Legislature(1995 - 1996)

03/31/1995 09:00 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  HOUSE BILL 100                                                               
                                                                               
       "An  Act making  appropriations for  the operating  and                 
       loan  program  expenses  of  state  government  and  to                 
       capitalize funds; making  appropriations under art. IX,                 
       sec. 17(c), Constitution  of the State of  Alaska, from                 
       the constitutional  budget reserve fund;  and providing                 
       for an effective date."                                                 
                                                                               
  HOUSE BILL 101                                                               
                                                                               
       "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."                       
                                                                               
  DEPARTMENT OF ADMINISTRATION (DOA)                                           
                                                                               
  Representative  Kohring MOVED to adopt Amendment #6(B) which                 
  would  provide  for   an  additional   BRU  to  the   Public                 
  Broadcasting Commission in order to distribute all the radio                 
  grants.  There being NO OBJECTION, it was adopted.                           
                                                                               
  FRONT SECTION                                                                
                                                                               
  Co-Chair Hanley MOVED to  adopt Amendment #1.   He explained                 
  that  Amendment  #1 would  provide  the  necessary technical                 
  changes to various departmental corrections.  There being NO                 
  OBJECTION, it was adopted.                                                   
                                                                               
  Representative  Martin MOVED  to  adopt Amendment  #2  which                 
  would  transfer $300  million  dollars  from Alaska  Housing                 
  Finance   Corporation   (AHFC)   to   the   general    fund.                 
  Representative  Grussendorf  spoke  against   the  amendment                 
  questioning the affect  it would  have to AHFC  with such  a                 
  large withdrawal.   Co-Chair Hanley voiced his  concern with                 
  withdrawal of such a large amount  and the impact that would                 
  have on the bond rating.                                                     
                                                                               
  Representative Martin commented that at this time, the total                 
  AHFC portfolio was $9.7  billion dollars.  He stated  that a                 
  cash flow  does exist in that  agency and that it  should be                 
  placed  into  the  general  fund.    Representative  Kohring                 
  OBJECTED.  He stated that such a large amount withdrawn from                 
                                                                               
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  the corporation would have a negative impact on the national                 
  bond rating.   Representative Martin  argued that Alaska  is                 
  the richest State in  the Union and should not  be concerned                 
  about credit ratings.  Representative Kohring disagreed with                 
  Representative Martin  noting importance  of the  credit and                 
  bond rating  which  would  be  negatively  impacted  through                 
  Amendment #2.   He recommended  requesting an analysis  from                 
  the rating agency.                                                           
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Martin                                                   
       OPPOSED:       Mulder,  Navarre,  Parnell,  Therriault,                 
                      Brown,   Grussendorf,  Kelly,   Kohring,                 
                      Hanley, Foster                                           
                                                                               
  The MOTION FAILED (1-10).                                                    
                                                                               
  Representative Brown MOVED to adopt Amendment #3 which would                 
  deposit $3.591 million  dollars from  the oil and  hazardous                 
  substance   release   prevention   mitigation  account   (AS                 
  46.08.020(b)) into the general fund.  These funds would  not                 
  be  deposited  into  the storage  tank  assistance  fund (as                 
  46.03.410).  Representative Mulder OBJECTED.                                 
                                                                               
  Representative Therriault concurred that the funding  source                 
  was being  raided.   Representative Brown  pointed out  that                 
  this money would  not be taken from the same  source as that                 
  referenced by Representative Therriault.                                     
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Navarre, Brown, Grussendorf                              
       OPPOSED:       Mulder,   Parnell,   Therriault,  Kelly,                 
  Kohring,                 Martin, Foster, Hanley                              
                                                                               
  The MOTION FAILED (3-8).                                                     
                                                                               
  Representative  Grussendorf  MOVED  to adopt  Amendment  #4.                 
  Representative   Therriault   OBJECTED.       Representative                 
  Grussendorf explained  that  the  proposed  amendment  would                 
  reduce  the  cut to  the  marine  highway services  by  $200                 
  thousand   dollars.     Amendment   #4   would   allow   for                 
  transportation  needs  by  Alaskans  serviced  by   the  M/V                 
  LeConte, the M/V Aurora  and M/V Bartlett.  He  advised that                 
  transportation is a necessary function for commerce,  school                 
  and family  activities.  The  "feeder" vessels are  the ones                 
  that  serve Alaska and  the local  residents.   The proposed                 
  reduction  in  service   would  effect  all  of   the  small                 
  Southeastern communities  and services to the communities in                 
  Prince William Sound.                                                        
                                                                               
                                                                               
                                3                                              
                                                                               
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Navarre, Brown, Grussendorf, Foster                      
       OPPOSED:       Parnell,  Therriault,  Kelly,   Kohring,                 
                      Martin, Mulder, Hanley                                   
                                                                               
  The MOTION FAILED (4-7).                                                     
                                                                               
  Representative  Brown  requested  discussion  regarding  the                 
  approaches being considered to the following four amendments                 
  (Amendment #5, #6, #7 and #8).   She voiced concern that the                 
  monetary terms of the union contracts before the Legislature                 
  had not been  included in the  budget and consequently  were                 
  not funded.   She recommended  that the Legislature  support                 
  the  collective bargaining  process.   Representative  Brown                 
  stressed that these contracts must be funded and included in                 
  the budget.                                                                  
                                                                               
  Representative Brown noted that Amendment  #8 would have the                 
  least effect on state government;  it would directly add the                 
  money necessary to effect the contracts.  She understood the                 
  amount needed would consist of  $6.8 million dollars general                 
  fund, $898 thousand  dollars federal funds and  $4.4 million                 
  dollars  in  other funds.   Amendment  #8  would add  in the                 
  amount of money necessary to address that concern.                           
                                                                               
  Representative  Brown  explained  that  Amendment  #6  would                 
  provide  a net  zero approach.   Through  Amendment  #6, the                 
  necessary  funding would  be provided  through  the personal                 
  services line in all  departments by a 1.04% increase.   She                 
  continued,  Amendment  #7  was   similar  to  Amendment  #6,                 
  although the  funding source  would come  from reducing  all                 
  lines in all departments by .4%.                                             
                                                                               
  Representative Brown  concluded, Amendment  #5 would  delete                 
  from the bill,  the language in Section #36.   The effect of                 
  the amendment  would  require that  each department  funding                 
  those union employees, be responsible to absorb those costs.                 
                                                                               
                                                                               
  (Tape Change, HFC 95-76, Side 2).                                            
                                                                               
  KATHLEEN  STRASBAUGH,  GOVERNMENTAL  AFFAIRS, DEPARTMENT  OF                 
  LAW, discussed  the  legal repercussions  of the  contracts.                 
  Co-Chair  Hanley  understood that  if  the budget  is passed                 
  without any language  regarding the contracts,  essentially,                 
  the contracts would be approved and  the money would have to                 
  be "eaten" within the departments.                                           
                                                                               
  ALISON   ELGEE,   DEPUTY    COMMISSIONER,   DEPARTMENT    OF                 
  ADMINISTRATION, reiterated that if there is no action by the                 
  Legislature, the impact will be felt on the areas that house                 
                                                                               
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  those employees.                                                             
                                                                               
  Ms. Elgee provided the Committee an overview of the terms of                 
  the  contracts.    The transmittal  memo  outlines  the most                 
  significant  change  in the  contracts  to the  40/hour work                 
  week.  Also, all contracts include reduced overtime costs.                   
                                                                               
  Representative Brown MOVED to adopt Amendment #8 which would                 
  fund the entire  $12.256 million  dollars.  Co-Chair  Hanley                 
  OBJECTED,  commenting  that  at this  time,  three  separate                 
  appropriation  bills  are  being  drafted  to  address   the                 
  concern.  Representative Brown  questioned what would happen                 
  if none of the  proposed pieces of legislation passed.   Co-                 
  Chair Hanley  responded that the contracts would then not be                 
  approved and renegotiation would occur.                                      
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Brown, Grussendorf, Navarre                              
       OPPOSED:       Parnell,  Therriault,   Kelly,  Kohring,                 
                      Martin, Mulder, Foster, Hanley                           
                                                                               
  The MOTION FAILED (3-8).                                                     
                                                                               
  Representative Brown MOVED to adopt Amendment #7 which would                 
  add  a new section consisting of  $12.256 million dollars to                 
  fund  the  Supervisory Unit,  Labor,  Trades and  Crafts and                 
  Inlandboatman's Union of  the Pacific collective  bargaining                 
  agreements originating from the various  sources.  She asked                 
  to amend the amendment by  changing the general fund  amount                 
  to  $6,892,094  dollars and  the  other funds  to $4,464,975                 
  dollars.                                                                     
                                                                               
  Representative  Brown  explained  that  the amendment  would                 
  reduce all lines  and all  funding sources by  .404% to  all                 
  departments.  Co-Chair Hanley OBJECTED.                                      
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Brown, Grussendorf, Navarre                              
       OPPOSED:       Therriault,   Kelly,  Kohring,   Martin,                 
                      Parnell, Hanley                                          
                                                                               
  Representatives Mulder and  Foster were not present  for the                 
  vote.                                                                        
                                                                               
  The MOTION FAILED (3-6).                                                     
                                                                               
  Representative Brown  WITHDREW Amendments  #5 &  #6.   There                 
  being NO OBJECTION, it was so ordered.                                       
                                                                               
  Representative Martin MOVED to adopt Amendment #9.  Co-Chair                 
                                                                               
                                5                                              
                                                                               
                                                                               
  Hanley OBJECTED for purposes of discussion.                                  
                                                                               
  MIKE   GREANY,   DIRECTOR,  LEGISLATIVE   FINANCE  DIVISION,                 
  explained that the  amendment would provide for  funds which                 
  remain in the Statutory Budget Reserve  to go to balance the                 
  FY96 budget.   He added that  the language of the  amendment                 
  would cap the amount allowed  to be taken from that fund  at                 
  $45.8 million dollars.                                                       
                                                                               
  Representative Martin explained the  intent of Amendment #9.                 
  Mr. Greany noted that previously adopted language  indicates                 
  that any recovery will be appropriated back  to the original                 
  fund source.  He  noted that Amendment #9 would  clarify the                 
  amount  returning   to   the   Statutory   Budget   Reserve.                 
  Representative  Martin explained  the  intent  would  be  to                 
  demonstrate  to  the "people"  of Alaska  that there  was an                 
  attempt to balance the budget.                                               
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Martin                                                   
       OPPOSED:       Brown,   Grussendorf,   Kelly,  Kohring,                 
                      Mulder,  Navarre,  Parnell,  Therriault,                 
                      Hanley, Foster                                           
                                                                               
  The MOTION FAILED (1-10).                                                    
                                                                               
  Representative Martin  MOVED to  adopt Amendment  #10.   Co-                 
  Chair  Hanley   OBJECTED   for   purposes   of   discussion.                 
  Representative Martin stated that deleting Section  10 would                 
  prevent usage of the Constitutional  Budget Reserve until it                 
  was "really" needed.                                                         
                                                                               
  Mr. Greany explained the  "cash flow" situation.   He stated                 
  that the language in the existing section specifies that any                 
  amount  needed to balance the fiscal year budget, would come                 
  from the Constitutional  Budget Reserve.  He  specified that                 
  the monthly draws should not exceed the yearly balance.                      
                                                                               
  Representative  Brown  questioned  the sum  of  money  being                 
  appropriated.   Mr. Greany  suggested that  the most  likely                 
  amount  which would need to be taken from that fund would be                 
  $400 million dollars.  Representative Brown pointed out that                 
  would include funding  for education which was  not included                 
  in the operating budget.                                                     
                                                                               
  Co-Chair  Hanley  WITHDREW the  OBJECTION.   There  being NO                 
  further OBJECTIONS, Amendment #10 was adopted.                               
                                                                               
  Co-Chair Hanley discussed Amendment  #11 which would  delete                 
  "on" in Section #37 and insert "for the fiscal year ending".                 
  Co-Chair   Hanley    MOVED   to    adopt   Amendment    #11.                 
                                                                               
                                6                                              
                                                                               
                                                                               
  Representative  Brown  asked  the  effect  of  the  language                 
  change.                                                                      
                                                                               
  (Tape Change, HFC 95-77, Side 1).                                            
                                                                               
  JAMES BALDWIN,  ASSISTANT ATTORNEY GENERAL,  CIVIL DIVISION,                 
  DEPARTMENT OF LAW, explained that the change was a technical                 
  amendment.   He added that  a state  accountant opinion  had                 
  been  consulted, although  added that  there  will not  be a                 
  clear resolution regarding  the language change until  it is                 
  reviewed by the Supreme Court.                                               
                                                                               
  Representative Brown recommended  that use of  the dedicated                 
  funds should  be prohibited.   Mr.  Baldwin  noted that  the                 
  dedicated funds are directed  toward revenue sources  coming                 
  into  the  State.   He  stated that  prohibition  applies to                 
  earmarking those funds for a specific purpose.   There being                 
  NO OBJECTION to Amendment #11, it was adopted.                               
                                                                               
  Discussion followed  among Committee members  addressing the                 
  interpretation of the courts intent  regarding the dedicated                 
  funds.   Co-Chair Hanley  stated that  the Legislature  will                 
  make policy calls regarding "swept" funds.                                   
                                                                               
  Representative Martin MOVED to adopt the new Intent Language                 
                                                                               
  STATEWIDE                                                                    
                                                                               
  Representative Martin  MOVED  to adopt  Amendment  #1  which                 
  would address departmental  travel costs.   He provided  the                 
  Committee with a travel cost breakdown.  [Copy on file].                     
                                                                               
  Representative Grussendorf reminded Committee  members, as a                 
  result  of  the reduced  departmental  budgets,  more agency                 
  traveling will be required  to reach the outer areas  of the                 
  State.  Representative Parnell noted concern  that Amendment                 
  Representative  Mulder voiced  his  opposition that  such  a                 
  drastic  motion  would increase  supplemental  requests next                 
  year.                                                                        
                                                                               
  Representative  Martin explained  the  intent  would  be  to                 
  address  the  departmental use  of  lapsed funds.   Co-Chair                 
  Hanley   clarified    that   the   lapses    referenced   by                 
  Representative  Martin  referred   to  unauthorized   travel                 
  expenses,  although  remarked  that  it  was legal  for  the                 
  departments  to shift money  in the  contractual lines.   He                 
  agreed  that  the  subcommittees should  be  looking  at the                 
  travel components for each department, although, agreed that                 
  the amendment would create a drastic impact.                                 
                                                                               
                                                                               
                                7                                              
                                                                               
                                                                               
  Representative  Brown  OBJECTED  to  adopting Amendment  #1.                 
  Representative Mulder  advised  that  the  referenced  funds                 
  would not be lapsing funds.                                                  
                                                                               
  (Tape Change, HFC 95-77, Side 2).                                            
                                                                               
  Representative Navarre elaborated that  the departments need                 
  to have  the authority  to move  funds in  order to  address                 
  existing  problems.     He  emphasized  that  many   of  the                 
  departments  inabilities  to properly  function  result from                 
  legislative actions.  He asked Committee members to be aware                 
  of  the impact of  the proposed amendment.   Co-Chair Hanley                 
  disagreed, commenting  that  the  intent  would  not  remove                 
  flexibility.    He recommended  that  the  department travel                 
  should show in the personal services line.                                   
                                                                               
  Representative  Brown   asked  the  total  lapse   for  FY95                 
  contained in all lines.  Representative Martin was not sure.                 
  He  stated  that   a  Budget  and  Audit   Committee  report                 
  stimulated curiosity regarding the travel  component.  A $13                 
  million dollar disparity existed in  the departmental travel                 
  component.    Representative  Navarre  reiterated  that  the                 
  Executive branch of government must have a certain degree of                 
  flexibility in order to manage efficiently.                                  
                                                                               
  A roll  call vote was taken on the MOTION to adopt Amendment                 
                                                                               
       IN FAVOR:      Martin                                                   
       OPPOSED:       Kohring,   Mulder,   Navarre,   Parnell,                 
                      Therriault,  Brown,  Grussendorf, Kelly,                 
                      Foster, Hanley                                           
                                                                               
  The MOTION FAILED (1-10).                                                    
                                                                               
  Co-Chair Hanley explained that Amendment  #2 would propose a                 
  departmental "slim fast"; he added that the policy contained                 
  in the amendment  was first proposed by  the Administration.                 
  If  adopted, the agencies  would still retain  the option of                 
  paying staff at their original range  and step, but would be                 
  short the  general funds.    He noted  that it  was not  his                 
  intent to offer  the amendment,  although, had submitted  it                 
  for discussion and emphasized once again all options need to                 
  be considered  in order  to make  the necessary  substantial                 
  reductions to the budget.                                                    
                                                                               
  Representative Brown  asked if back-up information  had been                 
  updated in order to indicate  the new positions coming  into                 
  service.                                                                     
                                                                               
  ANNALEE  MCCONNELL,  DIRECTOR,   OFFICE  OF  MANAGEMENT  AND                 
  BUDGET,   OFFICE   OF   THE   GOVERNOR,   noted   that   the                 
                                                                               
                                8                                              
                                                                               
                                                                               
  administrative  salaries  have not  yet  been updated.   She                 
  explained,  that  "run"  is  usually  provided in  November,                 
  adding that it is a major and complicated process.                           
                                                                               
  DEPARTMENT OF ADMINISTRATION (DOA)                                           
                                                                               
  Co-Chair Foster MOVED to adopt Amendment  #7 which would add                 
  funding  to the  Kotzebue Technical  Center  for operational                 
  grants   in   the   amount   of   $400   thousand   dollars.                 
  Representative Martin OBJECTED.                                              
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Navarre, Brown, Grussendorf, Foster                      
       OPPOSED:       Martin,  Mulder,   Parnell,  Therriault,                 
                      Kelly, Kohring, Hanley                                   
                                                                               
  The MOTION FAILED (4-7).                                                     
                                                                               
  STATEWIDE                                                                    
                                                                               
  Representative   Mulder   MOVED  to   adopt   Amendment  #3.                 
  Representative  Brown  OBJECTED.     Representative   Mulder                 
  explained  that the  effect  of Amendment  #3  would add  an                 
  additional  $350  thousand   dollars  into  Alaska   Tourism                 
  Marketing Council (ATMC) for advertising.                                    
                                                                               
  Representative  Grussendorf  spoke   against  reducing   the                 
  components  suggested  in order  to  make the  ATMC increase                 
  possible.  Representative  Brown agreed  with Representative                 
  Grussendorf.   She stressed  that the  additional components                 
  had each been discussed on subcommittee level and that there                 
  were good reasons for taking no additional reductions.                       
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Mulder,   Parnell,   Therriault,  Kelly,                 
                      Kohring, Foster                                          
       OPPOSED:       Navarre,  Brown,   Grussendorf,  Martin,                 
                      Hanley                                                   
                                                                               
  The MOTION PASSED (6-5).                                                     
                                                                               
  Representative Mulder MOVED to report CS HB 100 (FIN) out of                 
  Committee with individual  recommendations.   Representative                 
  Navarre  OBJECTED.  He commented  that the Minority had been                 
  disappointed process  of accommodation within  the operating                 
  budget.  He elaborated that  the minority intended to  offer                 
  amendments  on  the  full  House  floor.    He  warned  that                 
  statewide needs are not being adequately addressed.                          
                                                                               
  Representative Grussendorf reprimanded the  Committee on the                 
                                                                               
                                9                                              
                                                                               
                                                                               
  priorities established  in the final House Finance Committee                 
  version  of  the budget.    He  noted unresolved  issues  of                 
  concern for all the departments.                                             
                                                                               
  Representative Brown  voiced appreciation on the  decorum of                 
  the  Committee,  while  noting  many  items which  were  not                 
  correct within the budget.   She pointed out  that subsidies                 
  to business had  been singled  out above the  needs of  many                 
  Alaskans.   The budget is not sufficient in emergency health                 
  services, public safety, the Office  of Public Advocacy, the                 
  Department of Law and the Department  of Fish and Game.  She                 
  concluded that she did not agree  with the priorities of the                 
  forthcoming budget.                                                          
                                                                               
  Representative Kelly  countered that the Majority should not                 
  have  their   motives   questioned  as   they   assume   the                 
  responsibility  to clean up the "mess"  made by the minority                 
  over the  years.  Representative  Grussendorf responded that                 
  basic problems  resulted during  the "watch"  of the  former                 
  Administration.   He  pointed  out that  the  intent of  the                 
  Legislature  should  be  to  increase  economic  development                 
  within  the  State, although  noted  that with  the proposed                 
  budget, those agencies which  could be of most service  have                 
  been dramatically cut.                                                       
                                                                               
  Representative  Navarre added  that the  budget process  had                 
  been driven  by a  "number".   Consequently, many  important                 
  areas of the budget were not addressed.  He pointed out that                 
  the   impacts   will   be   felt   throughout   the   State.                 
  Representative Navarre reprimanded Representative  Kelly for                 
  his perspective on the  budget crisis stating that it  was a                 
  misrepresentation of history and fact.                                       
                                                                               
  Co-Chair Hanley stated that it was  critical to realize that                 
  the  budget process  had  been a  tough  decision in  making                 
  reductions.  He emphasized that reductions are necessary.                    
                                                                               
  (Tape Change, HFC 95-78, Side 1).                                            
                                                                               
  Co-Chair Hanley added  that additional new revenues  for the                 
  State will be essential.                                                     
                                                                               
  Representative Navarre agreed  that the goal of  the session                 
  was to achieve a  budget supported by both the  Majority and                 
  the Minority.   The goal was  to create  a budget which  the                 
  House could  support  and  pass.   He  emphasized  that  the                 
  Minority represent  concerns statewide and pointed  out that                 
  there was little accommodation and objectivity in reaching a                 
  budget agreement between both parties.                                       
                                                                               
  A roll call  vote was taken on  the MOTION to move  the bill                 
  from Committee.                                                              
                                                                               
                               10                                              
                                                                               
                                                                               
       IN FAVOR:      Parnell, Therriault, Grussendorf, Kelly,                 
                      Kohring, Martin, Mulder, Hanley, Foster                  
       OPPOSED:       Navarre, Brown                                           
                                                                               
  The MOTION PASSED (9-2).                                                     
                                                                               
  CS HB 100  was reported out  of Committee with  a "do  pass"                 
  recommendation.                                                              

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