Legislature(1995 - 1996)

04/20/1995 03:30 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HOUSE BILL NO. 100                                                           
       An Act making appropriations for the operating and loan                 
       program expenses of state  government and to capitalize                 
       funds; making appropriations under art. IX, sec. 17(c),                 
       Constitution   of  the  State   of  Alaska,   from  the                 
       constitutional budget  reserve fund; and  providing for                 
       an effective date.                                                      
  Upon convening the  meeting, Co-chairman Frank  advised that                 
  the committee would continue review of budget amendments.                    
  AMENDMENT NO. 46                                                             
  Co-chairman Frank noted need to effect a technical amendment                 
  to  the  general  fund   appropriation  in  the  enforcement                 
  component within the  fish and  wildlife protection BRU  for                 
  the Dept. of Public Safety budget.  The $555.0 appropriation                 
  should be amended  to $555.5.  Co-chairman  Frank called for                 
  objections to the change.  No  objection having been raised,                 
  the $555.5 figure was ADOPTED.                                               
  AMENDMENT NO. 50                                                             
  Co-chairman Frank directed attention to the following intent                 
  language proposed for incorporation in  the front section of                 
  the budget:                                                                  
       It is the  intent of the legislature  that funding                      
       necessary to meet the Department's disaster relief                      
       responsibilities   will   continue   to  be   made                      
       available through the disaster declaration process                      
       outlined in the current funding agreement.  During                      
       the 1996 legislative session, the department shall                      
       submit  a  supplemental appropriation  request for                      
       fiscal year 1996 disaster relief costs.                                 
  Senator Zharoff MOVED for adoption of  Amendment No. 50.  No                 
  objection having been raised, the amendment was ADOPTED.                     
  AMENDMENT NO. 68                                                             
  Senator  Zharoff  MOVED for  adoption  of Amendment  No. 68.                 
  OBJECTION was raised.   Senator  Zharoff requested that  the                 
  first of five proposed  new front sections contained in  the                 
  amendment be removed since it was dealt with previously.  He                 
  then  asked  that  the  administration  speak  to  remaining                 
  sections relating  to collective bargaining  agreements with                 
  the Inlandboatmen's  Union; Labor,  Trades and  Crafts Unit;                 
  and  the Supervisory  Unit.   ANNALEE  McCONNELL,  Director,                 
  Office of Management and Budget, came before committee.  She                 
  reiterated  support  for   both  the  collective  bargaining                 
  process and negotiated contracts.                                            
  Co-chairman Frank called for a show  of hands on adoption of                 
  Amendment  No. 68.  The motion  FAILED on a vote  of 1 to 5.                 
  (Senator Donley did not appear to vote.)                                     
  AMENDMENT NO. 69                                                             
  Senator  Zharoff  MOVED for  adoption  of Amendment  No. 69.                 
  OBJECTION  was  raised.    The  Senator explained  that  the                 
  amendment would  delete Sec.  38 of  the  front section  and                 
  remove  House  language  which would  not  allow  funding of                 
  monetary  terms  for employee  contracts without  a specific                 
  appropriation.   He noted  that Sec.  38 language  nullifies                 
  agreements between bargaining  units and the administration.                 
  ANNALEE McCONNELL stressed that  the administration does not                 
  want to  "end up in  limbo."  It  does not  want to be  in a                 
  situation where it is unclear  whether or not contracts  are                 
  approved.  She  reiterated support for  full funding of  the                 
  contracts,  saying  that  without  clarifying  language  the                 
  administration would "go  ahead and  pay for the  additional                 
  contract costs."  That would equate to an unallocated cut of                 
  $8.4 million.                                                                
  Co-chairman Frank called for a show  of hands on adoption of                 
  Amendment No. 69.  The motion FAILED on a vote of 2 to 5.                    
  AMENDMENT NO. 70                                                             
  Senator Zharoff directed attention  to Revised Amendment No.                 
  70 and MOVED for  adoption.  OBJECTION was raised.   Senator                 
  Zharoff  explained  that  the  amendment  would  appropriate                 
  $715.8 in  interest  earnings  attributable  to  the  Alaska                 
  Marine  Highway System  Fund from  the general  fund  to the                 
  Alaska Marine Highway  System Fund.  The  additional funding                 
  would be used to bring the ferry system up to FY 94 actuals.                 
  GARY HAYDEN, Director, Alaska  Marking Highway System, Dept.                 
  of  Transportation  and   Public  Facilities,  came   before                 
  committee.  He  voiced his understanding that  the amendment                 
  would  meet the  intent of  both  the subcommittee  and full                 
  Senate Finance Committee in setting the  cap at FY 94 actual                 
  totals.   Co-chairman Frank  voiced his  intent to  hold the                 
  department budget, including the ferry system, at  the FY 94                 
  level.    Senator  Rieger explained  that  the  subcommittee                 
  allocated  the reduction  between the two  major components:                 
  highways/maintenance  and  the marine  highway system.   The                 
  original cap was  $126 million.   The FY  95 authorized  was                 
  $129 million.  The subcommittee report called for  a prorata                 
  reduction on the  marine side and  the land side by  exactly                 
  the same percentage, from FY 95.                                             
  Brief  discussion followed regarding front section (Sec. 32)                 
  funding  for  the marine  highway  system.   Senator Zharoff                 
  voiced his  understanding that  Sec. 32  funding leaves  the                 
  system $715.8 short of the FY 94 level and would not provide                 
  stable service.   Mr. Hayden concurred.   He explained  that                 
  the impact of Sec.  32 funding is that the  system will have                 
  to  reduce service to both Southeast and Southwest Alaska by                 
  approximately 10 weeks.   In Southwest  that would mean  the                 
  TUSTUMENA and the  BARTLETT would be  out of service for  an                 
  additional  month.  In  Southeast it would  mean that winter                 
  panhandle  deployment  would  extend  for approximately  six                 
  weeks.   During that time period, there  would be a 30% loss                 
  in  the number  of  port calls  each week.    That level  of                 
  service is comparable to FY 91.                                              
  Senator Zharoff stressed that the $715.8 appropriation would                 
  flow  from  interest  earned by  the  Alaska  Marine Highway                 
  System Fund during  FY 95.   He urged  consideration of  the                 
  request, asking that services not be reduced  for the coming                 
  season.  Senator Rieger voiced support for service but noted                 
  that the proposed FY  96 budget will require a  $400 million                 
  draw from the Constitutional Budget Reserve.                                 
  End:      SFC-95, #49, Side 1                                                
  Begin:    SFC-95, #49, Side 2                                                
  Senator Rieger  stressed that  the intent  is not  to reduce                 
  service but to "make a budget that works."                                   
  Discussion of  recent  supplemental funding  for the  system                 
  In response  to a  question from  Senator Zharoff  regarding                 
  operation  under reduced funding, Mr. Hayden reiterated that                 
  at the $28,006.0 level there would be a reduction in service                 
  next winter.  Service would  approximate that provided in FY                 
  91.  A  schedule has not  yet been printed, and  no bookings                 
  have  been  made.   Senator  Zharoff expressed  concern that                 
  reduced service during the winter impacts Alaska  residents.                 
  Mr. Hayden concurred.  He noted that summer service responds                 
  to demand.  Winter  reductions would be made in  areas where                 
  vessel expenses are the highest and revenues are low.                        
  Senator Rieger advised  that of the amount of reduction from                 
  FY  95, 78%  of the  cut came  from road  maintenance.   All                 
  districts will be impacted.   The intent was to  be "exactly                 
  prorata" so that  there was no  favoritism for one  district                 
  over another.                                                                
  In response to a question from Co-chairman Frank, Mr. Hayden                 
  explained  that  revenues generated  by  the fund  have been                 
  stable  over  the  last four  years  at  approximately $40.5                 
  million.  The  projection for next  year is $41.2, based  on                 
  312 weeks of service.   If service is reduced,  less revenue                 
  will be collected.   Discussion continued  regarding service                 
  Co-chairman Frank called for a show  of hands on adoption of                 
  Revised Amendment No. 70.  The motion  FAILED on a vote of 1                 
  to 6.                                                                        
  AMENDMENT NO. 71                                                             
  Senator Zharoff MOVED for adoption of Amendment No. 71.  Co-                 
  chairman Frank OBJECTED.  Senator Zharoff explained that the                 
  amendment  would  add   $551.221  to  the  budget   for  the                 
  University  of Alaska  to  pay the  cost  of the  collective                 
  bargaining   agreement   with  the   University   of  Alaska                 
  Classified Employees Association.                                            
  NANCY  SLAGLE,   Director  of   Budget  Review,   Office  of                 
  Management and Budget, came before committee.  She explained                 
  that the agreement is  retroactive to January 1, 1995.   The                 
  amount set forth in the amendment is the portion relating to                 
  FY 96.                                                                       
  ALISON ELGEE, Deputy Commissioner,  Dept. of Administration,                 
  next  came  before  committee.     She  explained  that  the                 
  classified employees' association  is a new unit  within the                 
  University.  Employees elected to form a union late in 1993.                 
  This is  the first  contract between  the employees  and the                 
  University.    The  group  is  comprised of  physical  plant                 
  workers throughout the system.  Monetary terms include a  3%                 
  pay increase.  These  employees have no other mechanism  for                 
  adjustment.   Senator Donley  voiced his  understanding that                 
  the University gave non-union employees a  3% raise but held                 
  it back  until the  contract with  classified employees  was                 
  signed.   Ms. Elgee  concurred.  Senator  Donley then voiced                 
  his understanding that  if the legislature fails to fund the                 
  agreement, the University will continue to pay employees not                 
  represented by a union more than those  who are represented.                 
  Ms. Elgee acknowledged that if the agreement is not  funded,                 
  classified  employees  would  be frozen  at  existing  pay.                  
  Comments followed by Senator  Donley concerning the inequity                 
  between those who  received the increase  and those who  did                 
  Co-chairman Frank called for a show  of hands on adoption of                 
  Amendment  No. 71.  The  motion FAILED on a  vote of 2 to 4.                 
  (Senator Sharp was temporarily absent from the meeting.)                     
  When Senator Donley  questioned the rationale  behind denial                 
  of the amendment, Co-chairman Frank  explained that he set a                 
  level of funding for the University  and did not wish to  go                 
  above  that  level.    Senator  Donley  then  asked  if  the                 
  committee  would  support  a  3%   pay  reduction  for  non-                 
  represented university employees.  Co-chairman Frank advised                 
  that he  did not wish  to intervene in  University business.                 
  Senator   Donley  MOVED  for  adoption  of  intent  language                 
  specifying that everyone within the University take a 3% pay                 
  cut because the legislature refused to approve a contractual                 
  3% raise for classified employees.                                           
  Co-chairman Frank called for a show  of hands on adoption of                 
  Senator Donley's amendment  for a  3% pay cut.   The  motion                 
  FAILED on a  vote of 2  to 5.   (Senator Donley and  Senator                 
  Phillips  supported  the  motion.)    Senator  Donley  again                 
  questioned  lack  of  consistency   in  University  pay  and                 
  discrimination  against  a  particular  group of  employees.                 
  Senator Phillips concurred in that concern.                                  
  AMENDMENT NO. 95                                                             
  Co-chairman  Frank directed attention  to Amendment  No. 95,                 
  second revision, and explained that it provides a contingent                 
  $110  million  appropriation  from  Alaska  Housing  Finance                 
  Corporation in the event the necessary three-quarter vote is                 
  not  achieved  in   the  Sec.  41  appropriation   from  the                 
  Constitutional  Budget   Reserve  Fund.     Senator  Zharoff                 
  OBJECTED to  the amendment  and expressed  need to  review a                 
  budgetary  spending  plan.     A  spending  plan   was  then                 
  distributed by staff from  the Legislative Finance Division.                 
  Senator Donley requested a brief recess.                                     
                       RECESS - 4:05 P.M.                                      
                      RECONVENE - 4:15 P.M.                                    
  Upon  reconvening the meeting,  Co-chairman Frank asked that                 
  committee members not engage in  debate on the spending plan                 
  at this time  but instead deal  with proposed Amendment  No.                 
  95, as revised.   Senator  Zharoff asked how  much could  be                 
  withdrawn  from  the CBR  with  a  majority  vote.   ANNALEE                 
  McCONNELL voiced support for a three-quarter vote.  She said                 
  that the fiscal environment is not  such that it makes sense                 
  to utilize "accounting tricks" to "get to  a majority vote."                 
  The   present  situation   is   the   type  Alaskan   voters                 
  anticipated would require a "super majority."                                
  A second concern  relates to the $110  million appropriation                 
  from AHFC.  Mrs.  McConnell noted that Standard &  Poors put                 
  AHFC  on   credit  watch  because  of  previous  legislative                 
  withdraws  and potential for future  draws.  DAN FAUSKE, CEO                 
  and Executive Director, Alaska Housing Finance  Corporation,                 
  came before committee and referenced  a recent press release                 
  (copy appended to these minutes) from  Standard & Poors.  He                 
  further referenced pending  legislation (SB 143 and  HB 281)                 
  encompassing the Governor's proposed transfer of $70 million                 
  from the corporation,  this fiscal year, and  subsequent $50                 
  million annual transfers for the next four years for a total                 
  of $270 million.   The press  release indicates that if  the                 
  agreed-to $270 million  transfer is made over  the indicated                 
  time  period,  AHFC will  be  taken  off credit  watch  with                 
  negative  implications  and placed  on  "developing."   That                 
  means  Standard  &  Poors  will  withhold,  pending  further                 
  developments, any more  action.  Rating agencies  all concur                 
  that the proposed  plan is more appropriate  and prudent and                 
  will   maintain  the   stability   and   integrity  of   the                 
  corporation's rating.  A $110 million transfer at  this time                 
  far exceeds  "what the  corporation is  able to  do."   That                 
  action would spark a very negative response "from those that                 
  we need to do business with on the East Coast, when it comes                 
  to  accessing capital markets."   Mr. Fauske  urged that the                 
  committee stick to the $70 million transfer or enactment  of                 
  pending legislation.                                                         
  Discussion followed regarding capital  expenditures proposed                 
  by AHFC  and possible  offset of  those moneys  by the  $110                 
  transfer.  Mr.  Fauske cautioned that while the  math works,                 
  of concern to  rating agencies  would be future  withdrawals                 
  and  lack   of  stability.     Further  discussion  followed                 
  regarding stability provided by long-term fiscal planning.                   
  Additional  lengthy  discussion followed  regarding meetings                 
  with rating  agencies and  AHFC spread  sheet scenarios  for                 
  In response to a question from Senator Phillips,  Mr. Fauske                 
  noted  that  movement   from  AA  to  A   rating  represents                 
  approximately $13.7 million.  Over the life of the bonds, it                 
  is close to $30  million.  That factors into  the pockets of                 
  Alaskans in terms of higher mortgage rates.                                  
  Further  discussion followed concerning  what would  be lost                 
  should AHFC's capital  budget be reduced.   Mr. Fauske noted                 
  that AHFC  would "lose  access to  a great  deal of  federal                 
  money."   Much  of what  AHFC spends  is  used to  match HUD                 
  moneys.   Between $35  and $37  million would  be needed  to                 
  cover the match.   The proposed  $54 million capital  budget                 
  would access  $120 million.   Discussion followed  regarding                 
  past AHFC capital budgets.                                                   
  Co-chairman Frank stressed that if the three-quarter vote on                 
  the  Constitutional Budget  Reserve  Fund  is achieved,  the                 
  proposed  $110  million  transfer  from  AHFC,  embodied  in                 
  Amendment No. 95 (2nd Revision) would not occur.                             
  Senator  Zharoff suggested that  reductions in  AHFC capital                 
  expenditures involving HUD moneys are  most likely to impact                 
  rural  areas.   He  stressed  need  to look  at  the overall                 
  Co-chairman Frank called for a show  of hands on adoption of                 
  Amendment No. 95  (2nd Revision)   The motion  CARRIED on  a                 
  vote of  4 to 3, and  the amendment was ADOPTED.   (Senators                 
  Donley, Phillips, and Zharoff were opposed.)                                 
  AMENDMENT NO. 17                                                             
  Co-chairman  Frank  advised of  need  to effect  a technical                 
  amendment  to   Amendment  No.  17.    Referencing  language                 
  relating to the  Community Jails  Task Force and  contracts,                 
  the Co-chairman noted  need to  change "shall"  to "may"  at                 
  lines  5 and 7.  Co-chairman Halford MOVED for adoption.  No                 
  objection having been raised, the amendment was ADOPTED.                     
  AMENDMENT NO. 98                                                             
  Co-chairman Halford MOVED for adoption  of Amendment No. 98.                 
  He  explained  that  it contains  a  technical  amendment to                 
  ensure that agencies do not utilize budget appropriations to                 
  fund monetary  agreements which  have not  been approved  or                 
  funded by  the  legislature.     No  objection  having  been                 
  raised, Amendment No. 98 was ADOPTED.                                        
  CONFORMING MOTION (Amendment No. 100)                                        
  MIKE   GREANY,   Director,  Legislative   Finance  Division,                 
  referenced need to conform action taken in the front section                 
  of the budget  to department funding  in back sections.   He                 
  distributed a proposed  conforming amendment (copy  attached                 
  to  these  minutes)  which he  explained  would  impact five                 
       Dept. of Administration - Information Services                          
       Dept. of Law            - Oil and Gas Litigation                        
       Dept. of Military and   - Federal Funds                                 
          Veterans Affairs                                                     
       Dept. of Transportation - Marine Highway Stabilization                  
          & Public Fac.                                                        
       Dept. of Corrections    - PFD funds (SB 135)                            
  Co-chairman  Halford  MOVED for  adoption of  the conforming                 
  amendment and  requested  unanimous  consent.    Co-chairman                 
  Frank subsequently  asked that  action be  held in  abeyance                 
  pending discussion  of Amendment  No.  99.   [See below  for                 
  approval of the conforming amendment.]                                       
  End:      SFC-95, #49, Side 2                                                
  Begin:    SFC-95, #51, Side 1                                                
  AMENDMENT NO. 99                                                             
  Co-chairman Frank  explained that Amendment  No. 99 combines                 
  Secs. 39 and 41 so that  sweep language and budget balancing                 
  language is within  a single  section.  Co-chairman  Halford                 
  MOVED  for adoption  of  Amendment No.  99.   Senator  Randy                 
  Phillips OBJECTED.  Co-chairman  Frank called for a  show of                 
  hands.   The motion  CARRIED on  a vote of  4 to 3,  and the                 
  amendment  was ADOPTED.    (Senators  Donley, Phillips,  and                 
  Zharoff were opposed.)                                                       
  CONFORMING MOTION (Amendment No. 100)                                        
  MR.  GREANY  again   explained  that  the  purpose   of  the                 
  conforming   amendment  is  to   prevent  the   doubling  of                 
  appropriations  in  both  front  and  back sections  of  the                 
  budget.  Funding for the listed department areas will appear                 
  in front sections.  Co-chairman  Halford restated his MOTION                 
  for adoption.                                                                
  Discussion  followed regarding  front section  funding of  a                 
  portion of the  Dept. of Corrections  budget from PFD  funds                 
  upon passage of  SB 135.   General funds for the  department                 
  remain in  the back  section while  the $2,703.7  PFD offset                 
  will be shown  in Sec. 13.   In response to a  question from                 
  Nancy Slagle,  Co-chairman Frank  explained that  if SB  135                 
  passes, the $2.7 million in PFD funding is available.  If it                 
  does  not  pass, the  money is  not  available.   Ms. Slagle                 
  voiced her understanding that if the bill does not pass, the                 
  Dept. of Corrections would be minus the  $2.7 million, under                 
  the Senate scenario.                                                         
  Co-chairman  Frank called  for  objections  to  the  motion.                 
  Senator Zharoff OBJECTED.  The Co-chairman called for a show                 
  of  hands on  adoption  of the  conforming  amendment.   The                 
  motion CARRIED  on  a vote  of 5  to 2,  and the  conforming                 
  motion was ADOPTED.                                                          
  Co-chairman  Frank  directed  that  the meeting  be  briefly                 
                       RECESS - 4:40 P.M.                                      
                      RECONVENE - 4:50 P.M.                                    
  Upon reconvening the meeting, Co-chairman Frank acknowledged                 
  ongoing  conjecture  over   Dept.  of  Corrections   funding                 
  involving SB 135.  He  advised that if funding is not  found                 
  to be correct  as presently  incorporated within the  Senate                 
  budget,  a  floor amendment  would  be offered  to  effect a                 
  Senator  Zharoff  noted  that  funding   for  the  Dept.  of                 
  Education  had  not yet  been provided.    He then  asked if                 
  education would  be fully  funded.   Co-chairman Frank  told                 
  members that the spending plan has sufficient flexibility to                 
  accommodate an amount  between flat and full  funding.  That                 
  decision has not yet been made.                                              
  Co-chairman Halford  MOVED to pass  SCS CSHB 100  (Fin) from                 
  committee with  individual recommendations.   Senator Donley                 
  OBJECTED.  He continued to voice concern regarding safety in                 
  the work  place and  the fact  that the  budget contains  no                 
  general funds  for enforcement  of state  safety laws  while                 
  issues of much lower  priority have been funded.   He raised                 
  further  concern  over  lack  of  legislative  approval  and                 
  funding of  collective bargaining  contracts  for state  and                 
  university employees.  There  has been no debate as  to what                 
  might  be wrong  with  the contracts.    If the  legislature                 
  rejects the agreements,  it should indicate why  it is doing                 
  so.  Firm  directive and guidance  should be provided.   The                 
  Senator  spoke  specifically  against  the  manner  in which                 
  funding for  classified university employees was  handled by                 
  committee.    He  further  questioned  lack of  funding  for                 
  education so that it could  be considered within the context                 
  of the overall budget.                                                       
  Co-chairman Frank called for  a show of hands on  passage of                 
  SCS CSHB 100 (Fin).  The motion CARRIED on a vote of 5 to 2,                 
  and SCS CSHB 100 (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.                 
  Senator  Phillips  signed "do  pass  if amended."   Senators                 
  Donley and Zharoff signed "no recommendation."                               
  The meeting was adjourned at approximately 5:00 p.m.                         

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