Legislature(1995 - 1996)
03/14/1995 09:10 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 137(FIN) am
An Act making supplemental appropriations for the
expenses of state government; making capital
appropriations; amending operating appropriations;
making appropriations to the disaster relief fund and
to the Alaska marine highway system fund; and providing
for an effective date.
Co-chairman Frank directed that CSHB 137(Fin) be brought on
for discussion and referenced a draft SCS CSHB 137(Fin) (9-
GH0036\Z, Cramer, 3/13/95) and its accompanying spread sheet
highlighting differences between the Governor's amended
request and House and Senate versions. The Co-chairman then
commented on the following items within the Senate bill:
1. Addition of funding to the Dept. of Corrections for the
correctional academy to make Senate funding consistent with
House funding of $172.0.
2. Addition of $99.0 for correctional industries, which is
consistent with House funding.
3. Addition of $25.0 to the Dept. of Administration,
Alaska Public Offices Commission, for an administrative
hearing.
4. Addition of $500.0 to the Dept. of Law for repayment of
inappropriate federal cost allocation charges.
5. Addition of $4,394.1 for judgments and claims.
6. Reduction of uncollectible program receipts within the
Dept. of Health and Social Services, Alaska Psychiatric
Hospital, from $325.0 to $200.0.
7. Addition of $410.0 for judgment and claims in Dept. of
Health and Social Services, division of administration and
support services.
8. A technical amendment was made extending the lapse date
on Exxon Valdez Oil Trustee Council restoration projects,
consistent with approvals made by the Legislative Budget and
Audit Committee.
9. Addition of $191.0 to the Dept. of Public Safety for
the arbitrator's award relating to state trooper
detachments.
10. Funding of $1.00 to the Dept. of Transportation and
Public Facilities, marine highway stabilization fund,
because language relating to an appropriation to the fund is
included within the title of the bill.
11. Extension of the lapse date on the Egegik
organizational grant through the Dept. of Community and
Regional Affairs.
12. Addition of $39.4 to the Dept. of Administration for
stale dated warrants.
13. Addition of $95.8 to the Dept. of Labor to cover an
additional stale dated warrant request.
Senator Rieger asked if the $4.4 million supplemental to the
Dept. of Law for judgments and claims involves collection of
a number of small miscellaneous claims. Co-chairman Frank
explained that the largest amount, $3.2 million, involves
the Constantine case--a class action suit regarding fishing
violations. The department fined numerous fishermen more
than the court allowed. The remaining amount represents a
number of smaller claims.
Senator Donley raised a question concerning reduced funding
of $460.0 for Dept. of Health and Social Services activities
at McLaughlin. Co-chairman Halford explained that while the
Governor requested $580.5, "It looked like they could get by
with the $460.0." He acknowledged that the department had
subsequently requested the higher amount, and he suggested
that funding represents a policy call by committee. Co-
chairman Frank advised of a conversation with the Office of
Management and Budget indicating that other areas could be
reduced to increase funding at McLaughlin. KAREN PERDUE,
Commissioner, Dept. of Health and Social Services, came
before committee accompanied by KATHY TIBBLES, Acting
Director, Division of Family and Youth Services, Dept. of
Health and Social Services. Ms. Tibbles explained that if
the recent two weeks of reduced detention at McLaughlin
holds, and if vacant youth counselor positions are filled to
lessen the need for overtime, and all other budget items for
McLaughlin hold, the facility might end up with a $5.0 lapse
at the end of the year. She cautioned that the admission
rate has historically increased in the spring. The
department does not believe the situation at McLaughlin will
remain stable. The division has also been unable to obtain
registers to fill youth counselor vacancies. The register
will not be released for another five weeks. The division
has explored the possibility of utilizing funds from foster
care, residential care, and other youth facilities to cover
a deficit at McLaughlin, but has not found needed funding.
There is concern that an additional cottage will have to be
closed. In changing a 20-bed treatment facility to a
detention facility, the division released "as many kids as
we could on early releases." There are no further
discharges that can be made without endangering the
community. Placement of additional young people in
detention rather than treatment beds will lead to court
sanctions.
Ms. Tibbles concluded her remarks by indicating:
If we have an unhistoric decrease in detention for
the remainder of this year, we might be able to
cover with our existing resources. But we don't
believe that's going to happen, and . . . we do
need the full supplemental . . . we requested.
Commissioner Perdue noted that the department has other
funds to cover the shortfall. However, those funds are not
within the impacted BRU. She said she would provide a list
of areas where transfers would have to be made.
Comments followed by Senator Donley regarding lack of
ability to incarcerate dangerous juveniles. He attested to
the fact that police officers in Anchorage often have no
place to take young people who have committed a crime. Loss
of an additional 20 beds will not improve the situation.
Senator Zharoff asked for clarification of the $1.8 million
proposed by the Governor for the Toksook Bay school district
fuel spill settlement and cleanup. Co-chairman Frank voiced
concern that bad precedent would be set if the proposed
settlement is funded. DUANE GUILEY, Director, School
Finance, Dept. of Education, came before committee. He
explained that the state owns both the school building and
the site upon which it is located. The school district uses
the building on a use permit. A 5,000 gallon oil spill
occurred in 1990. The community of Toksook Bay filed an
action against the district and listed the state as owner.
End: SFC-95, #15, Side 1
Begin: SFC-95, #15, Side 2
The state and school district had a number of discussions
with plaintiffs in an attempt to settle, prior to going to
court. At a mediation session before a judge in Anchorage,
the state informed the district that the state had a
preference for settlement and suggested that the district
join the state in an attempt to reach a "global settlement."
The district chose not to settle in advance. The state
proceeded to settle and has received tentative approval of
the settlement, pending funding by the legislature. The
$1.8 million will "get the state out of the lawsuit
entirely." The district would then go forward to jury
trial.
Senator Rieger inquired concerning damages claimed in the
suit. Mr. Guiley advised that the initial claim was $40.4
million. That amount consists of miscellaneous health
claims--fear of potential for leukemia and cancer and other
such diseases as a result of the petroleum product entering
their homes through the water system. Mr. Guiley attested
to claims of short-term nausea, dizziness, and other
discomforts. There was also the inconvenience of not having
access to water in one's home, having to haul water, and
having to deal with honey buckets. Not all miscellaneous
claims have been documented and approved by the state. The
class-action suit involves approximately 500 residents of
the community.
BARBARA RITCHIE, Assistant Attorney General, Dept. of Law,
next came before committee to certify to the class-action
nature of the suit.
In response to a further question from Senator Rieger, Mr.
Guiley reiterated that the $1.8 million "settles the state's
interest entirely." He referenced attorney fees and
interest under "the Rule of 82." The total award would be
approximately $3,600 per plaintiff. The settlement amount
would be divided among individual claims, attorney fees, and
costs. Estimated attorney fees total $110.0. The
settlement consists of that amount, an $800.0 judgment,
prejudgment interest of $290.0, reimbursable costs of
approximately $100.0 for actual medical expenses incurred,
and avoided defense cost of not proceeding to jury trial.
In response to a question from Co-chairman Halford, Mr.
Guiley said that the settlement was based on an assessment
of risk by the Dept. of Law. The settlement was also
negotiated by the Dept. of Law.
Co-chairman Halford voiced his understanding that the water
system at Toksook Bay was posted and known to be "in
trouble." People continued to use the water even after it
was posted as unsuitable. Mr. Guiley concurred. He
explained that there are two sources of water in Toksook
Bay. The secondary water source is used in the event the
primary source freezes. The secondary source is non-potable
water from an aquifer. The non-potable water supply was
contaminated by the spill. The city was notified of the
spill by the school district. The city decided to turn on
the backup supply to prevent the entire system from
freezing. It appears that the city may have had notice of
the contamination prior to turning on the backup supply.
In response to a question from Co-chairman Halford, Mr.
Guiley informed members that the city joined the class-
action suit filed by individual residents. The state had a
counterclaim against both the city and the local Native
corporation because of the appearance of spills from other
bulk tanks in the community and those located at the store.
The Co-chairman asked if the source of pollution was
conclusively proven to be "just the school." Mr. Guiley
advised that the 5,000 gallon spill was documented based on
records of volume in the tanks. The aquifer was tested for
contamination, and the samples of oil in the aquifer matched
samples of oil from the bulk fuel tanks at the school
district. In addition to that spill, oil is seeping out on
the beach. It appears that oil on the beach may not be from
the 5,000 gallon spill at the school but from Native
corporation tanks at the store. Over time, there has been
more than one spill. A previous 1,000 gallon spill was also
documented when the BIA ran the school, prior to state
possession of the facility.
Senator Donley inquired concerning the basis upon which the
Dept. of Law recommended payment of the settlement. Barbara
Ritchie explained that, under present statutes, the state
incurred strict liability for damages from the spill. The
state cannot avoid paying some amount of damages. The facts
indicated that pursuing the issue through the courts would
cost at least half a million dollars in attorney time and
might have avoided liability to only "about 100 of the 500
plaintiffs." Given the nature of jury awards in these types
of circumstances, the Dept. of Law believes that a
settlement of $3,600 per plaintiff is an excellent
settlement. It was thus negotiated and recommended for
funding.
Senator Donley asked what percentage of individual damages
is represented by the $3,600 settlement. Ms. Ritchie said
it would depend upon what happens with the balance of the
case. Most of the plaintiffs are children who have suffered
"real damages" in the nature of short-term health effects,
interruption of water service, etc. The Senator asked how
much the department anticipates plaintiffs will collect from
others in the suit. Mr. Guiley explained that the state
initially argued that it had 10% responsibility because the
state was merely the owner of the building and site while
the district was the actual operator. As attorneys
attempted to negotiate the settlement before the judge, the
judge said he was not interested in apportionment. He
instead sought global settlement. The amount the district
negotiated with plaintiffs to a point close to settlement
was "at least three times that of the state . . . ." The
district argued the other side of the issue, saying that it
had only 10% liability and the state had 90% because the
state failed to provide the district adequate resources to
properly maintain the building. Senator Donley asked that
in the future the Dept. of Law send before committee the
attorney who actually worked on the case. Ms. Ritchie
explained that the primary attorney is located in Anchorage.
Co-chairman Frank directed that he be contacted via
teleconference.
Senator Rieger noted reference to strict liability statutes
and voiced his understanding that they relate to cleanup
costs rather than damage awards to third parties. Ms.
Ritchie advised that, in this instance, the strict liability
of the State of Alaska flows from the fact that the state is
the owner of the property. The state, as the owner, is
responsible for both cleanup and reimbursement of parties
for damages under the statutory scheme of strict liability.
Senator Sharp voiced his understanding that the secondary
water supply was never potable. Mr. Guiley concurred. The
Senator then asked if ongoing testing indicated
contamination prior to the spill. Mr. Guiley acknowledged
testing of the primary water supply. He stressed that the
contaminated aquifer was the backup. The primary source has
problems with temporary freezing during extreme weather
conditions. The backup supply was non-potable due to
inclusion of chemicals and metallic particles not due to
petroleum product. The state hired experts to conduct
testing and analysis of the contamination in an attempt to
trace the petroleum product to specific supplies within the
community. There was sufficient evidence to convince
attorneys that "It was, in fact, the same oil that came from
the school district tanks that was in the aquifer."
The cleanup to which the state has agreed is contained
within a written plan approved by the Dept. of Environmental
Conservation. It is limited to $400.0. The budgeted cost
of the cleanup, scheduled to take place this summer, is
$397.0. The cleanup plaintiffs want, based on professional
estimates, is a $10 million cleanup. Plaintiffs want all
oil removed from the aquifer. The $397.0 cleanup will not
do that, but it will remove oil to the extent that DEC will
approve the cleanup as sufficient under state statutes.
Co-chairman Halford stressed that the city made the decision
to run contaminated water through the system after it knew
"the water was bad" because it wanted to protect its primary
system. That had nothing to do with the school district.
The city should not now be party to a lawsuit "suing us for
their action." Mr. Guiley said that the primary purpose of
the settlement is to release the state from the claims of
individual residents. When the settlement is finalized, the
state will receive a release from "all of those claims as
well as from the city." He again referenced counterclaims
against the city and Native corporation relating to "their
apportionment of the damages from the total oil spill which
relates to the spill at the beach site." Co-chairman
Halford asked if the state intends to pursue the
counterclaims. Mr. Guiley voiced his understanding that if
the settlement is funded by the legislature, the
counterclaims may continue against the school district to
recover the $397.0 in cleanup costs. He advised that he was
unsure whether counterclaims would continue against "the
other plaintiffs." Senator Donley voiced frustration that
the school district would merely come to the legislature for
more money. It thus appears that money is merely being
shifted around.
Senator Zharoff asked if the state would be completely out
of the case should the settlement go forward. Mr. Guiley
responded affirmatively, saying:
Yes. The state would be completely out of it to
the extent of the plaintiffs. And then, if the
state were to continue this effort, it would be
only to recover costs incurred.
Senator Zharoff voiced his understanding that the state is
viewed as the "deep pocket" in the case. Mr. Guiley
answered:
Certainly . . . in the apportionment, where the
state originally tried to argue the 10%
responsibility with the district being 90%
responsibility [sic]. The concern is that if
there is a substantial settlement against the
district, that, in fact, the state may end up
having to pay the cost anyway.
Senator Donley concurred, noting that if the state gets out
of the case, and the school district does not do a good job
of defending itself and is subsequently hit with a "big
judgment," the state will end up paying that also. Mr.
Guiley observed that the district has resources upon which
it can draw. That would depend upon to what extent the
legislature would require the district to be responsible for
its own claims.
Senator Zharoff voiced his understanding that "Everybody is
agreeing to settlement to some degree" but there is some
difference between the city and plaintiffs. Mr. Guiley said
that the district and plaintiffs were "very close to a final
settlement." Negotiations "came down to within a couple of
hundred thousand dollars," but they could not come to final
agreement. At this point, the case is scheduled for a jury
trial in Bethel.
Co-chairman Frank directed that review of other portions of
the supplemental request proceed pending establishment of a
teleconference link with the Dept. of Law in Anchorage.
Senator Donley raised a question regarding funding for the
public defender agency within the Dept. of Administration.
Co-chairman Frank said that supplemental funding puts the
agency above last year's request by the Governor. Senator
Donley referenced comments by the agency that its budget is
case driven. However, the agency fails to discuss
administrative decisions relating to how much is spent on
individual cases. Comments from those in the legal
community indicate that the state provides "some outstanding
defenses for criminals in this state--much more than any
ordinary citizen could ever provide for themselves . . . ."
Co-chairman Frank concurred in frustration over what is
adequate, what choices are made, and what controls are in
place. The budgetary message should be that there are
limits to what the legislature is willing to provide. The
agency should be challenged to manage within the
appropriated level.
Senator Donley advised that he was not convinced of need for
the $50.0 in supplemental funding. ALISON ELGEE, Deputy
Commissioner, Dept. of Administration, briefly came before
committee. Senator Donley inquired concerning the number of
convictions overturned because of inadequate representation
by the public defender's office. Ms. Elgee deferred
comment to Mr. Salemi, director of the agency, and offered
to make arrangements for him to testify via teleconference.
Co-chairman Frank asked that Senator Donley pursue his
concerns through the subcommittee reviewing the budget for
the Dept. of Administration.
Ms. Elgee advised that budgets for the office of public
advocacy and public defender have, over the last several
years, been developed based on prior year plus supplemental
funding. That does not provide a factor for substantial
case load increases experienced by both agencies. The cost
per case is decreasing, but the sheer volume of activity
drives up program costs.
Comments followed by Senator Donley regarding need for
recommendations for reducing both costs and volume. Ms.
Elgee attested to a 30 to 40% reduction in costs, resulting
in an average cost of $500 per case. Senator Donley
suggested need for statutory changes to allow the agencies
to perform within budget limitations. Ms. Elgee spoke to
recommendations stemming from criminal justice working group
efforts. She specifically noted need to reduce the
incidence of alcohol use because of its correlation to
violent crime. Senator Donley voiced need for changes to
"the structure . . . that compel the state to provide a
certain level of defense." Ms. Elgee attested to controls
which restrict evidence processing to that needed to
response to the prosecution's case. Further discussion of
parameters followed.
Co-chairman Frank advised of a teleconference link to the
Dept. of Law in Anchorage. [The following is a
transcription of teleconference discussion of the Toksook
Bay settlement.]
CO-CHAIR FRANK: We do have Chris Funk, from the Dept. of
Law, in place of the attorney that negotiated the Toksook
Bay settlement. He apparently . . . I don't know
if it's a he or she, but this attorney apparently
knows something about the case. Are you on line?
Yes, go ahead.
BARBARA RITCHIE: Mr. Chair. Yes, it should be Ray Funk.
CO-CHAIR FRANK: Ray? Oh, okay.
BARBARA RITCHIE: Chris Kennedy is apparently on leave this
week.
Ray Funk is in the tort section in the Fairbanks office
and was also involved in the case.
CO-CHAIR FRANK: We got the names transposed here. So,
okay. Is it Mr. Funk then?
FUNK: Yes, sir, can you hear me?
CO-CHAIR FRANK: Yes, we can.
FUNK: I wanted to clear up one matter first, that Barbara
Ritchie brought to my attention. The question was, was
the case a class action. The case was not filed
as a class action, but in trying to effect
settlement of the case, we were concerned that
there might be more suits later from other
individuals. And we made a settlement based upon
the court certifying a settlement class, to be
able to ensure that this litigation was a final
end to any and all potential claims that came out
of this fuel spill, for the state.
CO-CHAIR FRANK: Senator Sharp.
SEN. SHARP: Does that include the school district, if the
state pays 100 per cent?
FUNK: No. The school district is still litigating. We
made
attempts to have a joint settlement between both
defendants and the plaintiffs a couple of times, and
those have been unsuccessful to date.
CO-CHAIR FRANK: Senator Donley.
SEN. DONLEY: Well, Mr. Funk, I guess one of the concerns
I've got
is that, you know, as an attorney you're looking at
your client's interest (which is the state and the
people), but as a finance committee we've got to look
at the overall costs involved. And if we're paying for
the costs for not only your client but also for the
school district, I mean, we have a different frame of
reference in our decision making here. I'm wondering
did you consider, and I don't know whether it would be
or not, any advantage to the state staying in the case
to make sure the school district properly litigates.
Because, we're probably going to end up paying what
they pay too.
FUNK: We certainly looked at those concerns, and those
concerns were brought up by the school district any time
there was consideration of separate discussions of
settlement. And, those were reviewed all along.
As well, I've been on the phone as recently as
last Friday with various issues concerning the
defense, by the school district, of other claims.
They're interested in some of the information
we've developed, some of the experts . . . . No,
we are still recognizing the legislature's concern
about their defense of the case. We also have
some issues between us in terms of cross claims
between us and the school district that we
attempted unsuccessfully, to date, to resolve
through settlement discussion.
CO-CHAIR FRANK: Senator Halford.
CO-CHAIR HALFORD: What about the city? Are you proceeding
in any
counterclaims against the city for actually making the
decision that incurred the liability?
FUNK: There were counterclaims filed in the lawsuit
concerning
decisions by the city to pass the oiled water on to the
residents of Toksook Bay. And, in settlement of this
case, those were part of the dismissal. Those are
still being pursued by the school district as to their
part of the case. But, part of the resolution of the
lawsuit was our dismissal of those counterclaims.
CO-CHAIR HALFORD: Oh, so you're going to dismiss the
counterclaims against the city as a part of this deal?
FUNK: Yes, Senator.
CO-CHAIR HALFORD: What was the reason that the city's
primary system was allowed to freeze up?
FUNK: I'm sorry, sir, I don't . . . . The system had been
faulty and they were worried about it freezing up. And,
it was because of that concern--that it might
freeze up--that it appears the city disregarded
advise from the Dept. of Environmental
Conservation, once the backup well had been
contaminated, to go ahead and use it to prevent
the freeze up. But, my understanding of the facts
are that it had not frozen up prior to that
occasion.
CO-CHAIR HALFORD: So, the primary source that was DEC
approved hadn't frozen up at all, then.
FUNK: No. They were worried, historically, I guess, that
it might. It's an infiltration system out of a stream.
The well that was contaminated was a backup well that
they tried never to use because it was also brackish
and made the water less potable. So, it was only used
on rare occasions and would only be used in these
concerns that during the winter the infiltration system
had some problems that led to the fear of freeze up.
CO-CHAIR FRANK: Senator Halford
CO-CHAIR HALFORD: Just following your proposed settlement
through, does it basically include virtually every
member of the population of the community as
a recipient of the individual shares?
FUNK: Yes, sir, that was the intent to prevent . . . .
When proposing a settlement class, we basically
proposed language that would include anybody in
the town or [who] passed through the town that
could have been contaminated during the period
when the contamination existed and the cleanup
prevented problems. [It took] nine months to
clean up the water system. So there was [sic] a
lot of problems in town and hauling water. Things
like that.
CO-CHAIR HALFORD: So, I assume the person that made the
decision to spread the water around was a resident of the
community. And, he will be . . . possibly if he
has a large family, he might get $30,000 in
damages for his decision to provide contaminated
water to the rest of the community.
FUNK: Sir, it was our understanding it wasn't any
individual person. But, it was a water committee
operating on the information they had. But,
the answer to your question is certainly that
would be a member of the potential settlement
class. And, I think a large part of the
settlement money would be spread evenly
between all of them. The proposal of
plaintiffs' lawyers to the court is that
certain moneys be paid in attorneys fees,
certain moneys be held for costs, and the
rest be distributed.
CO-CHAIR FRANK: Senator Donley, then Senator Sharp
SEN. DONLEY: Thanks, Mr. Chairman. I just wanted to walk
through this a little bit more too. So, when the state .
. . if the state . . . if we approve this
settlement, and the state dismisses its cross
claim or counterclaim against the city, who else .
. . is there . . . do the parties, then, also have
a claim against the city that would be ongoing?
FUNK: The school district does. My memory is, yes, that
they filed, also, a counterclaim against the city.
SEN. DONLEY: But the parties didn't sue the city? So the
city would be out of it, other than the school
district's counterclaim?
FUNK: The city is one of the plaintiffs who's suing the
school district as well. The suit was brought on behalf
of the city of Toksook Bay, the Toksook Bay
Traditional Council, and a large number of
individual plaintiffs that kept growing as they
tried to amend the complaint as people got to know
about the lawsuit. The eventual number of
individuals, I think, is close to 500 now, in the
thirteenth amended complaint.
SEN. DONLEY: Well, it's just that . . . . It seems like it
was the city which made the decision to turn on the water.
But since they'd be suing themselves, if they did that,
they rolled the state in. The state settles out.
They're out of it. They've got no liability. They've
got no personal responsibility to come up with the
money to pay their own people the damages they caused
to them.
FUNK: Certainly, the possibility of an insurance coverage
by the city that may have created some funds for a
resolution of the case that would leave them with a
percentage of fault or some liability was investigated.
And, because of recent pollution exclusions in insurance
policies, we couldn't locate any likely available pots of
money that would have provided good likelihood of their
being a serious participant for those issues.
SEN. DONLEY: Could you tell me the statute that's . . . .
Well, could you tell me exactly the cause of your belief
that, you know, . . . what the statutory law or
case law is that says the state has some exposure
here.
FUNK: Certainly, sir. The lawsuit was based upon claims
both under traditional negligence law and nuisance law,
but primarily it's based on AS 46.03.822, which is
the state statute for strict liability for the
release of hazardous substances. And, it sets
forth very, you know, very limited defenses in
sec. (b) of that statute--mostly concerning acts
of war and acts of God--none of which appeared to
at all apply to the state. But, strict liability
is for either the owner of the facility (in this
case the state had received title to this facility
from the federal government the year before) and
for the owner of the hazardous substance (in this
case the fuel) which was and is the school
district (LKSD). And they were also the ones in
control of the facility. Through a use agreement
with the state, they were in control of the
facility. So, both of us, in a sense, had strict
liability for this hazardous release and, under
the statute, then, are liable for the reasonable
costs of cleanup and for any damages that grow out
of the release.
SEN. DONLEY: But, what did the state do wrong, here? I
mean, it seems like unless the state actually did something
wrong, you still have . . . . You can subrogate
your claim. I mean, you can go after the parties
who did do something wrong to 100 percent of your
damage--anything you pay out, right?
FUNK: No, sir. That's what strict liability is all about.
It doesn't look at fault. It just says, 'Did a release
occur? Are you the owner or operator of the facility?'
Therefore, you have to pay damages.
SEN. DONLEY: Right. Right.
[Indiscernible comments due to more than one person
speaking.]
FUNK: . . . because of the difficulty of finding who's at
fault.
SEN. DONLEY: Right. Okay, so the state pays, but they
still can sue the parties who actually are at fault and
collect from them, can't they? Isn't that
what the countersuit and cross-claims are all
about?
FUNK: They're about indemnity and about contribution, which
are those issues. The state believes that its . . .
[End of tape transcription. The following portion of these
minutes reflects transcription of shorthand notes.]
(Senate President Pearce arrived at the meeting at this
time.)
Senator Rieger inquired concerning actual cleanup costs.
Mr. Funk explained that part of the settlement requires the
state to pay $1.8 million and conduct cleanup expected to
cost $400.0. He acknowledged that, at one point in the
discussion, plaintiffs wanted to control cleanup.
In response to comments by Senator Rieger concerning the
complexity of the issue, Mr. Funk again referenced sec. (b)
of the strict liability statute and said that it is clear,
in his legal analysis as well as review by other attorneys
in the department, that all factors apply. Language
reflects environmental law that makes it difficult for
anyone to slip out of liability. The law was drafted
against polluters. This is the first case where it is
coming back on the state as the defendant.
Responding to a further question from Senator Rieger
concerning the cross-claim, Mr. Funk said it was disturbing
to him that the state could not achieve a settlement that
included the school district as well. Mr. Funk attested to
brokered mediation and the fact that the state continues to
want discussion with school district lawyers. It would have
been better if all issues could have been resolved.
Co-chairman Halford said that his recommendation not to
include requested settlement funding in the supplemental was
based on the fact that it would, in effect, pay the people
who made the decision, at state expense. Payment also
appears to leave the state with further liability. He
reiterated his belief that the settlement should not be
funded in the supplemental. He further advised that he did
not think it should be funded at all. The Co-chair
suggested that the case should be litigated to conclusion.
Senator Sharp asked if any testing or evaluation of school
property was done prior to last year's transfer from the
federal government to the state. Mr. Funk responded that he
was unaware of an evaluation. The Senator suggested that it
was hard to believe the state would accept the transfer
without testing. Mr. Funk explained that the spill occurred
because a pipe rotted away and burst beneath the elementary
school, a few feet away from the backup well. The Dept. of
Law looked for ways to blame the prior owner of the
elementary school. Mr. Funk mentioned federal government
involvement in a minor spill at the site in 1975 or 1976,
but the Dept. of Law could find no evidence in this
instance. The backup well was always tested by the city,
and there was no major evidence of pollution. In 1990, a
maintenance man at the school found that a tank that should
have had 5,000 gallons of fuel oil was empty. It was the
rotting of the pipe that caused the pollution. The Dept. of
Law tried to link prior pollution to damages, but could not
find a good basis to advance a claim. The real damage to
the community appears to be from this spill.
Senator Sharp asked if the state performed a test. Mr. Funk
answered, "Not to my knowledge."
Senator Zharoff inquired concerning the effect of the state
not settling at this time, both in monetary and precedent
setting terms. Mr. Funk explained that the alternative is
to look at what could happen in a verdict. The Dept. of Law
believes that claims of strict liability would be the
determining factor. There is risk of a judgment in the tens
of millions of dollars. That is one of the reasons the
settlement was reached. The cost of litigation is also
anticipated to be expensive. The cost of experts would be
high since complex environmental issues are involved.
Discovery might require expensive drilling at a remote site.
It was for that reason that the state wanted the settlement.
Speaking to precedent, Mr. Funk voiced department concern
that the state, as owner, is responsible for speedy cleanup
efforts. The state needs to step forward and meet the
requirements it imposes on others.
Senator Rieger inquired concerning the date of the spill and
subsequent cleanup action. Mr. Funk said that the spill
occurred during the months of October and November, 1990.
In a couple of days, staff at the city noticed the backup
well was contaminated. Since no one seemed aware that the
state owned the facility, the school district hired
contractors to conduct cleanup. It took approximately 9
months to clean the water system. It was August of 1991
before the water was certified by DEC. To date, nothing has
happened in terms of cleanup costs. Part of the settlement
covers the cost to cleanup the aquifer, next summer.
Senator Zharoff raised a question regarding funding of $1.00
for marine highway stabilization as opposed to the $1.5
million requested by the ferry system, the $739.8 proposed
by the Governor, and the $400.0 provided by the House. He
suggested that the state would lose revenue because it would
have to reduce the number of sailings.
GARY HAYDEN, Director, Marine Highway System, Dept. of
Transportation and Public Facilities, came before committee.
Co-chairman Frank reiterated that inclusion of language
relating to appropriation to the Alaska Marine Highway
System fund in the title of the supplemental required the
Senate to appropriate something; hence inclusion of $1.00.
The Co-chairman referenced the subcommittee recommendation
that the supplemental cover only unavoidable costs rather
than needs that result from policy decisions by the
administration.
Mr. Hayden said that if the system does not receive the
three positions he would:
1. Keep the TUSTUMENA in dry dock at Seward for a
savings of $60.0 per week.
2. Keep the LaCONTI in dry dock in Bellingham and
save $50.0 per week.
Those savings will also reduce revenues $91.5 per week. In
the end the state would save $110.0 but lose $90.0. The
above vessels are more expensive to operate per the amount
of revenue they produce. In response to a question from Co-
chairman Frank, Mr. Hayden spoke to costs associated with
staffing levels (engine room and deck personnel), and
maintenance of power plants and lines when vessels are in
dry dock.
Begin: SFC-95, #17, Side 1
[Minutes from this point reflect transcription of tape
recording.]
Mr. Hayden said that should supplemental funding not be
forthcoming, in addition to extended dry docking of two
vessels, he would carry the imbalance forward into next year
and cut back on projected service for that fiscal year in an
attempt to balance the budget. Co-chairman Frank suggested
that if the $400.0 imbalance was carried forward, the system
would have a whole year to make up the difference. Mr.
Hayden concurred. He then explained that for the current
year the system is providing 307 weeks of service. The
budget for next year projects 303 weeks. Service would
probably be lowered to 295 or 300 to accommodate the
imbalance.
Co-chairman Halford inquired concerning the balance of the
marine highway fund. Mr. Hayden advised of $40 million,
including general fund deposits. Up to this point, the
system has generated approximately $22 million in sales. In
response to additional questions from the Co-chairman, Mr.
Hayden advised that approximately $12 million of the $14
million in the vessel replacement fund has been obligated to
the new vessel.
Discussion followed regarding the status of the new vessel.
Mr. Hayden said that it has been sent to the shipyards.
They are in the process of preparing stage I proposals for
return to the state. A preproposal meeting with the five
shipyards will be held in Seattle tomorrow. The state
expects to have a contract signed in August. The total
projected cost is $85 million.
Responding to a question from Senator Zharoff concerning how
carry forward of the imbalance would impact bookings and
schedules, Mr. Hayden explained that the draft of next
winter's schedule has been sent to communities for comment
and review. It currently proposes 303 weeks of service.
Less service will have to be provided because of the
imbalance. No bookings for next winter have yet been made.
Senator Zharoff noted that winter sailings are those that
impact Alaska residents. Mr. Hayden concurred.
Senator Zharoff next raised a question regarding the impact
of lack of supplemental funding for contract jails.
DEL SMITH, Deputy Commissioner, Dept. of Public Safety, and
LT. BACHMAN, Administrator of Contract Jails, Dept. of
Public Safety, came before committee. Mr. Smith advised
that funding for the 15 contract jail sites for FY 95 is
within the Dept. of Public Safety. Proposed legislation
would move the function to the Dept. of Corrections in FY
96. Mr. Smith referenced a reduction in the number of sites
from 17 to 15 when two jails were closed at the department's
request. The state has signed contracts for FY 95 with 14
communities. One contract remains pending. Thirteen of the
contracts are contingent upon approval of funding at the
level requested in the supplemental. The other contract,
with the North Slope Borough, contains language saying that
if it is not funded, the jail will close at midnight May 9,
1995. FY 93 funding is currently in place. The FY 95
supplemental request would adequately address the present
cost of operating the jails.
In response to a question from Co-chairman Frank, Mr. Smith
explained that charges brought against offenders within the
North Slope Borough are brought under state statutes. The
care of prisoners, following initial arrest, is the
responsibility of the commissioner of the Dept. of Public
Safety. The department thus contracts with community jails
to hold prisoners until they can be moved to a state
facility or an arrangement is made to retain them within the
community while they serve their time. With the exception
of Anchorage, most communities utilize state misdemeanor and
felony charges. Responding to an additional question, Mr.
Smith read from AS 33.30.071 concerning the custody, care,
and discipline of prisoners pending arraignment and
commitment to the Dept. of Corrections. Lt. Bachman added
that once the cost of operating the jail for the North Slope
Borough was identified, the community was not willing to
operate the facility at all. The state agreed to the terms
of the above-noted contract because the borough handles over
900 prisoners a year. The department would immediately
become responsible for those offenders if some form of
contract was not in place. In light of transport costs, the
department agreed to "allow them to at least operate until
the first of May . . . ."
Lt. Bachman further explained that contracts now in place
received an extension for the first four months of FY 95.
They expired the end of October, last year. Mr. Smith read
a listing of contract jail sites:
Bristol Bay Cordova Craig
Dillingham Haines Homer
Kodiak Kotzebue North Slope Borough
Petersburg Seward Sitka
Unalaska Valdez Wrangell
Facilities at Seldovia and Emmonak have been closed. He
reiterated that the state signed contracts with 14
communities, contingent upon funding by the legislature.
Discussion followed between Senator Sharp and Lt. Bachman
regarding municipal law enforcement. Lt. Bachman reiterated
that most cities bring charges under state law. With the
exception of Anchorage and Juneau, they do not use municipal
ordinances.
Senator Zharoff again inquired regarding the impact of lack
of supplemental funding, asking if the contracts would be
void. Mr. Smith responded that it would depend upon
situations at individual sites. Some may continue operating
under FY 93 level funding and absorbing the cost through
June 30 and then not agree to a new contract. Others may
serve notification that they will no longer participate and
will not house state prisoners. In that case, other
department resources would have to be directed toward
transport of offenders to the nearest state facility.
Unfortunately, state facilities are at capacity and beyond.
Other options would be requesting "own recognizance release"
as opposed to immediately placing offenders in jail.
Deferred prosecution is a further option. If transport is
necessary, troopers would have to be taken from other
functions to make the transfer.
Co-chairman Frank inquired concerning a comparison between
existing contracts and the FY 96 request. Mr. Smith
directed attention to backup information (copy appended to
these minutes) accompanying the supplemental request. He
explained that it reflects eight months of funding from
November 1, 1994, through the end of FY 95 on June 30.
Senator Zharoff voiced his understanding that offenders held
in contract jails are held for violation of state law. Mr.
Smith concurred. He then reiterated that those arrested
under state law become the responsibility of the
commissioner of the Dept. of Public Safety.
Co-chairman Frank suggested that the state has little
control over arrests at the local level which feed prisoners
into the state system. He then asked if communities share
in the cost of contract jails. Lt. Bachman explained that
the state pays 100% of the operating cost: personnel,
vehicle costs, electricity, and other utilities. The state
does not pay for the actual physical plant. That is
contributed by the community. Senator Zharoff asked if
communities could refuse to house state prisoners. Lt.
Bachman explained that contracts require that they take
state prisoners; they cannot refuse. In the absence of a
contract, they could decline to do so.
In response to an inquiry from Co-chairman Frank, Mr. Smith
told members that prior to November 1, when findings and
standards were developed for identifying actual costs for
which the state is responsible, there was no listing or
accountability for what the state was "paying for."
Standards provide stability to the program. FY 95
supplemental funding will get the effort on track and enable
the program to be predictable in future years.
The Co-chairman voiced his understanding that the department
will have to renegotiate contracts at the end of the fiscal
year in June. Discussion followed regarding potential for
increases and need for a FY 96 supplemental as well. Mr.
Smith advised that under the newly developed standards
formula, increases should be substantially smaller and
involve cost of living needs.
Senator Zharoff next inquired concerning lack of
supplemental funding in Alaska Housing Finance Corporation
for senior housing to match the HUD allocation level, asking
what impact it would have at Stebbins and Barrow.
BOB BARATKO, Director, Administrative Services, Dept. of
Revenue, came before committee. He advised of AHFC's
anticipation that HUD funds would be made available in the
next federal fiscal year. There is, however, no guarantee
that would happen.
Discussion of the overlap of state and federal fiscal years
followed. The state would lose the upcoming building season
by not capitalizing in FY 95. There is also a possibility
that HUD will not provide the same level of funding next
year. The funding ratio is approximately $5.00 federal
dollars for each state $1.00. Stebbins would receive $621.0
in AHFC funding. HUD funding totals $3,265.0. Barrow would
receive $621.5, with HUD funding of $3,262.9. Funding would
provide 20 housing units in each community.
In response to a question from Co-chairman Frank, Mr.
Baratko explained that AHFC's request is based on best
estimates provided by federal agencies. However, federal
agencies do not define the allocation of funds until well
into the federal fiscal year. Requested funding was
unanticipated when AHFC developed its budget submission.
Co-chairman Frank asked if projects are bid-ready for
construction this year. Mr. Baratko answered, "That's my
understanding, sir." Contractors are lined up to present
bids.
NANCY SLAGLE, Director of Budget Review, Office of
Management and Budget, advised of information from staff at
AHFC indicating that April is a critical time since that is
when the moneys are allocated by the federal government. If
corporate receipt moneys are available at that time, the
federal government will be able to make the allocation for
these projects and put them on line this summer. If AHFC
must await the FY 96 capital budget process, the state loses
that window, and the projects will be delayed a year. Co-
chairman Frank questioned whether the projects are bid-ready
to proceed.
Senator Rieger inquired concerning the federal allocation
process. Mr. Baratko voiced his understanding that federal
money is made available and identified to the states. The
states then have a certain amount of time to commit to the
match. HUD then releases funds to the state. If the state
does not provide the match, the offer is withdrawn for the
year. April is the deadline for the match. That allows HUD
time to reallocate funds to other states prior to the end of
the federal fiscal year in September.
Senator Sharp advised of three reasons to deny the request:
1. The poison pill clause in AHFC's latest mortgage
that prohibits transfer of unrestricted assets of the State
of Alaska, or any department agency, instrumentality, or
political subdivisions thereof, pursuant to legislative
appropriation, or otherwise, without receiving in
consideration thereof assets or equivalent fair market
value. Transfer of $1.00 without receipt of equal assets
could trigger default.
2. It is bad public policy to place significant
capital in a supplemental budget.
3. The funds are available in the federal budget
until October. They can thus be included in the FY 96
capital budget.
AHFC has not yet been able to cite a single instance wherein
bid-ready documents are in place. A two or three month
slide in providing the match does not lead to forfeit of
federal moneys. Mr. Baratko reiterated need for a
commitment by April. Senator Zharoff asked if the state had
previously lost federal funds by failure to make the April
commitment. Nancy Slagle said she did not know what the
historical background has been, since AHFC only recently
came under the executive budget act. Co-chairman Frank
voiced his recollection that similar funding was dealt with
in the capital rather than supplemental budget. Ms. Slagle
stressed need for timeliness.
Senator Donley directed attention to the following proposed
intent language:
The public defender, the office of public advocacy
and the Department of Law shall each, within 15
days of passage of this legislation, report to the
legislature on what statutory changes or
regulatory action can be constitutionally taken to
reduce the operational costs to the state of
defending accused individuals in the state
criminal justice system.
Co-chairman Frank called for objections. None were
forthcoming, and the intent was ADOPTED.
Co-chairman Halford directed attention to the following
additional intent:
It is the intent of the legislature that the
Department of Corrections shall maintain funding
for operation of the McKinley meat plant in Palmer
during the remainder of fiscal year 1995.
Co-chairman Frank called for objections. Senator Zharoff
inquired concerning need for the intent. Co-chairman
Halford explained that it merely seeks to ensure that the
department utilizes supplemental moneys for the purposes for
which they were sought.
MARGARET PUGH, Commissioner, Dept. of Corrections, came
before committee. She concurred that with proper funding,
the department should be able to maintain the plant. If
adequate funding is not provided, the plan was to continue
the prison industry laundry at the Lemon Creek facility
since it provides services to the marine highway system.
Beyond that, the department had not selected specific
industries to continue. The cost of continuing the McKinley
plant is approximately $13.0 for the remainder of the year.
Co-chairman Halford voiced his understanding that the plant
would continue to operate under the $99.0 funded in both the
House and Senate bills.
BOB COLE, Director, Division of Administrative Services,
Dept. of Corrections, came before committee. He advised of
department intent to hold all correctional industries
harmless until the end of the fiscal year.
Co-chairman Frank called for objections to the proposed
intent. No objection having been raised, the intent
language was ADOPTED.
Co-chairman Frank referenced March 10, 1995, correspondence
and asked how the department would deal with lack of funding
for the request. Commissioner Pugh advised that the
department "would like to seek another $2.5 million in
supplemental funding . . . ." Co-chairman Frank voiced his
understanding that the new request is in addition to the
$609.0. The Commissioner responded affirmatively, advising
that it is not possible for the department to compress a
savings of $2.5 million into the remaining months of the
current fiscal year. The department has scaled back and
reduced its original supplemental request from $13.6 to
$10.6 through efficiencies, recalculation of worker's
compensation, cancellation of planned training sessions,
cancellation of an emergency 25-bed CRC (community
residential center contract), movement of prisoners around
to balance the population and avoid overtime, and transfer
of prisoners to Arizona and to CRCs to avoid court fines.
End: SFC-95, #17, Side 1
Begin: SFC-95, #17, Side 2
If additional funding is not received, the department will
have to implement a hiring freeze. There are approximately
40 vacancies in the department, at the present time. Those
and subsequent vacancies would have to be held open.
Control of expenditure of overtime would require
rescheduling of annual leave. The department would also
implement "emergency purchase only" for supplies, travel,
and food. Cancellation of training means that the
department will not be in compliance with state statutes for
the level of training required for correctional and
probation officers. In addition to a sweep of all accounts,
the department would have to cancel some community
residential center contracts and place offenders in those
programs on some sort of commutation or return them to
institutions.
Commissioner Pugh said that cancellation of contracts for
community residential centers could be mitigated by use of
$570.0 in earned program receipts from DWI collections. The
department does not now have authority to receive and expend
those moneys.
Co-chairman Frank noted that in comparing the request to the
FY 95 budget request for institutions, the $609.0 brings the
department up to the level of the Governor's request. Funds
for out-of-state contractual have also been provided. The
legislature does not understand why the department is in a
bind. Commissioner Pugh explained that in FY 94, the
department held 55 to 60 positions in institutions open. In
October, the department filled those positions. Co-chairman
Frank advised of a commitment from the prior administration
that it would not spend beyond the FY 95 Governor's request.
Senator Donley voiced concern regarding the budget for the
Dept. of Corrections and suggested that other areas of the
budget should first be reduced before impacting ability to
incarcerate dangerous people. He suggested that furlough
programs have been pushed as far as they can go. There is
concern regarding endangerment due to lack of incarceration.
The Senator voiced support for a shift of priorities toward
corrections, from a public safety point of view.
Co-chairman Halford directed attention to a proposed
amendment involving three transfers within the Dept. of
Health and Social Services to provide $580.5 for the
McLaughlin Youth Center. Senator Rieger inquired regarding
the impact of the reduction in waivers services. JANET
CLARKE, Director, Administrative Services, Dept. of Health
and Social Services, explained that reduced funding relates
to the four Medicaid waivers the department received from
the federal government for adults with physical
disabilities, children with complex medical conditions,
older Alaskans, etc. The program is new and has existed
only a year. Projections on how fast the department was
able to get clients on the waiver have not proven to be
accurate. The funds will lapse if not expended. Senator
Rieger sought assurance that costs incurred in FY 95 would
not be paid out of FY 96 moneys.
In response to a question from Senator Zharoff, Ms. Clarke
described the process whereby the department reviewed the
budget for lapsing balances, or items that could be
deferred, to come up with funds for the McLaughlin Youth
Center. The Commissioner stressed that transfers should not
impact direct service.
Co-chairman Frank called for objections to the proposed
amendment. No objection having been raised, the AMENDMENT
was ADOPTED.
Senator Donley again raised public safety concerns due to
lack of adequate funding for the Dept. of Corrections.
Directing attention to Sec. 4, statewide operations for all
institutions, he MOVED to add an additional $2.5 million and
that the funding source be the underground storage tank
fund. Co-chairman Frank asked that the motion be HELD
pending a recess of the meeting.
Senator Zharoff voiced need for additional amendments
relating to the ferry system, community jails, Toksook Bay,
the gaming task force, office of public advocacy, the public
defendant agency, and Alaska Housing Finance Corporation.
Senator Donley advised that if his foregoing motion for the
additional $2.5 million fails, he would instead move to
allow department use of the $570.0 in program receipts from
DWI offenders.
RECESS - 11:40 A.M.
RECONVENE - 12:55 P.M.
Co-chairman Halford MOVED for adoption of the following
three-part amendment:
1. Add $1.5 million in general funds to the Dept. of
Law for oil and gas litigation. The Senate total
would remain below both the initial request
and House funding.
2. Add $570.0 in general fund, program receipts from
DWI fines to the Dept. of Corrections, institutions.
3. Add $106.9 to the Alaska Court System, trial
courts, for Arctic Slope royalty case.
No objection having been raised, the AMENDMENT was ADOPTED.
Directing attention to Sec. 20 of the draft SCS CSHB 137
(Fin) and the $500.0 appropriation to the disaster relief
fund, Co-chairman Halford MOVED to delete the last phrase at
page 4, line 30, thus removing "for the fiscal year ending
June 30, 1996." No objection having been raised, the
AMENDMENT was ADOPTED.
Senator Donley MOVED to restore the Governor's request for
statewide operation of Dept. of Corrections. He
acknowledged addition of the $570.0 in program receipts but
voiced need for restoration of the original request as well.
He further MOVED to use the underground storage tank
assistance fund as the funding source for the $2.5 million
requested by the department. Senator Sharp OBJECTED. Co-
chairman Frank called for a show of hands. The motion
FAILED on a vote of 2 to 4.
Senator Sharp referenced the $1.8 million in AHFC corporate
receipts proposed by the Governor for use as a match to HUD
funds for senior housing and asked that the administration
include it in the FY 96 capital budget, if it is not
ultimately funded in the proposed supplemental.
Senator Donley advised that he was not yet convinced a
supplemental is necessary for the public defender agency and
MOVED to delete the $50.0 from the Senate bill. Co-chairman
Frank voiced support for the recommendation by Senator
Phillips, chairman of the subcommittee on the Dept. of
Administration budget. The Co-chairman suggested that
earlier adopted intent should focus agency interest on
reductions.
In response to a question concerning impact of the deletion,
Senator Donley referenced past years where funding for the
public defender increased dramatically while prosecution was
held to little or no growth. At the present time, the
public defender has superior equipment to the prosecutor and
is able to provide costly defenses.
Senator Zharoff advised that he could not support the
deletion and would instead seek to offer an amendment
increasing support to $75.0. Senator Sharp voiced support
for the $50.0 recommended by the subcommittee chairman, but
also noted that he would ask that Senator Phillips
reconsider the recommendation. Co-chairman Halford
concurred in comments by Senator Donley but advised of his
intent to support the subcommittee recommendation. Co-
chairman Frank called for a show of hands. The motion
FAILED on a vote of 1 to 5.
Senator Zharoff then MOVED to increase funding for the
public defender agency from $50.0 to $75.0, because the case
load from court appointments has continued to increase.
Senator Sharp OBJECTED. Co-chairman Frank called for a show
of hands. The motion FAILED on a vote of 1 to 5.
Senator Zharoff next MOVED to increase funding for the
marine highway system from $1.00 to the House figure of
$400.0. Co-chairman Halford OBJECTED. Co-chairman Frank
called for a show of hands. The motion FAILED on a vote of
1 to 5.
Senator Zharoff MOVED to provide funding of $682.4 for
contract jails to cover existing contracts with communities.
He suggested that the state has taken advantage of
communities in the past and has not paid the full cost of
services. Contract jails have been a benefit to the state.
Without them, costs will escalate considerably, particularly
in the transport of prisoners. Co-chairman Frank
acknowledged concern on behalf of the legislature and
suggested that the jails would be dealt with in the FY 96
budget. Senator Donley concurred in concern, saying that
should the motion fail, he would support providing half the
funding from an alternative funding source. Senator Zharoff
expressed further concern that funding for the jails was
deleted in both House and Senate versions of the
supplemental. That leaves little room for negotiation in a
conference committee. Reduction of funding sends a clear
message to communities. Reaction is likely to be immediate.
Co-chairman Frank called for a show of hands. The motion
FAILED on a vote of 1 to 5.
Senator Donley MOVED to restore $341.2 (half of the original
request) to contract jails through an appropriation from the
agricultural revolving loan fund, saying that contract jails
represent a higher priority than loans. The Senator
reiterated that failure to provide funding leaves little
opportunity for negotiation. Co-chairman Frank called for a
show of hands. The motion FAILED on a vote of 2 to 4.
Senator Zharoff MOVED to provide the $1.8 million for the
Toksook Bay settlement. He suggested that if preventive
measures are not taken at this time, long-term costs will be
much higher. Both Co-chairman Halford and Senator Sharp
voiced OBJECTION. Co-chairman Frank called for a show of
hands. The motion FAILED on a vote of 1 to 5.
Senator Zharoff referenced the charitable gaming task force
which was established last year but not adequately funded.
He then MOVED to add $33.8 in general fund program receipts
to the Dept. of Revenue for costs associated with the task
force. Co-chairman Halford OBJECTED.
Senator Rieger voiced his recollection that the task force
reflects a new effort that was not authorized in the FY 95
operating budget. He then referenced the committee decision
not to fund policy calls that represent a change of
direction from the FY 95 budget. That approach is
appropriate given the present financial situation.
Senate President, Drue Pearce, advised that the legislature
passed gaming legislation. Regulations implementing the
legislation were taken to court by operators. Although the
Dept. of Law indicated the state would win in court, the new
administration established the referenced task force and is
not proceeding with either the law suit or establishment of
regulations. That is contrary to what the legislature
passed. Funding is not warranted.
Co-chairman Frank called for a show of hands on the motion.
The motion FAILED on a vote of 1 to 5.
Senator Zharoff again referenced the $1.8 million request
for Alaska Housing Finance Corporation for senior housing
and stressed need to capture federal dollars within the
necessary time frame.
Senator Donley MOVED to utilize the underground storage tank
assistance fund to restore half, $1,250, of the $2,500
request for the tourism marketing council. Senator Zharoff
questioned whether the source of funds had already been
committed. Nancy Slagle advised of an existing
appropriation of approximately $3 million for operating
costs of the program which are not reflected in access
documents provided to Legislative Finance. There is thus no
balance available in the storage tank assistant fund without
going back and reappropriating moneys already identified for
operation of the program for the current year. Senator
Donley said he was willing to do that.
Co-chairman Frank called for a show of hands. The motion
FAILED on a vote of 1 to 5.
Co-chairman Halford MOVED for passage of SCS CSHB 137 (Fin)
with individual recommendations. Senator Zharoff OBJECTED
for the purpose of statement. He then voiced concern that
the Senate bill would damage existing programs and suggested
that the committee went further than necessary in effecting
reductions. Senator Donley concurred in the OBJECTION.
End: SFC-95, #17, Side 2
Begin: SFC-95, #19, Side 1
He again stressed need to properly incarcerate those who
pose a danger to public safety. Co-chairman Halford
concurred and noted that addition of the $570.0 in program
receipts to statewide correctional operations will avoid
placing someone on early release because of lack of space.
Co-chairman Frank noted that funding incorporated within the
supplemental raises the budget above the governor's request
for FY 95. He concurred in concern but added that
responsible funding has been provided. While it may not
include everything the Dept. of Corrections would like, it
will force management decisions and prioritizations
consistent with outlines presented by the commissioner. The
approach is reasonable.
Co-chairman Frank called for a show of hands on passage of
the supplemental bill. The motion CARRIED on a vote of 4 to
2, and SCS CSHB 137 (Fin) was REPORTED OUT of committee.
Co-chairmen Frank and Halford and Senators Rieger and Sharp
signed the committee report with a "do pass" recommendation.
Senators Donley and Zharoff signed "no recommendation."
ADJOURNMENT
The meeting was adjourned at approximately 1:25 p.m.
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