Legislature(2009 - 2010)SENATE FINANCE 532
02/09/2010 09:30 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB253 | |
| SB254 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 253 | TELECONFERENCED | |
| *+ | SB 254 | TELECONFERENCED | |
| *+ | SB 229 | TELECONFERENCED | |
| *+ | SB 231 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 254
"An Act making supplemental appropriations, capital
appropriations, and other appropriations; amending
appropriations; repealing appropriations; making
appropriations to capitalize funds; and providing for
an effective date."
SB 254 was HEARD and HELD in Committee for
further consideration.
Ms. Rehfeld provided a high level overview of the
supplemental bill before the committee. She noted that
agency representatives are available online for questions.
She explained the proposal to place funding into savings due
to the potential surplus in FY10. She mentioned the public
education fund appropriation of approximately $1.1 billion
as witnessed in Section 12(a) of SB 254. She discussed the
various appropriations and the repayment of the
Constitutional Budget Reserve (CBR). The regular discussion
about supplemental funding includes unanticipated needs. She
discussed the various operating components of the budget
addressed through the supplemental appropriations. Fire
suppression comprises a significant component of the budget.
She mentioned Alaska's significant fire season this year.
The base amount in the budget for fire suppression is $35.4
million. The non formula agency operating requests equal
approximately $32 million. She mentioned statewide items
included in the operating proposal in Section 12(b), which
includes the movement of funds into the small business
economic development revolving loan fund. Additionally, a $5
million request is included to replenish the disaster relief
fund under Section 12(c). Specific capital requests are
"emergency" in nature and address areas where funding was
not sufficient to complete a project. The total of the
capital component of the budget is $58.3 million.
10:21:43 AM
Ms. Rehfeld observed that the review of supplemental
requests includes discernment of standalone items versus
those that can be addressed in the next budget cycle. Some
items were not incorporated into the FY11 budget, but are
currently discussed in terms of budget amendments. She noted
that inmate health care is another area of significant
concern with a supplemental request based on the number of
catastrophic cases. She noted the number of catastrophic
cases. The state must not charge other federal programs for
health care of inmates when they enter incarceration.
Medicaid growth causes concern, as the authorization in FY10
was not sufficient.
10:23:46 AM
Ms. Rehfeld highlighted sections of the 17 page bill. The
first section of the bill is the operating supplemental
request by departments. Section 2 summarized the funding by
agency. Section 3 provides the capital requests. Section 4
summarizes the capital funding. Section 5 is the language
section and spurs discussion about the Federal Matching
Assistance Program (FMAP) rate under the American Recovery
and Reinvestment Act (ARRA). In order for the state to
receive the benefit under the ARRA funds requires conditions
of no change to current Medicaid program and the state
cannot place the savings in a "rainy day" account. Included
in the supplemental bill is language clarifying that that
the state's ability to utilize the higher reimbursement rate
has allowed the use of general funds to cover other
increased costs in our budget. Section 6 includes the
request for funding to implement the arbitrator's decision
from March 19, 2009 regarding the Alaska Correctional
Officer Association. Section 7 includes a specific item for
pupil transportation under DEED. Section 8 involves a
miscellaneous claim for the Division of Juvenile Justice.
Section 9 is a correction to an appropriation in the FY10
budget concerning $85 thousand for pipeline training from
DLWD. Section 10 from the Department of Law (DOL) is a
request for $28 thousand for judgments and claims. Section
11 allows the Department of Natural Resources (DNR) the use
of program receipts from the sale of aircraft estimated at
$2 million. Section 12 addresses fund transfers proposing
the transfer of $1.1 billion to the public education fund
and also addresses the Alaska International Airport System
(AIDEA) revolving loan fund to the small business economic
development fund along with the $5 million for disaster
relief referenced earlier. Section 13 addresses
ratifications. Ratification is sometimes known as zero
balancing and is a term used to request authorizations to
cover expenditures that have already occurred and resulted
in an over expenditure of an appropriation. The
legislature's authorization to ratify the appropriations
gives the department the additional authorization for what
occurred in a prior year, but does not affect cash in the
current year.
Co-Chair Hoffman asked for the ratification history for the
last five years. He recalled that the category of
expenditures is now in excess of $10 million. He asked if
departments are spending unauthorized funds because the
legislature will ratify them. What is the administration
doing to control the unauthorized spending?
10:29:36 AM
Ms. Rehfeld answered that ratifications include a couple of
outstanding items. The largest portion is the $10.3 million
ratification for firefighting. Ratifications are an area of
the budget where a base appropriation is decided upon, not
knowing what the fire season will look like. The next step
is to approach the legislature with the supplemental request
based on the estimates from the firefighting that took place
during the last fire session. Following adjournment of the
legislature, language in the supplemental bill allows
ratification for the following year. Because last year's
fire season was so dramatic, the $10.3 million represents
funding needed for firefighting during the end of FY09.
Ms. Rehfeld announced another significant piece concerning
the Department of Corrections (DOC) who overestimated the
amount that they would receive from the federal government
for housing federal prisoners. The department reduced the
authorization in the budget because DOC does not receive
funding to house federal prisoners.
10:33:17 AM
Co-Chair Stedman asked the ramifications if the legislature
does not ratify. Ms. Rehfeld responded that the accounting
system clean up will not be effective. Co-Chair Hoffman
asked if the departments would have to pay the costs from
their current budget. Ms. Rehfeld answered that she was not
sure that the department could revisit past years because
the statute prohibits it.
KIM GARNERO, DIRECTOR, DIVISION OF FINANCE, DEPARTMENT OF
ADMINISTRATION, stated that departments cannot accrue
expenditures from previous years that have now expired due
to uncollectable receivables because of the legal sanctity
of the appropriations. The appropriation level at which the
legislature creates the language locks the accounting system
and the users of the funds at the legal level. Co-Chair
Stedman compared the ratification situation with the Alaska
Marine Highway System's compliance with legislative
appropriations.
Co-Chair Hoffman understood the situation with fire
suppression and correction officers. He agreed that a plan
was necessary to correct expenditures that have not been
appropriated by the legislature.
Ms. Rehfeld informed that an authorization of the
expenditures was approved, but were unavailable in the end.
She explained that areas identified as problems in the
ratification process must be corrected in the budget
document. Several corrections are proposed in the
supplemental bill and in the FY11 budget.
Ms. Garnero noted that $481 thousand of ratifications are
related to several departments. The process is a onetime
clean up of the accounting system receivables. The future
intention is to reconcile annually.
Ms. Rehfeld addressed Section 14 and the correction allowing
DOL to address the receipt of restitution in juvenile cases.
The state debt and other obligations require adjustments to
address international airport revenue fund and
recommendations from their bond council to minimize the
revenue needed from customers within the international
airport.
Ms. Rehfeld stated that Section 16 extends the lapse for the
instate gas pipeline appropriation. The budget was scheduled
to lapse on February 28, 2010. The department requests
authority to extend the lapse date to the end of the fiscal
year, June 30, 2010.
10:38:58 AM
Co-Chair Stedman wished to discuss the gas pipeline
appropriation further in the future. Co-Chair Hoffman
recalled that the legislature "short funded" so that the
department could justify their accomplishments. He pointed
out that the short fund equaled $3 million. Ms. Rehfeld
responded that the instate pipeline coordinator has not
requested additional funds in the current year. Existing
contracts are in place, and work is ongoing. Only a request
for an extension exists.
Ms. Rehfeld announced that Section 17 addresses the
Constitutional Budget Reserve (CBR) and the management of
the funds. The department is proposing to replace the
management with general funds at $1.673 million. Section 17
also authorizes a draw from the Statutory Budget Reserve
(SBR) if revenues are not sufficient to cover expenditures
in FY10.
10:41:13 AM
Co-Chair Stedman requested clarification on the $1.6
million. He asked if it included the cost of handling the
$400 million over the next 90 days or is it a portion of the
management funds by DOR. Ms. Rehfeld explained that the
mentioned funds are the management fees for the entirety of
the CBR.
Co-Chair Hoffman asked for justification. He asked if it was
because the administration does not believe that a three
quarter vote in the legislature was possible. Ms. Rehfeld
explained that if the goal is to retain the CBR then it
should not be drawn from to manage the funds. Co-Chair
Stedman declared that a discussion about plans for the
sizable state savings should be held this session.
Ms. Rehfeld referred to Section 18 and the regular lapse
provisions for capital projects. Appropriations requested in
Section 12 and the deposit to the public education fund does
not lapse. Section 19 is a repeal of Section 43c known as
the 17(b) provision. The administration does not believe
that the provision is necessary given the objective to repay
the CBR. Section 20 requires an effective date for the
passage of the bill. Section 21 states that the act will
take effect April 18, 2010.
10:44:59 AM
Senator Ellis asked about Section 6 and the bargaining
agreement with DOC. He asked about an adjustment to the FY11
budget regarding the agreement. Ms. Rehfeld answered that if
the government approves this, these funds will be allocated
to the personal services components within the DOC budget in
order to pay the increased wages as incorporated in
arbitrator's decision. She stated that the $3 million will
be spread where their personal services cost exist within
their budget.
10:46:14 AM
Ms. Rehfeld noted that if the legislature chooses to approve
the funding, then the FY11 budget must be amended. Senator
Ellis asked if the agreement would exist in a section
related to the department. Ms. Rehfeld revealed that a large
bargaining unit agreement that covers all departments
requires a single section that allocates across all of the
agencies and the funding sources and is spread throughout
all of the budgets if approved by the legislature.
10:47:15 AM
Co-Chair Hoffman elaborated that the committee would address
the legislation further in the future. He requested the
questions about SB 253 be answered tomorrow.
Senator Olson asked a question about Section 11 and the
Department of Natural Resources (DNR). He voiced concern
about an appropriation for aircraft replacement. He assumed
that the aircraft referred to was the CL214 used for water
bombing. He asked why the parts and accessories were sold.
Ms. Rehfeld could not answer the question. Senator Olson
suggested a future meeting regarding the issue.
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