Legislature(2013 - 2014)HOUSE FINANCE 519

02/12/2013 01:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 22 BOARD OF MARINE PILOTS TELECONFERENCED
Moved CSHB 22(L&C) Out of Committee
+ HB 26 EXTEND BOARD OF PUBLIC ACCOUNTANCY TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 30 STATE AGENCY PERFORMANCE AUDITS TELECONFERENCED
Moved CSHB 30(FIN) Out of Committee
HOUSE BILL NO. 30                                                                                                               
                                                                                                                                
     "An Act  relating to  performance reviews,  audits, and                                                                    
     termination   of  executive   and  legislative   branch                                                                    
     agencies,  the University  of  Alaska,  and the  Alaska                                                                    
    Court System; and providing for an effective date."                                                                         
                                                                                                                                
1:35:40 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze discussed that a pending amendment for HB                                                                      
30 had been discussed at the prior meeting. He MOVED                                                                            
Amendment 1 in Representative Gara's absence.                                                                                   
                                                                                                                                
Representative Wilson OBJECTED.                                                                                                 
                                                                                                                                
Representative Kawasaki asked for an explanation of the                                                                         
amendment.                                                                                                                      
                                                                                                                                
Co-Chair Stoltze remarked he was stalling for time and made                                                                     
several comments about the amendment. He believed the                                                                           
amendment recognized that cutting budgets was tough.                                                                            
                                                                                                                                
Representative Gara joined the meeting.                                                                                         
                                                                                                                                
Co-Chair Stoltze  asked Representative  Gara to  address the                                                                    
amendment.                                                                                                                      
                                                                                                                                
1:38:11 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:38:40 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Representative Gara addressed Amendment 1:                                                                                      
                                                                                                                                
     Page 5, following line 21:                                                                                                 
                                                                                                                                
     Insert a new subsection to read:                                                                                           
                                                                                                                                
     "(d) If the  agency is not able to  identify 10 percent                                                                    
     of   the  general   funds   in   the  agency's   budget                                                                    
     appropriated  from  the  general  fund  that  could  be                                                                    
     reduced  or eliminated  using the  criteria set  out in                                                                    
     (c)(2)(A)  -  (C) of  this  section,  the agency  shall                                                                    
     identify which programs or elements  of programs on the                                                                    
     list required under (c)(2) of  this section do not meet                                                                    
     the  criteria  set  out  in (c)(2)(A)  -  (C)  of  this                                                                    
     section."                                                                                                                  
                                                                                                                                
Representative  Gara directed  attention  to page  5 of  the                                                                    
legislation. He  explained that  the amendment  was intended                                                                    
to provide the public  and other legislators with additional                                                                    
information  that would  enable  them to  understand the  10                                                                    
percent budget cut suggestions  required by the legislation.                                                                    
He  considered the  amendment to  be friendly.  He furthered                                                                    
that without  the amendment people would  receive a document                                                                    
listing a series of cuts  totaling 10 percent of an agency's                                                                    
budget.  He  expounded  that  the  bill  asked  agencies  to                                                                    
identify items  that (A) did  not serve a current  need, (B)                                                                    
were  not authorized  by the  state's  constitution, or  (C)                                                                    
were non-essential  to the agency's mission.  He stated that                                                                    
if agencies could not find  cuts under items (A) through (C)                                                                    
they were  directed to find  cuts in low  priority services.                                                                    
The   amendment  specified   that  the   report  issued   by                                                                    
consultants should identify which  of the standards the cuts                                                                    
met.  He  referred  to  an   opposition  argument  that  the                                                                    
amendment was  unnecessary because the report  would already                                                                    
recognize which of  the standards the proposed  cuts met. He                                                                    
countered  that  it may  or  may  not; the  amendment  would                                                                    
require it to do so.  He emphasized that the amendment would                                                                    
allow the  public to see  why the cut had  been recommended.                                                                    
He added that the amendment  would ensure that agencies knew                                                                    
why they had chosen the cuts they had.                                                                                          
                                                                                                                                
1:41:59 PM                                                                                                                    
                                                                                                                                
Representative  Wilson expressed  opposition to  Amendment 1                                                                    
and noted it had also  been heard in a subcommittee meeting.                                                                    
She  was concerned  that cuts  may not  always fit  into one                                                                    
distinct category.  She believed  the point of  the exercise                                                                    
was  to  identify  proposed  cuts   based  on  the  language                                                                    
outlined  in the  bill. She  opined  that providing  further                                                                    
detail on  why something  had or had  not been  proposed for                                                                    
cuts could be confusing.                                                                                                        
                                                                                                                                
Representative  Costello spoke  against  the amendment.  She                                                                    
believed  that  the  amendment  weakened  the  legislation's                                                                    
intention  to   ask  some  very  difficult   questions.  She                                                                    
stressed  that the  legislature, departments,  agencies, and                                                                    
the  public would  all be  asking tough  questions. She  was                                                                    
concerned that allowing the "out"  would avoid the difficult                                                                    
conversation. She  had learned there would  be opportunities                                                                    
for   public   testimony.    She   stressed   that   working                                                                    
collectively would help determine ways  to move forward in a                                                                    
less   certain  budget   situation.   She  appreciated   the                                                                    
amendment's recognition  that the process would  not be easy                                                                    
for anyone.                                                                                                                     
                                                                                                                                
1:44:02 PM                                                                                                                    
                                                                                                                                
Vice-Chair Neuman  surmised that  the amendment  would allow                                                                    
an agency to  opt out of recommending 10 percent  cuts if it                                                                    
could  not meet  the criteria  under (c)(2)(A).  He believed                                                                    
that  public  notice  had  been  addressed.  He  pointed  to                                                                    
language that had been added  in subcommittee (page 2, lines                                                                    
5  through 8)  related  to  the results  of  the review  and                                                                    
providing information  to the  Legislative Budget  and Audit                                                                    
Committee (LB&A). He  stated that the public  would be aware                                                                    
of the results when the audit was released.                                                                                     
                                                                                                                                
Representative  Gara  asserted  that  Amendment  1  was  not                                                                    
intended to have the result  discussed by Vice-Chair Neuman.                                                                    
He explained  that the amendment still  required agencies to                                                                    
identify  10   percent  cuts.  He  stated   that  under  the                                                                    
legislation an  agency would first  look for  items outlined                                                                    
in (c)(2)(A)  through (C) on  page 5;  if cuts could  not be                                                                    
found under the three categories  the agency was required to                                                                    
find other cuts  (page 5, lines 9 and 10).  He stressed that                                                                    
the  amendment would  only require  the disclosure  of where                                                                    
the  cuts had  come from;  the disclosure  would enable  the                                                                    
public to  understand how  the cuts  had been  identified by                                                                    
auditors. He emphasized that the  amendment would not change                                                                    
the 10 percent requirement in the legislation.                                                                                  
                                                                                                                                
Representative Thompson referred to page  5, lines 20 and 21                                                                    
and  read  from  the  bill:  "...including  agency  mission,                                                                    
results-based  measures,  prioritization of  core  services,                                                                    
and  all programs  within the  core services  from the  most                                                                    
important to the least important."                                                                                              
                                                                                                                                
Representative   Thompson  concluded   that  the   provision                                                                    
requiring   the  information   to   be   submitted  to   the                                                                    
legislature [page 5, lines 18  through 21] would likely show                                                                    
where the proposed cuts had come from.                                                                                          
                                                                                                                                
Co-Chair  Stoltze  opined  that the  amendment  provided  an                                                                    
"out"  because it  did not  direct agencies  to find  the 10                                                                    
percent  cuts.  He  stated  that   the  bill  only  required                                                                    
agencies to make  a recommendation; it did  not mandate that                                                                    
the legislature  had to follow  the recommendations.  He saw                                                                    
nothing  wrong with  asking agencies  to designate  the cuts                                                                    
and noted  that agencies could  include a narrative  if they                                                                    
believed the  cuts were not efficacious.  He reiterated that                                                                    
he   was  uncomfortable   giving   agencies   an  out   from                                                                    
identifying the cuts.                                                                                                           
                                                                                                                                
1:50:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   MIKE   CHENAULT,   SPONSOR,   opposed   the                                                                    
amendment. He  clarified that the  review committee  did not                                                                    
make  recommendations  for  agency cuts;  departments  would                                                                    
make recommendations  to the committee. He  believed that if                                                                    
department's  could  not locate  the  10  percent cuts  they                                                                    
would  have the  ability to  provide a  narrative explaining                                                                    
why they believed  items were essential to  their budget. He                                                                    
understood  the  concerns,  but believed  departments  would                                                                    
provide commentary  on the impact  cuts would have  on their                                                                    
current budgets.                                                                                                                
                                                                                                                                
Co-Chair Stoltze remarked that  he agreed with the sentiment                                                                    
he had  seen on a sign  that stated: "if it's  in the yellow                                                                    
pages why is government doing it?"                                                                                              
                                                                                                                                
Representative Kawasaki  voiced support for Amendment  1. He                                                                    
observed  that  if an  agency  was  not  able to  make  cuts                                                                    
specified  in (c)(2)  (A)  through (C)  they  would have  to                                                                    
justify  the remaining  cuts.  He  believed the  information                                                                    
would help the review team  and the legislature to determine                                                                    
if the cuts were feasible.                                                                                                      
                                                                                                                                
Representative Gara  agreed that Co-Chair  Stoltze's concern                                                                    
was valid, but  stressed that the amendment  did not provide                                                                    
an out to agencies. He  clarified that the amendment did not                                                                    
alter  the  bill's  intent;  it  only had  to  do  with  the                                                                    
commentary included  in the report.  He elaborated  that the                                                                    
amendment  would require  disclosure of  where the  cuts had                                                                    
come from  (either from (c)(2)  (A) through (C) or  from the                                                                    
lowest priority services in the  agency). He emphasized that                                                                    
the amendment  would not change the  consultants' proposals.                                                                    
He communicated that the amendment's  purpose was to provide                                                                    
information to the public.                                                                                                      
                                                                                                                                
1:55:36 PM                                                                                                                    
                                                                                                                                
Representative  Chenault underscored  that  the review  team                                                                    
would  not be  responsible  for identifying  the 10  percent                                                                    
cuts; agencies would  be in charge of  bringing cuts forward                                                                    
to the review team.                                                                                                             
                                                                                                                                
Representative Wilson MAINTAINED her OBJECTION.                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Gara, Kawasaki                                                                                                        
OPPOSED: Costello, Edgmon,  Holmes, Munoz, Neuman, Thompson,                                                                    
Wilson, Stoltze                                                                                                                 
                                                                                                                                
The MOTION FAILED (8/2).                                                                                                        
                                                                                                                                
Representative  Costello addressed  the bill's  three fiscal                                                                    
notes.  The  first  was  a  zero note  from  the  Office  of                                                                    
Management and Budget. The second  note from the Division of                                                                    
Legislative Audit  included $642,300 for three  positions in                                                                    
FY 13,  zero fiscal impact  for FY 14, $1,351,900  for three                                                                    
positions in  FY 15,  $1,198,900 for  three positions  in FY                                                                    
16, $1,324,900 for three positions  in FY 17, and $1,177,900                                                                    
per year for three positions in FY 18 and FY 19.                                                                                
                                                                                                                                
1:58:35 PM                                                                                                                    
                                                                                                                                
Representative Costello relayed that  the last note had zero                                                                    
fiscal  impact  and was  from  the  Division of  Legislative                                                                    
Audit.                                                                                                                          
                                                                                                                                
Co-Chair  Stoltze communicated  that  the  fiscal notes  had                                                                    
been  discussed at  the prior  meeting. The  notes addressed                                                                    
the issue of potential contracting.                                                                                             
                                                                                                                                
Vice-Chair  Neuman  MOVED  to report  CSHB  30(FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSHB 30(FIN) was REPORTED out  of Committee with a "do pass"                                                                    
recommendation  and with  one new  fiscal  impact note  from                                                                    
Division  of Legislative  Audit,  one new  zero fiscal  note                                                                    
from Legislative  Finance Division, and one  new zero fiscal                                                                    
note from the Office of Management and Budget.                                                                                  
                                                                                                                                
1:59:52 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:00:27 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                

Document Name Date/Time Subjects
HB22 Supporting Documents-Audit Summary.pdf HFIN 2/12/2013 1:30:00 PM
HB 22
HB22 Supporting Documents-Audit 08-20076-13.pdf HFIN 2/12/2013 1:30:00 PM
HB 22
HB 22 Sponsor Statement.pdf HFIN 2/12/2013 1:30:00 PM
HB 22
HB 26 Sponsor Statement.pdf HFIN 2/12/2013 1:30:00 PM
HB 26
HB26 Audit Report Digest.pdf HFIN 2/12/2013 1:30:00 PM
HB 26
HB22 Supporting Documents.pdf HFIN 2/12/2013 1:30:00 PM
HB 22
HB26 Audit Public Accountantcy.pdf HFIN 2/12/2013 1:30:00 PM
HB 26
HB 30FN.3-Leg Audit-2-11-13.pdf HFIN 2/12/2013 1:30:00 PM
HB 30
CSHB 30 Gara-1- Amendment.pdf HFIN 2/12/2013 1:30:00 PM
HB 30