Legislature(2011 - 2012)SENATE FINANCE 532
03/17/2011 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB46 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 46 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 46
"An Act making and amending appropriations, including
capital appropriations and other appropriations;
making appropriations to capitalize funds; and
providing for an effective date."
9:36:19 AM
Co-Chair Stedman asked the testifiers to introduce
themselves, and requested explanation as to why the
University President was not present at the meeting. He
added that after the discussion of the three proposals,
there would be a presentation related to the topic.
MICHELLE RIZK, ASSOCIATE VICE PRESIDENT, BUDGET, UNIVERSITY
OF ALASKA, introduced herself.
KIT DUKE, ASSOCIATE VICE PRESIDENT, FACILITIES, UNIVERSITY
OF ALASKA, introduced herself.
Ms. Rizk stated that the president intended to attend the
meeting, but he had a death in the family. Co-Chair Stedman
understood the reason for the president's absence,
appreciated the explanation, and expressed his condolences
to the president's family.
9:37:22 AM
Co-Chair Stedman requested the presentation begin with item
number 51679.
UNIVERSITY
Ms. Rizk stated that she would explain the three University
projects that were included in the Governor's proposed
budget. She furthered that Ms. Duke would discuss the
University of Alaska (UA) Sustainment Funding Plan for UA
Facilities (copy on file).
RN 51679
Annual Renewal and Repurposing
$2,000,000.
Ms. Rizk explained that UA owned and maintained over 400
buildings, totaling 6.7 million gross square feet, with an
adjusted value that currently exceeded $2 billion. An
additional amount of $2 million for Annual Renewal and
Repurposing was the first year of an effort to get to a
property maintenance sustainment funding strategy,
investing $50 million annually to extend the life of older
buildings that would need major system replacements. With
the ability to make capital investments annually, it would
prevent a deferred maintenance backlog.
9:39:01 AM
Co-Chair Stedman noticed that the items were in order of
campus, wondered how the projects would be prioritized
according to need. Ms. Rizk replied that the distribution
of funds would be based on the size and need of each
campus.
Co-Chair Stedman wondered why the document showed a gap
from $2 million to $50 million. Ms. Rizk replied that Ms.
Duke would answer that question in detail later in her
presentation. She summarized that that there was a request
for $25 million for the first phase of a two year phase to
reach $50 million. The annual investment is $50 million, in
order to keep facilities off of the deferred maintenance
backlog.
9:40:56 AM
RN 43218
Federal Receipt Authority for Capital Projects
$30,000,000.
Ms. Rizk stated that the request was an estimation of
potential federal receipt authority needed to for FY 12
through FY 17 projects at the main and community campuses.
The University was continuing to pursue federal funding
sources and needed the ability to accept funding. Prior
federal receipt authority was nearly exhausted due to Title
III funding, thus addition federal receipt authority was
necessary. Prior federal receipt authority received in FY
11 was used for projects such as the University of Alaska
Southeast (UAS) Sitka Renovation of Career and Technical
Education Renovation, and the University of Fairbanks (UAF)
Interior-Aleutians Campus (IAC) Tok Harper Renovation.
9:41:34 AM
RN 45326
Deferred Maintenance and Renewal and Repurposing
$37,500,000.
Ms. Rizk stated that the University owned and maintained
over 400 buildings, totaling 6.7 million gross square feet,
with an adjusted value that currently exceeded $2 billion.
The Deferred Maintenance and Renewal request provided
funding to reduce the backlog of maintenance for those
facilities. The current deferred maintenance backlog was
upwards of $800 million and funding was needed to reduce
the backlog to a level that would lessen the amount of
resource invested in emergency response, thus taking away
from preventative maintenance work that could be easily
accomplished annually. An investment of $37.5 million each
year for the next four years would enable the University to
begin reduction the deferred maintenance and renewal
backlog.
Co-Chair Stedman stated that the explanation of the
Governor's University requests in the Capital Budget was
now complete. There would be a presentation of the
University maintenance concerns.
9:42:51 AM
Ms. Duke discussed the chart: "Sustainment Funding Plan for
UA Facilities" (copy on file). She stated that the lift
side of the chart portrayed historic deferred maintenance.
She furthered that that the information in green
represented Deferred Maintenance Reduction. She explained
that the bars represented the capital investment that the
state had already made in Deferred Maintenance since 2006.
She stressed that even though there was capital investment,
the deferred maintenance backlog went from $615 million to
$750 million. She stressed that there was still no breaking
of the cycle of adding to the backlog, even with money that
was invested over time. She stressed that President Gamble
discussed a desire to stop the cycle of adding to the
backlog. She stated that previously, the Board of Regents
decided that the University would try to invest adequately
in preventative and scheduled maintenance, and there would
be investment in re-capitalization. She explained that re-
capitalization was the money that was invested to extend
the life of the building: roof, heating, and electrical
system replacement. She furthered that the structure of a
building will last much longer than the interior systems.
The dark blue bars represented the M and R Annual
Expenditures (Operating Budget). She stated that the light
blue bar represented the R and R Annual capital
expenditures. She explained that the red bars represented
the annual investment target shortfall. She stated that the
University's attempt to stop the shortfall, there needed to
be a $200 million investment to fulfill the backlog needs.
She stated that they were trying to establish a financial
situation that would be satisfactory to live with. She
stressed that there would be some emergency maintenance
needs. The dark blue line represented the funding needed to
maintain the buildings annually.
9:48:00 AM
Senator McGuire wondered if there was any application for
the energy efficiency loans under SB 220. Ms. Duke stated
that there was an application for the Energy Audit Funds,
which was the first step in the application for energy
efficiency loans. She stated that the application was
turned in approximately two weeks prior. Senator McGuire
stressed that there was about $280 million in those funds.
Co-Chair Stedman commented that there would be refurbishing
issues. He stated that there still could be financial
challenges with bond investments. He cautioned the
university in their investment and maintenance strategies.
Ms. Duke stressed that they wanted to reassure the
committee of their financial strategy.
Co-Chair Stedman pointed out that if the legislature does
not provide the money for the University, the University
would invest in bonds.
9:51:32 AM
AT EASE
9:51:38 AM
RECONVENED
Co-Chair Stedman welcomed testifiers from the Governor's
office.
LINDA PEREZ, ADMINISTRATIVE DIRECTOR, DIVISION OF
ADMINISTRATIVE SERVICES, OFFICE OF THE GOVERNOR, stated
that there was an item in the proposed budget for $100,000
for the Division of Elections. This item would represent an
additional Help America Vote Act (HAVA) Grant for voting
accessibility state-wide. She stated that there was a
corresponding transaction to the HAVA Grant request in
section 5-B of the bill: receipt of the federal money in
the election fund to fund the HAVA Grant request.
Co-Chair Stedman declared that the committee might be able
to provide funds for that request.
9:53:42 AM
Senator Egan wondered where the proposed voting places were
going to be. Ms. Perez agreed to provide that information.
9:54:34 AM
KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, discussed section 4 of SB 46 (copy
on file): Federal and Other Program Receipts. She stated
that the three sub-sections had to do with the receipt of
Federal or other funds that could be considered by
Legislative Budget and Audit. She explained that there was
some specific language that would allow state authorization
to be reduced under sub-section B, if other funds were
received. She furthered that sub-section C would limit the
expenditures to the funds that are actually received.
Ms. Rehfeld explained section 5: Fund Capitalization. Sub-
section A referred to the AGIA reimbursement fund, with a
request of $160 million. She stated that there was
appropriation of $185 million through FY 11. She stated
that with the addition of $160 million, there would be
approximately $345 million available for AGIA
reimbursements.
Co-Chair Stedman stated that there was some discussion in
the subcommittee process about AGIA, and desired to have
further discussion.
9:57:06 AM
Co-Chair Hoffman queried the thought behind the revenue
sources. Ms. Rehfeld replied that the Governor had proposed
to use the Alaska Housing Capital Corporation Funds. She
explained the about $300 million had been set aside for the
Alaska Housing Capital Corporation Fund, and there had been
some discussion about whether or not the money had been set
aside for gas line expenditures. She declared that the fund
was considered Unrestricted General Funds.
9:58:03 AM
Co-Chair Stedman encouraged consideration for funding of
the Alaska Housing Corporation Fund Source. He stated that
the Fund was initially set aside in the event that there
was substantial revenue short falls in the state. He
stressed that since the setting aside of the funds,
Alaska's financial situation had improved. He felt it was
unnecessary to use that fund. He stated that fund held $370
million, and would like to see the money moved over to the
Statutory Budget Reserves. He felt that move would
alleviate budgetary confusion.
9:59:28 AM
Co-Chair Hoffman stressed that the legislature had
appropriated funds, so the legislature should determine how
that money was used. He wondered if there was a desire to
use the Permanent Fund for the project. Ms. Rehfeld
responded no, they had not.
10:00:20 AM
Ms. Rehfeld discussed section 5-b, which was a request to
appropriate $100,000 in federal receipts into the Help
America Vote Act Election Fund.
10:00:32 AM
Ms. Rehfeld stated that section 6 had two parts. Part A was
a fund transfer of $22 million into the Alaska Capital
Income Fund. Part B was a fund transfer of $25 million from
the Alaska Housing Capital Corporation Fund for Renewable
Energy Grants.
10:01:17 AM
Ms. Rehfeld stated that section 7 would authorize
settlements from insurance claims to be deposited to the
General Fund or specific state agency to mitigate loss. She
furthered that the language was standard.
10:01:40 AM
Ms. Rehfeld explained that section 8 was for the National
Petroleum Reserve Alaska Impact Grant Program, which was an
annual program. She explained that the program estimated a
receipt of $5.4 million for grants to communities that are
eligible. She stated that DCCED had an annual grant
program. She stressed that the amended budget included
descriptions of the specific grants that were proposed for
authorization in the FY 12 budget.
10:02:20 AM
Senator Egan pointed out an error on line 9. Ms. Rehfeld
agreed.
10:02:58 AM
Ms. Rehfeld discussed section 9, and stated that the
amended budget proposed to move this language to the
operating budget. She stated that part B of section 9 was
the balance of the Rail Belt Energy Fund, which was
estimated to be approximately $65.7 million for the Susitna
Hydro-electric Project.
10:03:41 AM
Ms. Rehfeld explained that section 10 was for $35,000 to
Life Donor Alaska Services, which was a program that
supports making anatomical gifts.
Co-Chair Stedman wondered if that item was normally added
by the legislature. Ms. Rehfeld replied that it might be
traditionally added by the legislature, and the
administration had added the item for the legislature's
consideration.
10:04:14 AM
Ms. Rehfeld stated that section 11 referred to the lapse
provisions.
Ms. Rehfeld stated that section 12 stated that the
effective date of the bill would be July 1, 2012.
10:04:34 AM
Senator Thomas looked at section 6, and queried the balance
of the fund. Ms. Rehfeld replied that the balance was $424
million in the permanent fund corporation.
10:05:08 AM
Co-Chair Stedman noticed that there were some potential
additions and amendments to the capital budget, and
wondered what the committee would be required to consider.
Ms. Rehfeld replied that the administration had tried to
minimize the number of submitted amendments following the
thirty day statutory deadline. She stated that there would
be some small supplemental amendments and stated that there
would be some projects for the Department of Transportation
and Public Facilities (DOT/PF).
Co-Chair Stedman stated that the committee had been made
aware of the $200 million for DOT/PF. He furthered that
there was potential for substantial federal money coming to
the state.
Co-Chair Stedman wondered if there were more capital
amendments. Ms. Rehfeld stated that there was an amendment
for the Health and Social Services electronic records
upgrade, and the Department of the Administration's system
replacement project. She furthered that there were some
bargaining unit agreements that she hoped would be
concluded at the end of the current month.
Co-Chair Stedman stressed that there was a concern of the
spending level, and there was an issue of savings
components. He stressed that there should be a robust
savings in order to feel secure.
10:10:27 AM
Co-Chair Hoffman noted that the governor had made
substantial increases from the year prior, and the
legislature needed substantial efforts and energy
concerning the budget.
10:11:26 AM
Co-Chair Stedman stated that there needed to be some focus
on the enacted budget, and stated that the Governor had
made an adjustment of approximately $301 million. Co-Chair
Hoffman furthered that the legislature made no
modifications in the governor's budget in the year prior.
He stated that there should more of a focus on savings.
Ms. Rehfeld stated that the governor was very supportive of
the desire to put money in reserves.
Co-Chair Stedman reiterated that the legislature did not
modify the governor's budget in the year prior.
Co-Chair Stedman hoped the dialogue with the administration
about the budget would continue to be meaningful.
10:15:05 AM
Senator McGuire spoke of the anatomical gifts section of
the language, and thanked the Governor for including it in
the budget. She asserted that AGIA reimbursements had
popped up throughout the budget. She requested an update
from the Governor about what he felt was happening with
AGIA.
10:17:22 AM
Co-Chair Stedman stated that he had similar concerns
regarding AGIA. He stated that there was great concern over
the viability of that piece of legislation. He stated that
there was a request for a quarterly breakdown of past AGIA
expenditures and reimbursements. He stated that there could
be a special meeting on AGIA reimbursements. He furthered
that that topic had been addressed in leadership meetings.
He stressed that there was concern over the viability of
that legislation. He also stressed that the legislature
would like to get the gas to market.
10:21:03 AM
Senator Thomas commented that there was a constant issue of
how there would be a change in oil taxation. He stated that
there was some money and analysis of how long the state's
savings would hold out in the future. Ms. Rehfeld stated
that there was some internal work that represent spending
discipline in managing the reserves, based on reinvestment
before 2020.
Co-Chair Stedman hoped to look at the fiscal impacts of SB
46. He expected that the committee might take a different
view of liquidating the state's hard earned savings. He
stressed that the members would be very protective of the
savings.
SB 46 was HEARD and Held in Committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 46 UNIV Project Review List.pdf |
SFIN 3/14/2011 9:00:00 AM SFIN 3/17/2011 9:00:00 AM |
SB 46 |
| SB 46 UNIV Sustainment Funding Plan UA Facilities-presentation-pdf.pdf |
SFIN 3/17/2011 9:00:00 AM |
SB 46 |
| SB 46 UNIV MaintenanceSheet.pdf |
SFIN 3/17/2011 9:00:00 AM |
SB 46 |
| SB 46 GOV Project Review List.pdf |
SFIN 3/17/2011 9:00:00 AM |
SB 46 |
| SB 46 Language section .pdf |
SFIN 3/17/2011 9:00:00 AM |
SB 46 |