Legislature(1993 - 1994)

03/05/1993 02:05 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HB 56     An   Act   making  appropriations   for  operating                 
            expenses for certain programs  for which the costs                 
            are derived  from mandated  formulas or  criteria,                 
            and for expenses for  certain leases and contracts                 
            for state  services and operations;  and providing                 
            for an effective date.                                             
            Subcommittee  Closeout:   Department of  Labor was                 
            held in Committee for further discussion.                          
  DEPARTMENT OF LABOR                                                          
  The  Department  of  Labor  Subcommittee  consists  of Chair                 
  Eileen   MacLean   with   members   Representative   Hudson,                 
  Representative    Vezey,    Representative     Sitton    and                 
  Representative Finkelstein.                                                  
  Co-Chair MacLean explained that the  general fund target for                 
  the Department of  Labor was  $9.483 million dollars;  $95.8                 
  thousand general fund  reduction from  the Governor's FY  94                 
  budget  (before any  budget amendments).   [Attachment  #1].                 
  The   subcommittee  does  not  recommend  any  general  fund                 
  reductions to the Department.                                                
  She  added,  that  the proposed  budget  which  the Governor                 
  submitted for  the Department  for FY  94 was  significantly                 
  reduced  from  FY 93.    The  Governor  cut $636.8  thousand                 
  dollars or 6.2%  percentage from the FY 93 authorized level.                 
  The Department was  funded with eighty-four  percent federal                 
  and non-general funds.                                                       
  Co-Chair  MacLean  noted  her  concern  with the  reductions                 
  already made which  will effect the Department's  ability to                 
  perform the statutorily required work.   Past reductions are                 
  currently effecting the Department.  Co-Chair MacLean listed                 
  the decrements recommended by the Governor.                                  
       *    Labor Market Information      $100.0      thousand                 
       *    Commissioner's Office         $54.8       thousand                 
       *    Worker's Compensation         $85.0       thousand                 
       *    Wage and Hour                 $238.0      thousand                 
       *    Occupational Safety and                                            
                Health                    $147.0      thousand                 
       *    Alaska Safety Advisory                                             
                 Council                  $12.0       thousand                 
  Co-Chair  MacLean  pointed out  that  all increments  to the                 
  Departments   budget   were   non-general    funds.      The                 
  Subcommittee's  recommendation  is  the Governor's  proposed                 
  budget as amended.   The  Component Summary [Attachment  #1]                 
  represents  total funding  of $57,480.2  million dollars  of                 
  which  $9,679.6  million  dollars  is  general funds.    The                 
  targeted general fund amount is $9,483.8 million dollars and                 
  the Subcommittee  recommendation is $195.8  thousand dollars                 
  over that  amount.  The amount is the combined result of not                 
  taking the target  reduction of  $95.8 thousand dollars  and                 
  the Subcommittee's  approval of  one  budget amendment  from                 
  general fund program receipts.                                               
  The  two  amendments  are  Employment/Unemployment  Services                 
  ($100.0) and the  Commissioner's Office ($4.5).   The $100.0                 
  budget amendment  is general fund program receipts and would                 
  allow  the Department  to  accept  contracts from  non-state                 
  agencies for special employment assistance services.                         
  Co-Chair  MacLean MOVED  to adoption  Department  of Labor's                 
  Subcommittee report and that it be  incorporated into HB 55.                 
  Co-Chair  Larson   OBJECTED  for   purposes  of   additional                 
  information.  Co-Chair MacLean provided the Committee with a                 
  copy of HB 203.  [Attachment #5].                                            
  noted  the  Department's   support  of  the   Subcommittee's                 
  recommendations  and asked that  the House Finance Committee                 
  consider the recommendations.                                                
  DEPARTMENT OF LABOR, addressed Attachment #5.  This proposed                 
  bill  addresses  the declining  State  revenue and  the cuts                 
  which the Division of Workers' Compensation has taken in the                 
  past.  The bill recognizes the major  issues facing Workers'                 
  Compensation.  He provided the Committee with Attachment #4,                 
  a letter from the Workers' Compensation Board.                               
  The Board clarifies  their support of  a "user fee"  program                 
  which would help the Division meet  their current needs.  HB
  203 establishes a  phase in  process of four  to five  years                 
  which allows the  Division's performance not to  be affected                 
  by State funding.   The Board is dealing with cuts, and lack                 
  of  funding  for  investigation  of  uninsured  employers in                 
  addressing  the  escalation  of   medical  costs  and  other                 
  concerns which reduces the cost of Workers' compensation.                    
  Co-Chair Larson inquired how much revenue would be generated                 
  through  the phase  in  project.   Mr.  Arnoldt replied  the                 
  current the  estimate is  $585 thousand dollars  for FY  94.                 
  The Board wants  the funding to support the Division budget.                 
  Should  there  be  funds  generated  beyond  what  would  be                 
  required to support the discussion, the Board  does not want                 
  to fund the general fund.                                                    
  Co-Chair Larson questioned how claims would  be established.                 
  Mr.  Abshire stated  the insurance  company would  determine                 
  what the individual businesses would  be charged.  Companies                 
  are charged based  on their safety record.   Co-Chair Larson                 
  thought  the  additional  two  percent  impact  on  a  small                 
  business  would be  too severe for  the business  to handle.                 
  Mr.  Arnoldt  countered   that  the  State  of   Alaska  has                 
  experienced medical costs  rising $32 million dollars.   The                 
  underlaying cause for the escalation is unknown.                             
  DEPARTMENT   OF   LABOR,    responded   to    Representative                 
  Therriault's inquiries  regarding STEP funding.   She stated                 
  that  the  STEP  Program  would  sunset  this year  and  the                 
  proposed   funding  would  reauthorize  the  program.    The                 
  revenues from STEP originate  from one tenth of one  percent                 
  of employee contributions.  Based on the estimate of taxable                 
  wages for FY 94, that amount  would generate $108.5 thousand                 
  dollars for training grants.                                                 
  Ms. Knight stated that the Legislature made an appropriation                 
  of designated  grants from  STEP revenues  to the  Fairbanks                 
  Native Association.  There has  been concern that they  need                 
  to   examine   their  priorities   and   program  parameters                 
  established  for  STEP.    She  added that,  the  Employment                 
  Security  Advisory   Council,  which  collaborated   in  the                 
  development of the STEP Program, is concerned and opposed to                 
  the  designated  grants because  they  dilute the  number of                 
  funds available for requests.                                                
  Co-Chair Larson  distributed Attachment  #6, a proposed  one                 
  percent  reduction  scenario.    He  recommended  continuing                 
  discussion of  potential regulations  for the  Department of                 
  Labor.   Subcommittee closeout  will be  held  for a  future                 
  (Tape Change, HFC 93-39, Side 1).                                            
  provided  the Committee  with  handouts addressing  the five                 
  year average of  ANS prices.  [Attachment  #2 & #3].   FY 92                 
  includes $50.3  million dollars  from the  Exxon Valdez  oil                 
  spill litigation and $25.3 million dollars for legal expense                 
  The  FY  92 and  FY  93  (through  2/19/93) amounts  include                 
  administrative  settlements  of  $83.7  million dollars  and                 
  $121.3   million   dollars.     Administrative   settlements                 
  represent collections  of receivables  after  a request  for                 
  informal hearings.  Also included are receivable collections                 
  prior  to a  request for  hearing of $97.5  million dollars.                 
  Not  included  in the  projection  are the  amounts recently                 
  announced by a BP tax settlement of $630 million dollars.                    
  Commissioner   Rexwinkel   noted  the   largest  differences                 
  reflected in Attachment #2 & #3 result from the settlements.                 
  He distributed  copies of  the proposed  OMB spending  plan.                 
  [Attachment  #7].    Representative   Martin  asked  if  the                 
  settlement costs exclude those being placed in the Permanent                 
  Fund.  Commissioner Rexwinkel replied they did.                              
  Commissioner Rexwinkel referenced  Attachment #3, the letter                 
  from Chuck Logsdon, Petroleum  Economist, examining the five                 
  years ANS price  estimate.  The nominal  dollar calculations                 
  are  not  a true  average since  it  provides the  first six                 
  months of  FY 93 with  a full year's weight.   He emphasized                 
  that the market has been volatile and will continue to be.                   
  Representative  Therriault  asked if  the  settlement money,                 
  consisting of  non-restricted general  fund revenues,  would                 
  place  six  percent  into  the  Mental  Health  Trust  Fund.                 
  Commissioner Rexwinkel stated yes.                                           
  Representative  Brown  questioned   if  the  money  in   the                 
  Constitutional Reserve would be subject  to the six percent.                 
  Commissioner  Rexwinkel stated that  the Mental Health Trust                 
  Income  Account  would  be  allocated  six  percent  of  the                 
  unrestricted revenues.   Although, that  percentage does not                 
  come off the money in the Budget Reserve Account.                            
  provided the Committee insight as to differences between the                 
  Department of Revenue's  budget projection  and that of  the                 
  Legislative Finance  Division.  The difference  would amount                 
  to between $.17 cents\per barrel  and $.26 cents/per barrel.                 
  He added  that last year  the Legislature based  the current                 
  year's  budget  on  $16.90/barrel  price.    Currently,  the                 
  average is over $18/per barrel price.                                        
  Representative Martin  asked  if the  balanced budget  would                 
  include  "windfalls".   Mr. Greany  replied that  the FY  93                 
  budget was based on assuming a  $16.90/per barrel price.  No                 
  additional  windfalls would  be  necessary  to balance  this                 
  year's  budget  and  it would  be  balanced  on  the revenue                 
  stream.   He added that there is a cushion available for the                 
  remainder of the year.                                                       
  Representative  Hanley  commented   that  the   unrestricted                 
  revenue  from last  year did  not cover  the  current year's                 
  budget.  Oil  revenues plus additional sources  covered last                 
  year's  budget.    Mr.  Greany  agreed reiterated  that  but                 
  additional settlement monies  were not necessary to  balance                 
  the budget.                                                                  

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