silent regarding coastal zone management. He noted high
levels of frustration in the coastal communities with the
lack of response and the lack of alternatives offered. He
believed there would have to be more dialogue in the
future.
Co-Chair Hawker echoed concerns regarding the lack of a
productive dialogue.
2:53:33 PM
Commissioner Irwin acknowledged that it was an issue.
Representative Fairclough asked if the department has
worked with DOT to see if landing fees might be used as a
revenue source to fund the AVO, rather than general funds.
She thought there could be a partnership with the private
sector.
Commissioner Irwin was not aware of discussions to that
effect. He offered to get more information.
Commissioner Irwin turned to slide 6 - department
priorities. He suggested presenting more details in a
handout to distribute to the committee at a future date.
Co-Chair Hawker agreed.
Representative Gara queried which department addresses
pipeline spills.
Commissioner Irwin responded that both DNR and DEC respond
to oil spills. The goal of DNR is to work on gap analysis
using the Petroleum System Integrity Office (PSIO), whereas
DEC deals with risk analysis. He suggested the issue be
addressed at another time at more length.
2:58:41 PM AT EASE
3:05:24 PM RECONVENED
DEPARTMENT OF REVENUE
PAT GALVIN, COMMISSIONER, DEPARTMENT OF REVENUE, referred
to a handout entitled, "FY 11 Budget Overview". He began
with a pie chart on slide 2 - core and corporations, which
depicts the breakdown of the Department of Revenue (DOR).
The blue section is the department core services, the red
section is the Alaska Housing Finance Corporation section,
and the green section is the Permanent Fund Corporation
section.
Co-Chair Hawker interjected that the budget subcommittees
would attend to the specific details by agency.
Commissioner Galvin referred to slide 3 where the priority
programs are depicted. The bulk of the dollar amount is
spent managing investments. The money is used for internal
personnel and external managers. The blue portion is funds
collected from the Tax Division and from a portion of Child
Support Services. The red portion is the distribution of
funds to Child Support Services and the Permanent Fund
Dividend. The tiny purple portion is for the Long Term Care
Ombudsman Program and for statutory conflict avoidance
purposes.
3:10:52 PM
Commissioner Galvin described what the Long Term Care
Ombudsman does, as depicted on slide 4. The governor is
requesting an increment to fund a person to oversee the
investigation and follow up of this program. He opined that
the position was overdue because of the growth in
complaints.
Co-Chair Hawker observed that the growth in complaints was
an alarming statistic. He wondered if there was a need for
a regulatory solution.
3:13:07 PM
GINGER BLAISDELL, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF REVENUE, explained that the
complaints were family driven and varied and were on "a
one-to-one" basis. There has been no request for statute
changes.
Commissioner Galvin continued with slide 5 - a description
of the Tax Division's responsibilities. He emphasized the
importance of the annual tax report.
Co-Chair Hawker noted that the excise tax is responsible
for motor fuel taxes. He wondered if that tax were to be
eliminated, if there would be a corresponding reduction in
personnel. Commissioner Galvin replied that there would not
be a reduction in staff because there would still be a
reporting requirement.
3:16:16 PM
Commissioner Galvin related the Treasury Division's
responsibilities, as shown on slide 6. The budget item is
an increment related to management of the general fund and
other sub-accounts, such as the Constitutional Budget
Reserve (CBR). The increment shown is for management fees
for the CBR.
Co-Chair Hawker called the CBR the state's savings account.
He wondered what the debt of the CBR currently was.
Commissioner Galvin reported that the debt between the
general fund and the CBR was about $400 million. The
current balance is roughly $8.6 billion. There is a balance
in the statutory budget reserve (SBR) of about one billion.
Co-Chair Hawker summarized that the CBR debt is down to
about $400 million.
Representative Doogan asked if the $400 million represents
money that used to be in the CBR and was taken out and
spent. Commissioner Galvin clarified that the remaining
amount that would need to be refunded in order to satisfy
the previous withdrawals is $400 million. Representative
Doogan restated his question to ask if earnings it might
have had were included, or if it is just the principle.
Commissioner Galvin deferred to Mr. Burnett.
Co-Chair Hawker asked for the response to include the
authority upon which the answer is based.
3:20:04 PM
JERRY BURNETT, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE,
addressed if whether the amount included the earnings that
would have been there if the money had never been removed.
He explained that each year, on an accounting basis, there
is negative amount in the general fund. That is the
principal amount and not the earnings that could have been
earning interest. If lost earnings are included, the number
might be larger, but there is no way of knowing.
Co-Chair Hawker inquired where "payback" is defined. Mr.
Burnett replied that it is in the Constitution, Article 9,
Section 17, which was passed in 1990.
Co-Chair Hawker noted that Representative Doogan's question
was important.
Representative Austerman asked if there was about $8.6
billion in the CBR currently and about $1 billion in the
SBR. Commissioner Galvin said that was correct.
3:22:20 PM
Commissioner Galvin returned to the responsibilities of the
Treasury Division. He pointed out that the Treasury
Division was the primary staff to the Alaska Retirement
Management Board (ARMB) and is the location of the
unclaimed property function.
Commissioner Galvin explained the role of the Permanent
Fund Dividend (PFD) Division - slide 7. He related
significant changes in operations and distribution
practices. He noted one budget item, an increment for
$100,000 for Information Technology (IT) training.
3:25:40 PM
Representative Gara asked about the CBR. He shared his
understanding of the CBR. He questioned future obligations.
Mr. Burnett explained that CBR fund language states that
the only future money that would go into the CBR are tax
royalty settlements from court cases or administrative
proceedings, such as from the TAPS Tariff cases last year.
The past year, over $400 million was added from
settlements. Representative Gara presented a hypothetical
case where a new base level was established. Mr. Burnett
agreed with the example.
Co-Chair Hawker stated that Legislative Finance explained
that only the principle of the CBR that was borrowed must
be repaid, not the interest accrued. He pointed out that
the state has included interest in repayments. Mr. Burnett
clarified that while that is correct, it is not an
equivalent to the amount lost in the transaction.
3:29:31 PM
Representative Doogan asked for an explanation of the fund
source for the PFD Division. Commissioner Galvin said it
was money transferred from the PFD fund. No general fund
monies are used.
Representative Fairclough wondered if there was a way to
cross reference PFD applications or have multiple-year
applications so that those who forget could recoup their
dividend. Commissioner Galvin replied that there is no such
plan in place. Representative Fairclough wondered if a
different system could be used for long-time Alaskans.
Commissioner Galvin discussed the "once in a life-time
application".
3:34:27 PM
Commissioner Galvin reported on the Child Support Services
Division (CSCD) - slide 8. He noted an award received by
the division, the PAC-10 Challenge Preventing Arrears Cup
for 2009. He explained a fund source change for balancing
the agency's budget. The American Recovery and Reinvestment
Act (ARRA) funding changes occurred during the past year.
Co-Chair Hawker asked why administrative services did not
request an increment for Child Support Services Division
(CSCD). Mr. Burnett reported that no increment requests
have been requested since 2002 because none were needed.
3:38:51 PM
Commissioner Galvin described the duties of the
Commissioner's Office - slide 9. He related that there were
pending IT issues that would require support. He noted two
reports: AGIA Project Report and ACES Status Report.
Representative Gara requested an update on AGIA. Co-Chair
Hawker expected updated reports to be considered across
agencies. Representative Gara requested a report. Co-Chair
Hawker agreed to provide that information later.
Commissioner Galvin said that on Monday there would be a
presentation in House Resources.
3:42:24 PM
Commissioner Galvin related that the Alaska Municipal Bond
Bank Authority (AMBBA) falls within the Treasury Division -
slide 10. Two pieces of legislation are proposed to deal
with this funding, the Crime Lab and the University Life
Sciences Building. Ms. Blaisdell reported on the status of
those bills.
Representative Fairclough spoke of Build America Bonds.
Commissioner Galvin informed the committee that there are a
number of different public financing options.
Mr. Burnett related that Build America Bonds are taxable
debt bonds subsidized by the federal government. Local
governments have made use of them. Should the certificates
of participation pass, it is likely that Build America
bonds would be used for a portion of the debt. The State
Debt Committee would deal with them. The Recovery Zone
Bonds are for areas without bonding authority for local and
commercial projects. They have up to 45 percent federal
subsidy attached. Both bonds must be done in 2010. Co-Chair
Hawker was looking forward to the legislation regarding
those bonds.
3:47:57 PM
Commissioner Galvin turned to the Alaska Housing Finance
Corporation. He spoke of two pieces of pending legislation,
Revenue Bonds for Veterans and Energy Efficiency Bonds for
weatherization.
Representative Salmon asked about the status of the PFD.
Commissioner Galvin reported that the PFD balance has
recovered significantly from where it was a year ago. It is
currently approaching $35 billion. He noted that the PFD
Corporation has a variety of increments in the budget. He
stated his view, as a board member, that the APFC Board
attempts to tightly manage the budget and requests only
necessary items.
3:51:17 PM
Commissioner Galvin discussed the department's 10-year plan
- slide 13. He related that the department's budget
projection remains flat. Co-Chair Hawker asked if the spike
in the graph was showing capital spending. Commissioner
Galvin said that was correct.
Co-Chair Hawker asked about the growth of fund balances,
assuming an increase of 7 percent per year. He inquired if
the fund balances are earning 7 percent a year. Mr. Burnett
clarified that the expectation is that fund balances would
increase. Co-Chair Hawker asked if it was an aggregate. Mr.
Burnett agreed. Co-Chair Hawker concluded that that would
imply surpluses in all areas of operations at a rate
aggregating 7 percent per year for the next ten years. Mr.
Burnett agreed and added that the larger funds do naturally
increase.
3:54:34 PM
Commissioner Galvin discussed oil and gas requests - slide
1. He said they were related to the AGIA reimbursement
function. Four new positions were identified and are being
requested. He spoke of the audit of the AGIA Reimbursement
Fund and the need for a fiscal systems analysis to support
negotiations of gasline fiscal terms. Representative Doogan
asked for clarification of the last item in a future
discussion.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Overview DNR Presentation.pdf |
HFIN 1/29/2010 1:30:00 PM |
|
| Rev. Dept Overview.pdf |
HFIN 1/29/2010 1:30:00 PM |
|
| LFD Budget Overview page 35.pdf |
HFIN 1/29/2010 1:30:00 PM |
DOR Overview |