Legislature(1995 - 1996)

04/09/1996 04:10 PM TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
            SB 290 APPROPRIATIONS: CAPITAL & OTHERS                           
 CHAIRMAN RIEGER called the Senate Transportation meeting to order             
 at 4:10 p.m. and introduced  SB 290  as the first order of business           
 before the committee.                                                         
 ANNALEE MCCONNELL, Director of the Office of Management & Budget,             
 suggested that a hearing on the Governor's six year capital plan              
 would be valuable in order to establish a context for the annual              
 capital budget that is before the committee.  She informed the                
 committee that communities have commented that a longer term                  
 capital plan would be very helpful.  She recommended that the                 
 legislature adopt a six year capital plan which is required by                
 statute, although it is not observed or practiced.  This would                
 provide a planning guideline.  Ms. McConnell indicated that the               
 legislature should consider holding public hearings regarding the             
 infrastructure needs of the state in the reality of decreasing                
 Number 060                                                                    
 Ms. McConnell noted that she had copies of the 1997 budget.  She              
 suggested that there be some intent language at the beginning of              
 the capital budget which could adopt the guidelines contained in              
 the six year plan.  Over the years, some of the items in the                  
 capital budget have been determined to be more appropriate in the             
 operating budget such as license plates, manuals, and some marine             
 highway maintenance.  She noted that the House and Senate Finance             
 Committees were asked to let her know if any of the items proposed            
 to be moved into the operating budget did not belong.  House                  
 Finance moved the items placed in the operating budget back into              
 the capital budget.  Ms. McConnell proposed that once the                     
 committees' deal with the capital budget and make recommendations             
 about the funding level, the previously mentioned items could be              
 permanently moved into the operating budget.  These items total $7            
 Ms. McConnell informed the committee of the proposal for revenue              
 bonds for technology and equipment improvements.  The state leases            
 equipment frequently, but Ms. McConnell believed that the state               
 could receive a better deal through consolidated purchasing.  The             
 proposal is for $6 million with an annual debt service of $1.4                
 million.  By the end of the week, there will be a final                       
 recommendation of the candidates for those projects and their                 
 ranking.  Ms. McConnell emphasized that some of these are very                
 critical projects such as the Criminal Justice System and new                 
 computers for the Department of Labor.  The revenue bond proposal             
 seems to be a good way to stretch the dollar.  Ms. McConnell stated           
 that Alaska is falling behind in its technology and many of these             
 projects could not only improve services but could also reduce the            
 cost of operations.                                                           
 Number 160                                                                    
 NANCY SLAGLE, Director of the Division of Budget Review, began with           
 Section 1 of SB 290.  Section 1, the capital matching grant                   
 program, provides $15 million for distribution to communities                 
 throughout the state for capital projects.  Of that $15 million,              
 $13.3 million is allocated for municipalities and $1.7 million for            
 unincorporated communities.  Section 1 also provides appropriations           
 for the interest accrued on the monies being held in the general              
 fund for those communities.  This mechanism allows communities to             
 cover larger sized projects than the original allocation.  Section            
 2 of the bill provides the authority to go to Legislative Budget &            
 Audit if additional federal funds or program receipts are received            
 for capital projects.  Ms. Slagle noted that this does not happen             
 often.  Section 3 is the technology equipment lease which is the              
 revenue bonding.  The debt service on that amounts to $1.4 million            
 which is the annual amount over five years on the $6 million of               
 equipment.  Ms. Slagle informed the committee that there is a list            
 of potential projects which could be provided to the committee.               
 There should also be a prioritized listing of the projects                    
 forthcoming this week.                                                        
 CHAIRMAN RIEGER read this section to mean that the $1.4 would be              
 borrowed and paid back in fiscal year 1997; why is the $1.4 not               
 appropriated directly to the projects that are funded for that                
 year?  NANCY SLAGLE understood that during that year, the debt                
 service would begin on those certificates of participation.  The              
 intent is to begin as soon as possible.  Ms. Slagle believed the              
 timing to be such that debt service would need to be paid sometime            
 in that year which would allow more projects to begin.  There is              
 almost $3 million in need for the Criminal Justice Information                
 System as well as $900,000 for imaging in the Recorder's Office,              
 and various other critical projects.                                          
 Number 229                                                                    
 NANCY SLAGLE continued with Section 4 which is the lapse statement.           
 Section 5 begins with the Department of Administration. The first             
 project is for $350,000 for the Division of Information Services              
 (DIS) data network modernization.  Basically, this project would              
 modernize the hardware used by DIS, the network that most                     
 departments rely upon for information processing.  She noted that             
 Mark Badger, the Director of DIS, was present for specific                    
 CHAIRMAN RIEGER asked if the $350,000 was part of the funds                   
 received from the telecommunications charge back or part of the               
 technology revenue bond.  NANCY SLAGLE explained that this is a               
 charge back from the charges each department pays into the                    
 information services fund.  The departments pay a rate for the                
 services that are provided by DIS.                                            
 NANCY SLAGLE stated that the data network modernization project and           
 the high speed printers replacement project will help find                    
 efficiencies wherever possible in order to reduce costs to the                
 departments.  The appropriation for high speed printers in DIS is             
 $30,000.  Ms. Slagle continued with the Department of Commerce and            
 Economic Development which has a $400,000 appropriation for the               
 Economic Development Matching Grant Program in order to provide               
 state funds to nonprofit corporations, cities, boroughs, and other            
 eligible applicants to match the federal, nonstate agencies, or               
 private sector agencies' funding.                                             
 CHAIRMAN RIEGER asked if there was a list of projects or would the            
 $400,000 be spent at the discretion of the department.                        
 Number 279                                                                    
 TOM LAWSON, Section Chief of the Division of Trade & Development,             
 explained that the detailed budget contains a list of projects that           
 have been funded over the last few years.  The projects are done on           
 a first come first serve basis.  For fiscal year 1997, the                    
 department does not yet have any projects.                                    
 CHAIRMAN RIEGER asked if such a list could be provided.  TOM LAWSON           
 informed the chair that the list changes almost weekly.  Mr. Lawson           
 said that he could provide the committee with a list, but the list            
 would not be meaningful.                                                      
 SENATOR LINCOLN inquired as to how the $400,000 amount was arrived            
 at.  TOM LAWSON noted that in the past, the appropriation has been            
 more.  The demand typically exceeds the amount of money available.            
 In response to Senator Lincoln, Mr. Lawson said that in the last              
 couple of years the appropriation has been $500,000.  At its                  
 highest a few years ago, the appropriation was $800,000.                      
 SENATOR LINCOLN asked if regional representation is reviewed when             
 awarding these grants.  TOM LAWSON explained that there are                   
 guidelines which specify that one region can not receive more than            
 one grant or a certain amount of money in any one grant year.  This           
 spreads the money evenly.                                                     
 NANCY SLAGLE continued with the Four Dam Pool Divestiture                     
 appropriation of $725,000 which is corporate receipts for the                 
 transfer of the Four Dam Pool Hydroelectric Projects.  This                   
 appropriation would provide funding for the upfront transfer costs            
 such as land titles, permits, environmental, and legal services.              
 Once the projects are sold, the costs will be reimbursed.                     
 Number 321                                                                    
 In response to Chairman Rieger, GUY BELL, Director of                         
 Administrative Services for the Department of Commerce, believed              
 that the corporate receipts would be a combination of AIDEA and AEA           
 corporate receipts.  Mr. Bell said that he would have to obtain the           
 numbers from AIDEA.  AIDEA and AEA share the same board while the             
 AIDEA staff manages the energy authority.  The AEA cannot employ              
 staff, therefore, AEA contracts with AIDEA to supply staff                    
 services.  Mr. Bell offered to provide more information regarding             
 where the upfront money would come from.  Mr. Bell reiterated Ms.             
 Slagle's point that these costs would be reimbursed to AIDEA/AEA              
 once the projects were sold.                                                  
 CHAIRMAN RIEGER asked if it was specified in an existing agreement            
 between the purchasing utilities that the transfer cost would be              
 reimbursed; is it merely a payment of a cash sum that the executive           
 branch would be responsible to replace in AIDEA's account.  GUY               
 BELL explained that the transfer cost initial agreement specifies             
 that the upfront costs would be shared and the proceeds of the bond           
 issue will include the reimbursement of the transfer costs.  Mr.              
 Bell said that this agreement is a precondition for negotiations.             
 CHAIRMAN RIEGER clarified that he was referring to the level of               
 assurance that the money would return to AIDEA upon the transfer to           
 the utilities.  GUY BELL explained that AIDEA and AEA do not want             
 to incur expenses unless there is significant progress and an                 
 agreement.  There was a meeting in February and another meeting is            
 to be held.  Mr. Bell pointed out that the value issue has not yet            
 been agreed upon.  AIDEA will not continue with land surveying,               
 permitting, environmental expenses, etc. until an agreement is                
 developed.  This appropriation would be used after reaching an                
 agreement with the utilities.                                                 
 NANCY SLAGLE continued with the next project which fell under the             
 Department of Community and Regional Affairs.  She explained that             
 the Rural Power Systems Upgrades/Alaska Rural Energy Initiative               
 will provide repair and upgrade of power systems in rural Alaska.             
 This appropriation will provide grants and contracts for upgrades             
 and new construction.  Ms. Slagle informed the committee that the             
 division has received 541 requests from utilities which total $54             
 million in requests which illustrates the large amount of need.               
 Number 371                                                                    
 SENATOR LINCOLN inquired as to how such a large volume of requests            
 would be prioritized.  NANCY SLAGLE assumed that the requests would           
 be ranked by priority by the department.  Many of the grant                   
 programs, such as Village Safe Water, are in similar situations               
 where the need far exceeds the money available.                               
 CHAIRMAN RIEGER asked Ms. Slagle if she could provide a specific              
 list of the projects that would be funded.  NANCY SLAGLE offered to           
 check with the department on this question and relay the                      
 information to the committee.                                                 
 NANCY SLAGLE continued with the $50,000 request for the Head Start            
 Program.  Many of the Head Start facilities across the state need             
 health and safety repairs and upgrades.  She informed the committee           
 that OMB has been provided with a list of potential projects that             
 amounts to $500,000 in needs.  Again the most critical needs must             
 be determined in order to decide which projects would be funded.              
 SENATOR LINCOLN expressed concern with the Head Start appropriation           
 in that $50,000 does not amount to much.  It seems that the                   
 facilities housing the small children are not receiving the                   
 necessary attention.  NANCY SLAGLE noted that the same amount of              
 money was provided for Head Start last year.  Ms. Slagle agreed               
 that there is much need.                                                      
 SENATOR LINCOLN inquired as to what would happen if a fire marshall           
 or a DEC inspector came in and said that the system must be                   
 corrected in order to continue housing a Head Start Program.  Are             
 all of these facilities up to code for the fire marshall and DEC?             
 NANCY SLAGLE did not know.  She offered to provide any information            
 that may be related to fire code violations or requirements.                  
 SENATOR LINCOLN expressed interest in anything relating to any code           
 Number 423                                                                    
 SENATOR GREEN asked if these facilities were owned or leased by the           
 state.  NANCY SLAGLE explained that these are nonprofit                       
 organizations.  The Association of Village Council Presidents,                
 Rural CAP, and various other nonprofit organizations run these                
 programs.  Ms. Slagle did not know if the nonprofits owned or                 
 leased the facilities; however, the facilities are not state owned.           
 NANCY SLAGLE continued with the federal receipts for energy                   
 projects which totals $1 million.  This provides pass through                 
 federal grants in order to assist communities, electric utilities,            
 or other eligible entities by performing functions that others                
 cannot.  This is a way for the state to save money so that the                
 money can be used for energy projects such as the Institutional               
 Conservation Program pass through grants.  The Institutional                  
 Conservation Program provided the installation of waste heat                  
 systems in schools, the extension of transmission lines for federal           
 public health services, etc.                                                  
 CHAIRMAN RIEGER asked if the money received for federal grants was            
 project specific or is it a grant for energy projects left to the             
 discretion of the department.  NANCY SLAGLE was unsure if these               
 pass through grants were project specific, but offered to find that           
 information for the committee.                                                
 NANCY SLAGLE continued with the rural development grants that is a            
 $1,280,000 request of which $480,000 are federal receipts and                 
 $800,000 are inter-agency receipts from AIDEA.  This is the                   
 Governor's coordinated approach to economic development.  She noted           
 that the rural development grants used to be in the operating                 
 budget.  This appropriation supports community and economic                   
 development activities in rural communities which lead to the                 
 request for the appropriations to be transferred to the capital               
 budget.  These are small grants with a long duration and moving the           
 grants into the capital budget would eliminate the need to pursue             
 extensions every year.  Ms. Slagle listed the following as examples           
 for possible grants in fiscal year 1996:  product development,                
 business expansion to increase production in tourist novelty items,           
 a museum gift shop, and the development of a cooperative artist               
 training and retailing facility.                                              
 CHAIRMAN RIEGER asked if these grants were left to the discretion             
 of the agency.  He also asked Ms. Slagle to provide a list of the             
 projects slated for fiscal year 1997.  NANCY SLAGLE said yes, those           
 grants are left to the discretion of the agency.  She agreed to               
 provide the committee with a list of proposed projects.                       
 NANCY SLAGLE continued with community block grants which is $9                
 million in federal receipts.  This includes several block grants.             
 The community services block grant is required by federal                     
 regulation to be passed through to community action agencies, to              
 provide services to low income and homeless persons throughout the            
 state, and to alleviate the conditions of poverty.  She informed              
 the committee that Alaska has one community action agency to which            
 these funds are passed through and that portion totals about $5               
 million.  There is $4 million from the community services block               
 grant, the homeless grant, and the food and nutrition grant.  The             
 emergencies shelter grant provides funds to local communities and             
 nonprofits for homeless service providers and for renovation                  
 payment of maintenance operations, insurance, utilities,                      
 furnishings, etc. which is part of the community block grant.                 
 In response to Chairman Rieger, Ms. Slagle believed that the $5               
 million for the community development block grant was at the                  
 discretion of the department.  She explained that the community               
 development block grant awards approximately 30-35 grants of about            
 $200,000 each to local governments.  Ms. Slagle offered to provide            
 the committee with information regarding where those grants went in           
 the past and where the grants are anticipated in the upcoming year.           
 Number 510                                                                    
 CHAIRMAN RIEGER asked if EMS service was eligible for block grants            
 under this program.  NANCY SLAGLE did not think so, but offered to            
 provide that information.                                                     
 SENATOR LINCOLN suggested that it would be helpful to compare the             
 appropriations before the committee to those from last year.  NANCY           
 SLAGLE said that could be provided to the committee.  Depending               
 upon the grant program, the grant may be awarded on a competitive             
 basis.  Therefore, the information regarding the anticipated needs            
 for fiscal year 1997 may not be readily available.                            
 CHAIRMAN RIEGER was struck by the fact that more than half of the             
 appropriations thus far are to be awarded at the discretion of the            
 agency.  This does not look like the capital budget that he was               
 accustomed to seeing.  As a legislator, he had no idea of where the           
 money would go other than comparing where the money had gone in the           
 past.  Chairman Rieger was uncomfortable with awarding lump sums to           
 be allocated at the discretion of the department.                             
 NANCY SLAGLE pointed out that the criteria the departments used in            
 determining who would be awarded the money was reviewed.                      
 Information was gathered on that and could be provided to the                 
 CHAIRMAN RIEGER inquired as to where the $4 million would go after            
 being awarded to Rural CAP.  NANCY SLAGLE explained that Rural CAP            
 is to use that $4 million in assisting the poor, securing and                 
 retaining employment, education, housing, and emergency assistance.           
 Those funds have annually supported the village participation                 
 conference and the rural providers conference both of which are               
 sponsored by Rural CAP.  Ms. Slagle informed the committee that               
 those funds have been used in alcohol and drug abuse prevention               
 programs, energy conservation strategies and child development                
 NANCY SLAGLE continued with the Department of Corrections which has           
 83 buildings that constantly have repair needs.  Currently, the               
 primary concerns that the appropriation would address are the                 
 security systems, the roofs, the walls, the mechanical systems, and           
 the electrical systems.  There is not enough money to deal with all           
 of the outstanding deferred maintenance needs.  In response to                
 Chairman Rieger, Ms. Slagle said that this money would be left to             
 the discretion of the agency.  She noted that a break out of the              
 $1.5 million had been provided and she reviewed that list.  The               
 department has determined the most critical needs and have                    
 identified those areas.                                                       
 CHAIRMAN RIEGER asked if any of that money could be used in order             
 to enter into an agreement for a new facility.  NANCY SLAGLE said             
 that was not the intent.                                                      
 BOB COLE, Administrative Director for the Department of                       
 Corrections, said that was not the intention.  The department would           
 only move in that direction if there was a specific agreement                 
 between the legislature and the executive branch to proceed in that           
 NANCY SLAGLE pointed out that the money would be specifically                 
 appropriated for deferred maintenance as is the title of that                 
 appropriation.  Ms. Slagle did not believe that could legally be              
 used for anything other than deferred maintenance.                            
 TAPE 96-11, SIDE B                                                            
 NANCY SLAGLE continued with the Palmer Correctional Facility                  
 contaminated site cleanup.  The $72,000 is from the oil and                   
 hazardous spill response and prevention fund in order to cleanup              
 $20,000 worth of diesel fuel which has leaked at the Palmer                   
 Correctional Center.                                                          
 SENATOR LINCOLN asked if the $1.5 million in deferred maintenance             
 included funding for Palmer's underground fuel tanks.  NANCY SLAGLE           
 clarified that was $170,000.  Ms. Slagle deferred to Mr. Cole.  BOB           
 COLE explained that $170,000 in general funds was requested in the            
 deferred maintenance of the capital budget in order to dig up and             
 replace the underground fuel tanks.  The other money comes from the           
 cleanup fund and is available and does not come from the general              
 fund.  Mr. Cole specified that the area would be clean for the                
 installation of the underground fuel tanks.  The state pays to dig            
 up and replace the tanks and utilizes the cleanup fund to do just             
 that.  This saves the department $72,000.                                     
 Number 570                                                                    
 NANCY SLAGLE continued with the allocation for community jails                
 which would deal with some of the needed fire, life, health, and              
 safety requirements of the community jails facilities.  This would            
 provide $25,000 for a fire sprinkler installation in Unalaska,                
 $45,000 for remote cell locks in the North Slope Borough facility,            
 and $68,000 for the Kodiak facility.                                          
 BOB COLE noted that these projects were hold overs from last year             
 which were recommended from the community jails task force, but               
 were not funded.                                                              
 NANCY SLAGLE moved on to the Fort Richardson allocation, $900,000,            
 of which $200,000 is from the general fund and $700,000 from                  
 federal receipts.  This would be used in order to renovate the U.S.           
 Fort Richardson confinement facility to open up 40 beds for use by            
 the Department of Corrections.  She specified that the facility               
 would house lower custody, pre-trial prisoners, misdemeanants and             
 felons in the Anchorage area.  This would help with overflow that             
 has occurred in that area.                                                    
 CHAIRMAN RIEGER asked if military people would be placed in this              
 facility.  BOB COLE informed the committee that Fort Richardson has           
 a confinement facility that can hold about 50 people.  There are 6-           
 12 military inmates in the facility at any given time.  Fort                  
 Richardson would like to close this facility, lease it, or make use           
 of it in some way.  Mr. Cole noted that the Municipality of                   
 Anchorage brought this to the department's attention a year and a             
 half ago.  The Municipality of Anchorage is still interested as a             
 short-term solution while the larger question of overcrowding is              
 discussed.  Mr. Cole pointed out that it would be a cheap fix; it             
 would cost about $1 million to renovate the facility.  The                    
 contingency is the $700,000 worth of federal funds.  Mr. Cole                 
 discussed the possibility of allocations being tagged for this in             
 the Defense Appropriations Bill.  If this happens, then a                     
 discussion regarding the operational funding for the last quarter             
 of fiscal year 1997 would be necessary.                                       
 CHAIRMAN RIEGER said that this is not a deal yet.  Is there an                
 understanding that if the federal government comes through with               
 $700,000, then Fort Richardson would cooperate with its portion,              
 $200,000.  BOB COLE agreed that the deal was not sealed, but stated           
 that the Army is very eager to do this.  Mr. Cole explained that              
 the engineers reviewed the job and projected the cost to be around            
 NANCY SLAGLE moved on to the $250,000 in general funds to renovate            
 and convert the Harborview Development Center to a therapeutic                
 community for substance abusers.  She informed the committee that             
 about 85 percent of incarcerated adults are involved with substance           
 abuse.  This would help deal with this problem.                               
 In response to Senator Green, BOB COLE said that the facility could           
 be occupied early in FY 1998.  There would not be an operating                
 budget impact this fiscal year.                                               
 Number 517                                                                    
 SENATOR LINCOLN noted that there is a large sum of money from the             
 Council in Valdez in order to assist with the Harborview                      
 conversion.  The amount in the bill is a small amount of the total.           
 BOB COLE mentioned that the total cost of the Harborview conversion           
 is about $1 million or $20,000 per bed to renovate.  The Fairbanks            
 Community Council is on record in support of this project as well             
 as the Valdez Community Council.                                              
 NANCY SLAGLE continued with the Department of Education which                 
 begins with a list of the department's major maintenance projects.            
 The last two projects deal with construction.                                 
 CHAIRMAN RIEGER asked if there was a priority list for major                  
 maintenance as with school construction.  Are the top five major              
 maintenance projects listed?  NANCY SLAGLE replied yes.                       
 KAREN REHFELD, Department of Education, explained that the                    
 department's major maintenance list included two roof repair                  
 projects for Juneau.  The Governor's office combined those two                
 projects, the roof repair for the High School and the Mendenhall              
 River School, and collapsed the dollar amount.                                
 NANCY SLAGLE interjected that the remaining projects were taken off           
 the DOE list.                                                                 
 SENATOR LINCOLN inquired as to what was meant by the rest were                
 taken off the list; does that mean that one of the Juneau projects            
 was not on the priority list?  NANCY SLAGLE said no, both the                 
 Juneau projects were on the priority list.  The two projects were             
 combined and a smaller dollar amount was assigned for those                   
 projects.  Furthermore, the money for the Fairbanks School District           
 is just funding for the planning portion of the project.                      
 SENATOR LINCOLN inquired as to the total amount requested for                 
 Fairbanks School District.  NANCY SLAGLE informed the committee               
 that the Fairbanks School District requested $3,194,692.  The                 
 $223,600 is enough to do the planning and design for the project              
 anticipating that the Fairbanks School District would still be at             
 the top of the list next year for funding.  KAREN REHFELD                     
 interjected that the process does allow that projects be phased               
 when reasonable to do so.  The application would specify that the             
 project is a phase project and would be ranked accordingly.  Ms.              
 Rehfeld said that the project would receive points for being a                
 phased project.                                                               
 NANCY SLAGLE pointed out that the Lower Kuskokwim School District             
 project was the top project from the school construction grant                
 list.  This is a major portion of the money for the project, but              
 not the full amount.  The total amount is around $6.9 million.                
 Number 455                                                                    
 SENATOR LINCOLN asked how the department determines how far the               
 construction would get on a project such as this.  NANCY SLAGLE               
 explained that the entire capital budget was reviewed in order to             
 determine the priorities while funding major maintenance.  This is            
 a balance between construction and major maintenance.                         
 SENATOR LINCOLN inquired as to what would be given up since the               
 project lacked $2 million to be funded in total.  KAREN REHFELD               
 understood that there would be insurance proceeds, about $6                   
 million, to help support the cost of construction of Hunter                   
 Elementary.  Therefore, the total of the project would be $12                 
 million.  Ms. Rehfeld clarified that the amount the department                
 requested was for the remaining piece, there was no phasing.  Ms.             
 Rehfeld assumed that the district would revisit its plans.                    
 NANCY SLAGLE continued with the Public Library construction grants.           
 This federal money is received every year.  KAREN REHFELD noted               
 that the local municipality must make a match in order to receive             
 these funds.  In response to Chairman Rieger, Ms. Rehfeld believed            
 that the community of Gustavus had requested the construction of a            
 library.  There may be others and Ms. Rehfeld offered to provide              
 the committee with a list.                                                    
 NANCY SLAGLE moved on to Village Safe Water projects.  She passed             
 out copies of the priority listing for village safe water                     
 appropriations which includes the CIP project administration.                 
 There is money for clinic sanitation facilities,                              
 engineering/feasibility studies, federal sewerage grants from EPA,            
 CHAIRMAN RIEGER summarized that this was all itemized except for              
 the $15 million for the federal sewerage grants.  NANCY SLAGLE                
 directed the committee to the Federal EPA column which identifies             
 where the money is going.  Ms. Slagle said that it is a dollar for            
 dollar match with the state.                                                  
 Number 395                                                                    
 KEITH KELTON, Department of Environmental Conservation (DEC),                 
 explained that the EPA money is at least 50 percent of the project            
 cost and in some cases a little more.  In the case of a strict                
 sewerage project, the match would be 55 percent federal and 45                
 percent state.  A combination water and sewer project would be                
 50/50 split.  A solid waste project receives 50 percent federal               
 funding from the Rural Economic and Community Development                     
 Administration and the general fund would supply the remaining 50             
 percent.  Those funds go directly to the project accounts,                    
 therefore, the DEC is not requesting authority to receive and                 
 expend those funds.  Mr. Kelton pointed out that the EPA money does           
 go through the DEC who is required to receive and expend the $15              
 CHAIRMAN RIEGER referred to page 6, line 17 when asking if the $15            
 million was strictly federal funds or the 55/45 split of the $15              
 million.  KEITH KELTON believed the $15 million is entirely federal           
 funding.  Mr. Kelton agreed with Chairman Rieger that the $15                 
 million would amount to 55 percent of the total sewerage grant                
 money, unless there was a combination water and sewerage project              
 which would then be a 50/50 split.                                            
 CHAIRMAN RIEGER inquired as to why the general fund total was                 
 higher than the other funds, especially if the general fund is 50             
 or 45 percent.  KEITH KELTON pointed out that the Rural Economic              
 and Community Development Administration federal funds do not show            
 in the budget as receiving and expending almost $3.8 million.  This           
 money does not come to the state, but the state provides a match to           
 those project funds.  Also the first four projects, $2.5 million,             
 are entirely general fund projects and do not receive any federal             
 SENATOR LINCOLN thought the matching for water and sewer for last             
 year was about $23 million.  KEITH KELTON remembered that the state           
 general fund for Village Safe Water projects was $21.3 last year              
 while the federal funds amounted to $15 million plus a small amount           
 of farmers' home.  In the last three years, that has remained                 
 within a couple million in all funding sources.                               
 SENATOR LINCOLN mentioned the $100 million that Senator Stevens               
 spoke about over four or five years, when asking if the state was             
 planning for the federal amount.  KEITH KELTON explained that the             
 bill has seven year language for the authorization of the safe                
 drinking water act which has not yet passed.  Senator Stevens                 
 assumed that $15 million per year would total the $105 million.               
 The priority list would be developed on an annual basis based on              
 the specific appropriation that was obtained.                                 
 Number 337                                                                    
 SENATOR LINCOLN asked if the federal amount would decrease if the             
 state does not appropriate that amount.  KEITH KELTON was unsure as           
 to the statute of limitations on that.  Other grant programs with             
 the federal government allow two years for use of the capital                 
 construction funds.                                                           
 CHAIRMAN RIEGER asked if the other funds listed were federal FY 96            
 monies that are already in hand or is this next year's                        
 appropriation monies.  NANCY SLAGLE explained that the $16.888                
 million consists of $15 million in EPA funds and $1.888 million of            
 AHFC funds.  KEITH KELTON interjected that the $15 million is                 
 federal funding for FY 96.  The funding must still go through                 
 continuing resolutions, but all the funding will be received.                 
 CHAIRMAN RIEGER inquired as to how $1.888 million worth of AHFC               
 corporate receipts was placed into this request.  NANCY SLAGLE said           
 that those projects specific to housing were reviewed and those               
 projects fell under the statutory authority and mission of the                
 AHFC.  Corporate receipts from AHFC were used for a few projects.             
 Ms. Slagle noted that some projects within the municipal matching             
 grants, water and sewer projects are also funded by AHFC funds.               
 The specific projects are identified on the priority list as to               
 which are funded by AHFC.                                                     
 KEITH KELTON informed the committee that Alakanuk, Metlakatla, and            
 Hooper Bay are the three projects.  Those projects are identified             
 by the "1*" on the priority list.                                             
 CHAIRMAN RIEGER inquired as to why $450,000 was being put into a              
 system in Allakaket as this community was just relocated.                     
 Number 287                                                                    
 GREG CAPITO, Village Safe Water, explained that the funds requested           
 here are to augment the Federal Emergency Management funds that               
 have already been received.  This would provide a water source,               
 well drilling and transmission of the water into the new village              
 which  FEMA did not anticipate.  FEMA paid for the new village, the           
 state will try to buy the new water source and transmission line.             
 CHAIRMAN RIEGER asked if the $18,456,000 was the minimum match to             
 capture the $15 million in federal grants plus the $3.8 off budget.           
 KEITH KELTON said that assuming the first four items of $2.5 are              
 also included in the general fund, those would not be required to             
 receive the federal match but without those items the program could           
 not run.  CHAIRMAN RIEGER surmised that other than the $2.5, that             
 is the minimum.                                                               
 NANCY SLAGLE went to the next group of projects which begin on page           
 10, line 17.  These are the Municipal Matching Grants Projects                
 which amount to $7,586,000 in general funds and $5,142,000 in IA              
 receipts from AHFC.  In response to Chairman Rieger, Ms. Slagle               
 said that the same logic used in Village Safe Water program to use            
 AHFC funds was used here.  These projects were related to housing             
 and would qualify for AHFC's mission and statutory authority.                 
 CHAIRMAN RIEGER asked if this was a different municipal matching              
 grant program than the front section.  Is there a program on the              
 books for these matches?                                                      
 KEITH KELTON informed the committee that the program had been in              
 place since about 1970.  The appropriations have averaged $10-$12             
 million for the last six years.  The list is developed from a                 
 questionnaire sent to the communities.  The questionnaire solicits            
 information on environmental hazards, public health hazards, and              
 the need to build a project in conjunction with other activities.             
 A criteria system scores and ranks these projects.  He pointed out            
 that a list of projects is generated annually for the legislature             
 to consider.  In response to Chairman Rieger, Mr. Kelton said that            
 the match percentage depends upon the size of the community.  In              
 the larger communities, the ratio is 50/50 while communities with             
 a population under 1,000 have a ratio of 85/15.  Mr. Kelton noted             
 that the ratio is patterned after the same percentage as the                  
 Governor's matching grant program.  There is also a 70/30 ratio for           
 certain communities.                                                          
 CHAIRMAN RIEGER asked if Mr. Kelton had the list of matches for               
 each project.  KEITH KELTON said that information could be provided           
 to the committee.  Mr. Kelton listed some of the ratios for some              
 communities in order to give the committee a general idea.                    
 NANCY SLAGLE moved on to the above ground storage tanks.  The $1.6            
 million in general funds would fund surveying and identifying state           
 owned storage tanks with a capacity of 660 gallons or more.                   
 CHAIRMAN RIEGER asked if this was discretionary on the part of the            
 Number 209                                                                    
 JIM HAYDEN, Storage Tank Program in DEC, said that no priority list           
 had been established for the use of these funds.  An executive                
 cabinet between the various agencies has been established in order            
 to develop a priority system.  The form has been developed and the            
 questionnaire is in development at this time.  The capital projects           
 speak to a survey.  The survey will attempt to identify those                 
 systems that need repair.  Mr. Hayden emphasized that the bulk of             
 the funds would be spent to upgrade those facilities that are                 
 prioritized through this process.  Since the priority system has              
 not been completed, the funds would be discretionary.                         
 SENATOR GREEN inquired as to where an above ground storage tank               
 would be located and who would own them.  JIM HAYDEN informed the             
 committee that these tanks would primarily be found in rural                  
 Alaska.  The two major locations where these tanks would be are               
 schools and utilities.  Mr. Hayden predicted that above ground                
 tanks in about 100 schools and over 60 utilities are currently in             
 need of repair.                                                               
 NANCY SLAGLE went on to the Statewide Emergency Response                      
 Communication System which consists of $100,000 from the spill                
 response prevention funds.  This would provide a two-way radio                
 repeater system for Southeast Alaska and the North Slope in order             
 to deal with emergency spill response communication needs for DEC.            
 This is part of a phase project.                                              
 CHAIRMAN RIEGER said that the committee would stop at this point              
 and would intend to continue on Thursday after the committee deals            
 with the three bills of Thursday's agenda.  He said that he did not           
 intend to go through the Municipal Capital Matching Grants.                   
 NANCY SLAGLE asked if DOT needed to be present to discuss the                 
 highway and airport projects.  DOT has provided some discussion on            
 the STIP previously.                                                          
 CHAIRMAN RIEGER stated that he would like DOT or someone who could            
 speak to the projects.  He understood that in a budget amendment              
 from the Governor, a lump sum is not requested.                               
 NANCY SLAGLE noted that there are a few other small amendments that           
 address the university.                                                       

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