Legislature(1995 - 1996)
03/31/1995 09:00 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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 He stated that such a large amount withdrawn from 2 the corporation would have a negative impact on the national bond rating.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 4 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.