Legislature(1995 - 1996)
06/04/1996 05:00 PM 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
SB 1005 - APPROP: MISCELLANEOUS
A draft CSSB 1005 (Fin) (9-GS2073\O, Utermohle,
6/4/96) was adopted without Sec. 1. Amendments 1
through 9 were distributed for review. Amendments
1 and 2 were adopted as amended. Amendments 3 and
4 were not offered. Amendment 5 failed on a vote
of 2 to 5. Amendments 6, 7, and 8 were adopted.
Amendment 9 was held per a request by the sponsor
(Senator Zharoff). Testimony was presented by
Senator Pearce, Annalee McConnell, and Nancy
Slagle. CSSB 1005 (Fin) was REPORTED OUT of
committee with a "do pass" recommendation.
Co-chairman Frank directed attention to CSSB 1005 (Fin) (9-
GS2073\O, Utermohle, 6/4/96) and conducted the following
sectional analysis:
Sec. 1. Contains legislative findings and intent for Long
Range Planning Commission work.
Sec. 2. Contains constitutional budget reserve language
dealing with both the sweep and the budget balancing
mechanism. It suggests that appropriations
be made under sec. 17(c), which requires a
three-quarter vote.
Secs. 3 and 4. Contain supplemental appropriations for
employee contracts.
Secs. 5 and 6. Contain appropriations for FY 97 for
monetary terms of collective bargaining contracts,
including non-covered employees.
Dollar amounts have been reduced in
Sec. 5(c) by $1.5 million for the
retirement incentive plan savings
and $975.0 for other employer cost
savings resulting from CSSB 1003
(Fin).
Sec. 6. Makes funding contingent upon passage of CSSB 1003
(Fin).
Sec. 7. Reduces the amount of the appropriation from the
general fund to the debt retirement fund for debt
retirement (both G.O. and school debt), due
to a reduction in the estimate required to
fully fund debt retirement this year. That
is a savings of $1.6 million from the earlier
budget.
Sec. 8. Contains an appropriation to the disaster relief
fund for the fire in MatSu.
Sec. 9. Relates to the MatSu fire. Sec. 9 makes an
additional appropriation to the fire suppression
fund. An additional amendment will
later be offered to increase this
appropriation and make an appropriation
to the MatSu Borough for costs
associated with that fire.
Secs. 10 and 11. Incorporate effective dates that failed in
SB 412 and SB 136 (the operating and capital budget
bills).
Sec. 12. States that Secs. 3 through 5 constitute explicit
approval of the monetary terms of collective
bargaining agreements.
Secs. 13 and 14. Contain effective date clauses.
Co-chairman Frank acknowledged additional amendments for the
bill and noted that the current draft does not contain
additional capital and operating items. The Governor and
other legislative members have requested inclusion of
additional budget items. The intent, at this time, is to
"get this bill moved from committee and into second reading
so that we would not lose any days in our legislative
process." Amendments to include additional operating or
capital items would be offered as floor amendments, over and
above those of today.
Senator Donley voiced concern regarding the fact that
minority members were previously advised to hold amendments
for floor action and were subsequently criticized for not
having offered them in committee. Co-chairman Frank said he
would have no problem with amendments being offered during
the committee process. He advised that he was not intending
to explain why the committee was not adding all of the
Governor's requests at this juncture. The committee does
not want to lose a day. If a member wants to make an
amendment, that opportunity is available.
Co-chairman Halford MOVED for adoption of CSSB 1005 (Fin)
(9-GS2073\O, Utermohle, 6/4/96) as a mark-up vehicle.
Senator Rieger OBJECTED. He then voiced concern regarding
Sec. 1. He suggested that Sec. 2 through the end of the
bill be adopted and Sec. 1 be considered piece by piece, or
another means of dividing the question be found. The
Senator objected to language which indicates intent to adopt
the long-range financial plan at a future date. He further
objected to specific provisions within intent language,
saying that they do not match his view of what the long
range plan should encompass.
Co-chairman Halford withdrew his motion for adoption of CSSB
1005 (Fin) and instead MOVED for adoption exclusive of Sec.
1 and any title provisions that might apply to Sec. 1.
Senator Zharoff questioned objection to Sec. 1 language.
Co-chairman Frank cited lack of time for argument over the
23 subsections within Sec. 1 since findings and intent do
not substantively impact the legislation. Senator Rieger
reiterated that language does not reflect his intent and
suggested that it is inappropriate to incorporate intent
saying that the legislature "is going to do, next year, what
we could have done this year." Senator Zharoff indicated
that language speaks to a fiscal plan and suggested that it
attempts to move the state toward a budget reduction process
over a period of time. At present, there appears to be no
plan other than to cut the budget. Proposed intent language
offers recommendations.
Co-chairman Frank called for further debate on the motion.
None was forthcoming. He then called for objections to the
motion. Senator Zharoff OBJECTED. Co-chairman Frank called
for a show of hands. The motion carried on a vote of 6 to
1, and CSSB 1005 (Fin) was ADOPTED with the exception of
Sec. 1.
Co-chairman Frank next referenced proposed amendments. Co-
chairman Halford spoke to need for a technical amendment to
AMENDMENT NO. 1. He asked that "and 1997" be added to
appropriation language for fire suppression funding so that
the third line of the amendment reads:
ending June 30, 1996 and 1997, from the following
fund sources:
Co-chairman Halford MOVED for adoption of AMENDMENT NO. 1 AS
AMENDED. No objection having been raised, AMENDMENT NO. 1
was ADOPTED AS AMENDED.
Co-chairman Frank referenced AMENDMENT NO. 2 and explained
that it would allow the public utilities commission to
utilize FY 96 moneys in FY 97, with the stipulation that
assessments for FY 97 be reflective of costs attributable to
the particular industry, whether that be telephone,
electric, etc. The funding is needed to deal with the
Federal Telecommunications Act of 1996. Co-chairman Halford
MOVED for adoption and requested unanimous consent. Senator
Rieger OBJECTED for the purpose of a question. He said that
a reading of the first four lines indicates a balance is
being carried forward. The following language reads as if
the balance is assessed against utilities in FY 97. Senator
Sharp voiced his understanding that it is necessary to apply
the assessment to the FY 97 regulatory charge for telephone
utilities because left over moneys are normally used to
reduce regulatory charges against all utilities, on a
prorata share, in the following year. The amendment says
that the $200.0 to be used exclusively for telephones should
be assessed against telephone utilities in addition to their
regular assessment next year.
Senator Rieger asked if the "balance on June 30," referenced
in amendment language, refers to a balance that will be
assessed against the utilities. Co-chairman Frank explained
that it refers to the unexpended balance in the existing
budget. That amount will be carried forward. Normally, any
amount carried forward from one fiscal year to the next, in
APUC, is used to offset future assessments. The unspent
$200.0 would normally have reduced everyone's assessment
(gas, electric, and telephone utilities). However, in this
case, the APUC is asking that the $200.0 be spent on
telephone utilities alone. That has the effect of
disproportionately increasing 1997 assessments for other
utilities. Language within the amendment says that the
$200.0 should be assessed against telephones so as not to
have an impact on the 1997 assessment for other utilities.
Senator Rieger suggested it would have been clearer to say,
at line 5, that "an equal amount shall be assessed against
the telephones." Senator Sharp voiced his understanding
that the $200.0 needed to "get up to speed" on federal
regulations was not included in the total amount approved
for FY 97. "This would be an add-to for telephones only."
Senator Rieger next asked for an explanation of what the
intent would do. He specifically asked if "universal
service" means the same access now available. Co-chairman
Frank asked if representatives from the Office of Management
and Budget were prepared to speak to the issue. ANNALEE
McCONNELL, Director, Office of Management and Budget,
responded, "Not specifically on the intent language
presented here, but, obviously, we did believe that it was
important for the state to have control of our own
responsibilities under the Federal Telecommunications Act."
The Governor thus included a request for funding. The
administration does not wish to end up with federal
preemption. Senator Donley referenced lengthy deliberations
in past years regarding universal service and voiced need
for an explanation. Ms. McConnell advised that she could
not speak specifically to that issue. She reiterated the
administration's belief that it is important that APUC "take
this up" per the recommended lapsing funds.
Senator Rieger voiced concern that language within the
amendment "seems to be almost a code for something that's
going on." SENATE PRESIDENT DRUE PEARCE came before
committee. She explained that earlier in the session, after
passage of the federal telecommunications act, a number of
phone utilities in Alaska (both local and long distance)
expressed interest in legislation to follow federal law. A
briefing for legislators was conducted by John Katz of
Alaska's Washington, D.C., office and one of Senator
Stevens' staff members to advise of federal action. Senator
Stevens was on the federal conference committee. Concern
was raised by APUC-regulated, local phone companies in
smaller communities. It was the recommendation of the Lt.
Governor and Mr. Katz (following review of the federal act
and in agreement with APUC) that it was not necessary,
during the present session, to attempt to make state
statutes comparable to the new federal act. It is still
unknown what new rules might impact the industry in Alaska.
Another federal joint board process will be put forward via
the federal communications commission. There is no Alaskan
on the joint board, yet it will be dealing with how Alaska
will be treated under the new act.
END: SFC-96, FSS #4, Side 2
BEGIN: SFC-96, FSS #5, Side 1
Senator Pearce voiced need for state ability to react should
new rules be forthcoming in the near future. It is expected
that the first new rule will issue "sometime this Fall."
The specific interest of locals, that led to proposed
language asking that the APUC review the new rules "before
they take action," stems from the fact that local telephone
companies are regulated by APUC. That means that if they
want to change their telephone rates, they have to go
through an APUC rate case. It requires filings, public
hearings, etc., and the APUC has a set amount of time in
which it is required to respond. Rate-making cases can take
from six months to much longer. Concern by small phone
companies is that, with the new telecommunications act and
with announced intention by some long distance carriers and
ATU to get into local phone service throughout the state,
larger unregulated telephone companies will make offers to
consumers to which local utilities will be unable to respond
because of need to proceed through APUC. Telephone
companies in smaller communities would have to file an APUC
rate case to "ever be able to get to any sort of competitive
prices." By the time they progressed through the process
and got to a competitive price (if they were able to match
the price), the time for action would be long gone. That
was the concern brought forward by local phone companies.
It is that concern that led to intent language within
Amendment No. 2.
Senator Pearce next referenced interest on behalf of some
long distance companies for the legislature to declare that
competitive local phone service was in the state's best
interest. Those bills have not passed. However, there is
still concern that the APUC might move forward, and local
phone companies would not be able to respond.
Senator Rieger advised that the foregoing testimony explains
the last four lines of the amendment. It does not, however,
speak to universal service, how it is defined, and what
"same access" means. He voiced concern that universal
service would raise questions of cross-subsidization and
expressed need to know what is being talked about before he
could support the language. In the past, Alaskan consumers
have enjoyed "some preferential treatment" compared to
benefits available in the "Lower Forty-eight," particularly
in terms of full cost allocations. He questioned whether
the subject language might involve "removing some support
for telephone service up here." Senator Pearce said she
could not speak to the universal service question. She
acknowledged a subsidy and further acknowledged questions
about how those subsidies would be distributed if there is
local competition. The APUC will eventually have to make
that decision. She said she did not know whether the
legislature would choose to be a part of that. The subsidy
question, and definition of universal service in terms of
the subsidy, will start with rule-makings under new federal
law. Only after those decisions are made will the matter
come to APUC for further action at the state level. Both
Senator Rieger and Senator Pearce acknowledged that they did
not know the impact of the language.
Senator Donley voiced support for the portion of the
amendment relating to authorization of program receipts. He
then asked why it was linked to subsequent intent regarding
universal service and APUC action on the federal
communications act. Senator Pearce reiterated concern by
telephone companies in small communities about what might
happen should APUC move forward before the joint board has
an opportunity to do its work. Senator Donley concurred in
Senator Rieger's concern regarding universal service and
access language.
Senator Donley next asked if utilization of the remaining
$200.0 means that telephone utilities would repay the $200.0
in FY 97, and it would be rebated back to other utilities.
Co-chairman Frank responded negatively. He advised, "I
think that they would get a little extra assessment for
their share of . . . the $200.0." He then recited his
understanding of the operation of the approximate $4 million
budget. In developing next year's budget, the legislature
assumed a $200.0 carryforward. Assessments would thus be
for $3.8 million, divided per the normal proration. Under
the proposed language, assessments would be $4 million with
the extra $200.0 being fully assessed against the telephone
industry. Assessments for other utilities would not change.
Ms. McConnell advised that when the administration was
considering inclusion of the amendment, discussions were had
with APUC regarding the mechanics "for how they had to do
this." The language the administration developed does not
specifically tie it to telephone utilities. It was the
administration's understanding that was "the way that they
needed to deal with it." She offered to check on the
question and bring it to committee attention for subsequent
correction, if there is a problem. Ms. McConnell referenced
earlier discussion indicating that, given the regulatory
process, "they would need to do it in a more generic
fashion." Co-chairman Frank directed that Ms. McConnell ask
if "they can live with our language."
Senator Donley asked if the administration had a position on
universal service and access language. Ms. McConnell
advised she was not an expert on the issue and could not
speak to it.
Co-chairman Halford suggested that since universal service
language is not understood, it be removed from the
amendment. He then cited the following text for removal:
in addressing the issue of what constitutes
'universal service' under the Act, the Alaska
Public Utilities Commission should define
'universal service' so that
and suggested that remaining language maintains the intent.
Co-chairman Frank concurred that removal represents an
improvement in the wording. Co-chairman Halford then
formally MOVED to delete the above-noted language so that
the remaining portion of the sentence reads:
It is the intent of the Legislature that Alaskans
will have the same access to the benefits of
modern telecommunications . . . .
No objection having been raised, the amendment to AMENDMENT
NO. 2 was ADOPTED.
Senator Zharoff reiterated earlier concern regarding "same
access," suggesting that perhaps it should read "same or
improved." Co-chairman Frank asked if access language was
necessary to the amendment. Senator Pearce said that
instructing APUC not to move forward until rule-making takes
place would comfort numerous small, rural utilities
statewide. Co-chairman Frank suggested that the amendment
be further limited by removal of access language so that the
last sentence reads:
It is the intent of the legislature that the APUC
should carefully review steps taken by the Federal
Communications Commission to implement the 1996
Federal Telecommunications Act prior to taking any
significant action which would affect the current
telecommunications marketplace in Alaska.
Co-chairman Halford MOVED to delete the following access-
related wording:
Alaskans will have the same access to the benefits
of modern telecommunications services as the
residents of the lower 48 states and that
No objection having been raised, the amendment was ADOPTED
and the latter language was deleted.
Senator Rieger voiced need to insert the word "any" in
remaining language between the words "review" and "steps."
He explained that without the insertion, language could be
construed to direct APUC "to not take any telecommunications
actions on anything until the federal commission has
completed its work." He suggested that the legislature
would not want to freeze activities entirely. Co-chairman
Frank called for objections to the addition. None were
forthcoming, and the third amendment to the amendment was
ADOPTED.
Co-chairman Frank called for objections to adoption of
AMENDMENT NO. 2 AS AMENDED. No objection having been
raised, AMENDMENT NO. 2 was ADOPTED AS AMENDED.
Co-chairman Frank next noted AMENDMENT NO. 3 by Senator
Donley. Senator Donley said he would not offer the
amendment.
Senator Donley also said he would not offer AMENDMENT NO. 4.
He voiced his understanding that the proposed bill now deals
only with collective bargaining agreements, the
constitutional budget reserve fund, "this telephone issue,"
and the MatSu fire. Co-chairman Frank concurred.
Senator Donley referenced AMENDMENT NO. 5 and noted that an
appropriation to the Dept. of Public Safety for victims for
justice was discussed toward the end of the budget process,
in regular session, and attempts were made to identify
alternative sources of funding through reappropriations.
None of those efforts were successful. As background
information, he advised that seven or eight years ago, the
state eliminated funding for advocates for victims. Since
that time, a non-profit organization, "victims for justice"
has stepped in to fill the gap. The organization is active
in assisting the judicial council and "putting on seminars
for judges," relating to sensitivity to victims. He urged
support for the $25.0 appropriation since attempts to find
reappropriated funding failed.
Co-chairman Frank directed that the meeting be briefly
recessed.
RECESS - 5:45 P.M.
RECONVENE - 5:55 P.M.
Upon reconvening the meeting, Co-chairman Frank acknowledged
general support for the appropriation within AMENDMENT NO. 5
but recommended that it not be approved at this time. He
advised it could be kept in mind for a floor amendment along
with other potential amendments that may be offered as part
of the final operating and capital item package. Senator
Donley acknowledged ongoing negotiations but voiced concern
that the request for victims for justice did not appear in
the Governor's budget. For that reason, he stressed need to
address the request in special session. He attested to
support for the appropriation in both the House and Senate
and suggested that it "just kind of fell through the
cracks."
Co-chairman Frank called for a show of hands on adoption of
AMENDMENT NO. 5. The amendment failed to be adopted on a
vote of 2 to 5.
Senator Sharp MOVED for adoption of AMENDMENT NO. 6. He
explained that it would retain balances in the power project
fund and the rural electrification revolving fund that would
otherwise lapse into the general fund on June 30. Totals
are $650.0 for the former and approximately $350.0 for the
latter. He attested to a list of backlogged projects
submitted to the Dept. of Community and Regional Affairs and
noted need for the foregoing funds to be used as originally
budgeted. Co-chairman Frank called for objections to
AMENDMENT NO. 6. Senator Rieger asked if "regional intertie
projects" could include the Glennallen intertie. Senator
Sharp responded negatively, saying that it relates to
"small, village- intertie-type" projects.
Senator Donley raised a question concerning what appeared to
be a deletion of language relating to the Bethel Seawall
Construction. Senator Sharp explained that an appropriation
to the seawall was contained in the original SB 1005 but not
in the second version. He reiterated that amendment
language would merely roll the funding forward within cited
funds rather than allowing it to lapse. Reference within
the amendment to seawall construction should be lined out
because the current draft does not contain that language.
In response to a request from Senator Donley that the
administration speak to the amendment, ANNALEE McCONNELL,
Director, Office of Management and Budget, came before
committee. She said that the balance of the power project
fund was supposed to have gone into the general fund when
the statutory change was made. The administration proposed,
in both its original submission and a pared down version,
that both sources of funding be used for the Bethel Seawall.
They would otherwise lapse into the general fund. While
there are pending projects, the cited funds have not been
designated for any particular projects. The administration
thus felt it was appropriate for "them to go ahead and be
reappropriated to the Bethel Seawall." That was one of the
sources recommended for capturing the $5 million in federal
funds. The administration does not support the proposed
amendment. It believes the funding should be used for
another purpose.
Senator Rieger asked if the funds lapsed in 1994. Ms.
McConnell explained that one piece of the funding was
supposed to have lapsed at that time. However, it was
missed in effecting the transition under the new statute.
It was only recently noticed (long after budget preparation
last fall) as something that should have lapsed when the
statutory change was made. It is thus available for the
Bethel Seawall.
Senator Sharp referenced three projects identified as high
priority by utilities throughout the state. The first is $1
million for the Old Harbor hydroelectric project to be
matched by $600.0 from AVEC to reduce the draw on PCE. The
Senator further noted projects between Klawock and Thorne
Bay and Kasaan. He said that matching power project and
rural electrical funds to a Bethel Seawall does not bode
well when projects within the original intent are in need of
financing.
Co-chairman Frank called for further discussion or objection
to AMENDMENT NO. 6. Senator Donley OBJECTED. The Co-
chairman called for a show of hands. AMENDMENT NO. 6 was
ADOPTED on a vote of 6 to 1.
Co-chairman Halford explained that AMENDMENT NO. 7 relates
to disaster relief associated with the MatSu fire. The $1
million appropriation to the Dept. of Military & Veterans
Affairs would increase the total to $4 million, at the
request of the administration. In response to a question
from Senator Sharp, both Co-chairmen advised that the
appropriation would not lapse. The effective date would be
immediate. Senator Rieger acknowledged need as a result of
the fire, but noted that the proposed appropriation appears
to be contrary to recent committee policy of not placing
large amounts of funding in disaster relief in advance.
Concerns have been raised regarding administration of
disasters by the department. He said he was uneasy with the
proposal and would be more comfortable with a different
approach, once it is known what the funding will be used
for. Senator Sharp voiced similar reservations in light of
procedures used in a recent disaster where cost controls and
responsibilities were not effected.
Ms. McConnell explained that in response to legislative
concerns and issues raised in a subsequent audit, the
administration instituted new procedures with very specific
expenditure authority. As the dollar value increases, the
level of required scrutiny also increases. A disaster
response cabinet includes all commissioners in impacted
departments. Past situations giving rise to concern should
not be repeated.
She stressed that news regarding the current fire is
changing by the minute, and the magnitude is quickly growing
because of winds. The administration has assured citizens
in the area that necessary suppression (DNR) and disaster
(DMVA) resources will be in place. Ms. McConnell attested
to increased evacuations and expanded temporary housing
facilities. She advised of a 5:00 p.m. briefing to update
legislators and others on the status of the situation.
Amounts requested in the proposed bill reflect best
estimates as of earlier this afternoon. News in the last
three or four hours may mean that the amounts are
insufficient.
Co-chairman Halford acknowledged problems with past
disasters but stressed that the ongoing fire is near a
population center. Response, review, and reconstruction
will be done in the public eye. It does not present the
same potential for abuse highlighted in the recent audit.
He attested to the fact that the state would likely end up
spending "a great deal more than this number" and noted need
to amend the number upward as more information is available.
Ms. McConnell reiterated that members would be updated
daily. The appropriation to the Dept. of Military &
Veterans Affairs will include temporary housing, public
assistance with utilities, and individual and family grants.
Senator Rieger inquired concerning the likelihood of FEMA
moneys from the federal government. Ms. McConnell explained
that the state disaster declaration would be transmitted to
FEMA. Application for federal assistance on wildland fires
will also be made.
NANCY SLAGLE, Director, Division of Budget Review, Office of
Management and Budget, came before committee with an update.
She advised of preliminary approval for wildland fire
assistance from the federal government. The state should
thus be receiving assistance from FEMA. Senator Sharp
voiced his understanding that during the Koyukuk flood,
temporary housing was 100 percent paid by FEMA as well as a
$1,000 allotment for personal effects. Ms. Slagle attested
to a 70/30 split on FEMA wildland fires. She said she did
not know that the funding was specifically tied to temporary
housing and those types of things. It relates more to fire
fighting.
Co-chairman Halford cited involvement of two issues: the
first relates to the fact that federal fire fighting funds
will actually be available; the second issue is disaster
relief after the fire is extinguished and residents remain
homeless, etc. There has been no federal disaster
declaration.
Senator Zharoff commented upon the fire at Holy Cross and
stressed need to devote attention to that area as well as
MatSu. The interior should not be ignored simply because
fewer residents are involved. Ms. Slagle advised that the
Dept. of Natural Resources responded to questions from
Senator Lincoln and assured her that there are adequate
numbers of teams to deal with fires as they develop and need
attention.
Co-chairman Frank called for further discussion or
objections to AMENDMENT NO. 7. No objection having been
raised, AMENDMENT NO. 7 was ADOPTED.
Senator Zharoff explained that AMENDMENT NO. 8 is technical
in nature. It relates to a project at Pt. Baker, a
community on the northern end of Prince of Wales Island.
The community seeks to use part of the capital matching
grant moneys for the water system for the state-maintained
small boat access ramp. Co-chairman Halford advised that
the legislature dealt positively with all other community
changes when the capital budget was under discussion. He
then said he had no objection to the request if the
administration would provide assurance that funding belongs
to the community, and the amendment merely includes a change
in terminology. Nancy Slagle responded affirmatively.
Senator Zharoff MOVED for adoption of AMENDMENT NO. 8. No
objection having been raised, AMENDMENT NO. 8 was ADOPTED.
Senator Zharoff asked that AMENDMENT NO. 9 be held.
Co-chairman Frank inquired concerning further amendments.
None were offered. Co-chairman Halford MOVED for passage of
CSSB 1005 (Fin), AS AMENDED, with individual
recommendations. No objection having been raised, CSSB 1005
(FIN) was REPORTED OUT of committee. Co-chairmen Frank and
Halford and Senators Phillips and Sharp signed the committee
report with a "do pass" recommendation. Senators Donley,
Rieger, and Zharoff signed "no recommendation."
ADJOURNMENT
The meeting was adjourned at approximately 6:20 P.M.
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