Legislature(1997 - 1998)
01/13/1997 09:00 AM House BUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
Legislative Budget and Audit
January 13, 1997
9:00 a.m.
Senate Finance Committee Room
Juneau, Alaska
Tapes LBA97#1 Side 1 003-end
Side 2 003-152
CALL TO ORDER
Chairman Terry Martin convened the meeting of the Legislative
Budget and Audit Committee on January 13, 1997 at approximately
9:00 a.m. in the Senate Finance Committee Room in Juneau, Alaska.
PRESENT
Representatives Senators
Chrm. Martin Sen Phillips
Rep. Davies Sen. Adams
Rep. Bunde Sen. Halford
Rep. Davis
ALSO PRESENT
Mike Greany, Director, Legislative Finance Division; Merrill
Jenson, ??; Gretchen Mannix, Legislative Finance Division; Susan
Taylor, Legislative Finance Division; Dave Tonkovich, Legislative
Finance Division; Ginger Patton, Legislative Finance Division;
Virginia Stonkus, Legislative Finance Division; Jim Hauck,
Legislative Finance Division; Molly McKennan, ??; Bob Fisher,
Court System (by teleconference).
OTHER BUSINESS
Rep. Bunde pointed out that the Happy Valley airstrip is the only
airstrip only the highway between Prudhoe and Annigin Pass. The
airstrip would remain in State land. However, the proposal would
dispose of all the land adjacent to the airstrip. This would
eliminate the airstrip's ability to lease out this adjacent land
and essentially be self-supporting. In this case, the airstrip
maintenance would be a further drain on the General Fund or it
would go into further disrepair.
Rep. Bunde stated he would like LB&A to examine the financial
impact of maintaining this airstrip if the adjacent land is
disposed of. He pointed out that the land to be disposed of
would be given to the North Slope Borough. The North Slope
Borough has a long history of discouraging non-residents to use
or even transit the land up there unless involved in the oil
industry. He is concerned that people opposed to public use of
these lands would continue this policy if they controlled the
land adjacent to the airstrip. This would make it difficult for
people in the rest of the State to maintain what little access
they currently have to the North Slope area. The North Slope is
currently growing in the area of tourism. In addition, the
Legislature has requested an expansion of the North Slope Haul
Road be expanded and tourist facilities be added. He thought
sale of the adjacent lands could go in the reverse of the
aforementioned policies. He requested an audit that would
indicate how the disposal of this land would impact the viability
of the airstrip.
Chrm. Martin suggested that it would be faster to put it under
Community and Regional Affairs. An audit could take six to nine
months, delaying an immediate report. The committee process
would likely produce more immediate results.
Rep. Bunde re-emphasized that an audit would provide research and
back-up that would be useful to Community and Regional Affairs.
Chrm. Martin asked Mr. Jenson and Mr. Welker to begin looking
into this request. He also asked for a formal written request at
a later date.
STATE WARRANTS
Rep. Bunde raised the concern that while State spending is being
reduced, there appears to be a huge increase in Administrative
spending. For instance, over $320 million is being transferred
to other States in the nation, meanwhile the State is unable to
provide eyeglasses to its older citizens.
Rep. Bunde stated that Judgment Claims has increased nearly 100%
in the last two years to $12 million. Money sent to rural areas
has increased from ?? (086) $9351 million to $72 million.
Grievance Resolutions have increased from $185,000 in 1983 to
$715,000 in 1996. There appear to be conflicts of interest where
the State continues to do business with a legal firm a
Commissioner has 20% ownership in; with a neighborhood health
center that is co-owned by one of the Commissioners. He pointed
that $75,000 had been spent with a California winery; $40,000
with the Culinary Institute of America; with the Wildlife
Foundation; with Princess Tours; with the Juneau/Bellevue,
Washington, and Washington athletic clubs.
Rep. Bunde expressed concern over the liquor account, stating
that it seemed exorbitant beyond that needed for the ferry
system. The Department of Education and the Department of Fish
and Game also have large liquor accounts. Finally, the
Department of Education also has a rather large account with the
espresso bar, the Espresso On The Run.
Chrm. Martin agreed with Rep. Bunde's concern with these State
Warrants in a time of cut-backs in State spending. He suggested
that the Chair of Finance and the Chair of the Senate could bring
up the Warrants as administration reports.
Rep. Davies asked if the individual agencies had been contacted
for explanations.
FINAL AUDITS
Mr. Jenson summarized that the Committee is in the process of
winding up its ??"sink allotted" coverage for FY 96, which is
part of the State audit. With only two or three audits pending,
the Committee is ready for more audits. He suggested that the
Committee work with Rep. Bunde's office to address some of the
areas of concern that were raised.
AUDIT REQUESTS
Chrm. Martin reported that a bill has been introduced to put the
Alaska Railroad under the Executive Budget Act. The Alaska
Railroad is the only corporation in the whole State that is not
under the Executive Budget Act. He suggested that the
Legislature should have a closer overview of the Alaska
Railroad's annual and monthly expenditures.
Chrm. Martin noted that there have been disputes over the
allotment of land, particularly regarding costs and availability.
He asked the Audit division to look into these complaints.
Chrm. Martin state the next concern was an audit into procurement
practices requested by the State Ombudsman, Mr. Stuart Hall.
The last audit request was concerning the UAA American/Russia
Center. This request was presented by both the President of the
Senate and the Speaker of the House.
Rep. Davis asked about RPL 06-7-0144, Department of Health and
Social Services relating to API. He asked rather the change from
Medicaid receipts to patient receipts would mean the funds could
not be collected from Medicaid. In addition, he was concerned
with the increase in services at API. He wondered if this
proposal would in any way reduce the ability of the community
mental health programs to collect Medicaid receipts. Would this
proposal make it harder for the shift from API to community-based
mental health programs to occur?
Mr. Greany stated that in his opinion the proposal would not
impact the shift to community-based mental health services. The
shift in funds source was addressed by Susan Taylor. She stated
that to a certain extent, the collection of General Fund Program
receipts does affect the collection of the Disproportionate
Share. This is because the Disproportionate Share Payments are
because API is serving a disproportionate share of indigent
clients. So General Fund Receipts mean there is a third party
payer that is able to pay the cost of a client's care. In
theory, if a client is served in the community, they will no be
in API. For instance, clients going to API are doing so during
times of crisis.
Mr. Greany pointed out that there is a long-term program for API
and the community mental health programs. There will be a
definite budget issue in the future regarding funding for API in
relation to the general mental health programs of the State. For
this reason, it was recommended in the last meeting that this be
deferred to the Finance Sub-committee venue. This would allow
the request for the 97 Budget to be reviewed in the context of
the upcoming 98 Budget. Mr. Greany felt that the Committee would
probably recommend approval of the proposal. However, first the
Finance Committees dealing with the 98 Budget need to become
aware of the issue and the problem. At that point, a
determination could be made to send the proposal back to the
Budget and Audit Committee to fix the 97 problem in conjunction
with whatever will be happening for 1998.
Rep. Davies noted that in early 1996 there was a sharp decline in
the average daily census. There was no commentary on what that
reduction in the daily census would have on the budget
requirements. He asked the budget sub-committees to look at that
impact as well.
Chrm. Martin also stated concern regarding the University of
Alaska Arctic Region. The major concern was the transfer of
money not from the Federal, but is now from University Receipts.
How will this keep from dramatically increasing the Budget?
Mr. Greany stated that this was intended as a one-for-one fund
switch. Currently the funds coming in for the operation of the
super computer center from the Federal government are budgeted as
coming directly from the Federal government to the center. For
that reason, the funds were characterized as Federal Funds. Now
that funding arrangement has been changed. The funds now come
through a defense contractor, the TRW. The intermediate stop
means that the money loses its identity as Federal funds. The
University feels the proper characterization of those funds would
best fit under the University Receipts category. This a one-for-
one swap that is not intended to change the overall Budget level,
just as a change in resource types.
REGULAR SESSION
Chrm. Martin called for a MOTION to APPROVE the minutes of the
meeting on November 7, 1996. Rep. Davies OBJECTED temporarily
with a minor correction. On page 18, Rep. Davis should read Rep.
Davies. With that correction, the OBJECTION was REMOVED. No
objections being raised, the minutes were APPROVED.
Sen. Phillips MOVED to APPROVE the three audits; from the State
Ombudsman, from Speaker Phillips and Senate President Pearce, and
from for the Alaska Railroad. No objections being raised, the
MOTION was APPROVED.
Rep. Bunde stated that his office would be working closely with
the auditors in an informal request for information. Rep. Bunde
MOVED that the Committee allow that process to take place. No
objections being raised, the MOTION was APPROVED.
Mr. Greany clarified that the information gained in the audit
request by Rep. Bunde would be presented to the Finance
Committees for inclusion in their review of the agency budgets.
It is noted that the several agencies have already responded with
explanations of their purchases. In particular, the two agencies
have already proffered initial explanations of the liquor
purchases noted earlier.
REVISED PROGRAMS
RPL 05-7-0606 Education $26,000 in GF/Program
Receipts for
Mt. Edgecumbe - Summer
Arts Program and
Camp
Approval for $4,000.
Deferral for $22,000.
Mr. Greany stated that this is a new request and is broken down
into two separate parts. One is for $4,000 for increased
enrollment and one for $22,000 for two summer camps that will be
occurring during this upcoming summer. He recommends approval of
the $4,000 for increased enrollment at Mt. Edgecumbe and defer
the rest temporarily for the Finance Committees to examine.
Rep. Bunde asked if all students pay $100 no matter where they
come from and if the $100 was for one round trip to the school
and back.
Virginia Stonkus stated that all students pay the $100
irregardless of where they are from. This is for transportation
for one trip.
Rep. Davies clarified that this is strictly for the main school
period, not the summer camps.
Rep. Davis wished to confirm that even if the $22,000 was
deferred, that the school could continue to collect interest on
the amount.
Mr. Greany stated that generally moneys in the General Fund
generated interest for the General Funds, not for a specific
account unless statutes provided otherwise. He noted that with
the Legislature beginning session, the normal Budget process will
address the deferred RPLs. The Committee's role is to supplement
the Legislature during non-session times and when time issues are
critical.
Sen. Phillips MOVED for APPROVAL of $4,000 for increased
enrollment and MOVED for DEFERRAL of the $22,000 in RPL 05-7-
0606; no objections were raised, the MOTION was APPROVED.
RPL 05-7-0626 Education $3 million in Federal
Receipts for
Special/Suppl. Services -
Title I & Migrant
Education
Deferred.
Rep. Bunde MOVED for DEFERRAL of RPL 05-7-0626; no objections
were raised, the MOTION was APPROVED.
RPL 05-7-0679 Education $603,000 in Federal
Receipts for
Vocational Rehab/Disab.
Determ - Increased
Caseload
Approved.
Sen. Phillips MOVED for APPROVAL of RPL 05-7-0679; no objections
were raised, the MOTION was APPROVED.
RPL 06-7-0144 Health & Social Services $200,000 in
GF/Program Receipts
for API - Offset
Uncollectable
Disproportionate Share
Deferred.
Rep. Bunde MOVED for DEFERRAL of RPL 06-7-0144; no objections
were raised, the MOTION was APPROVED.
RPL 06-7-0190 Health & Social Services $845,000 in Federal
Receipts for
DYFS - Project ORCA
(Adoption/ Foster
Care)
Approved.
Rep. Davies MOVED for APPROVAL of RPL 06-7-0190; no objections
were raised, the MOTION was APPROVED.
Chrm. Martin requested that the Department of Health and Social
Services provide the Committee with a report of the adoption
process over the last three years.
Rep. Bunde stated that the HESS Committee would investigate the
whole adoption procedure to see if it could be streamlined to
encourage adoptions within the State of Alaska.
RPL 06-7-0196 Health & Social Services $99,300 in Federal
Receipts for
Labs & Radiological
Radon,
Tuberculosis Grants
Deferred.
Rep. Bunde MOVED for DEFERRAL 06-7-0196; no objections were
raised, the MOTION was APPROVED.
Rep. Bunde requested that the Department of Health and Social
Services discuss radon and its health concerns in Alaska with the
Committee.
Rep. Davies asked whether there has been an attempt to coordinate
the program with the State Division of Geology and Geophysical
Surveys on the subject of radon.
RPL 06-7-0197 Health & Social Services $700,000 in
GF/Program Receipts
for WIC - Nutrition and
Education
Approved.
Rep. Davies MOVED for APPROVAL 06-7-0197; no objections were
raised, the MOTION was APPROVED.
RPL 10-7-4038 Natural Resources $525,000 in EVOS
Trust Funds
for EVOS Trustee Council-
Horseshoe Bay, Ninilchik
Deferred.
Rep. Davies MOVED for APPROVAL of RPL 10-7-4038. Rep. Bunde
stated he would vote against the proposal and called for a vote.
Rep. Davies WITHDREW the MOTION.
Chrm. Martin stated that the MOTION would be DEFERRED; no
objections were raised, the DEFERRAL was APPROVED.
RPL 10-7-4040 Natural Resources $500,000 in Federal
Receipts
$200,000 in GF/Program
Receipts
for Geological
Development-
Airborne Geophys Surveys
Approved.
Sen. Phillips MOVED for APPROVAL 10-7-4040; no objections were
raised, the MOTION was APPROVED.
RPL 10-7-4041 Natural Resources $65,000 in
GF/Program Receipts
for Pipeline Coordinator
- DEC
Representation
Approved.
Rep. Davis MOVED for APPROVAL 10-7-4041; no objections were
raised, the MOTION was APPROVED.
RPL 10-7-4042 Natural Resources $510,000 in Federal
Receipts for
Mining Development -
Abandoned
Mine Lands
Approved.
Rep. Davies MOVED for APPROVAL 10-7-4042; no objections were
raised, the MOTION was APPROVED.
RPL 12-7-0058 Public Safety $364,100 in Federal
Receipts for
AST-Narcotics Task Force
Program
Approved.
Sen. Phillips MOVED for APPROVAL 12-7-0058; no objections were
raised, the MOTION was APPROVED.
Rep. Davies wondered why the issue is not being handled as part
of the yearly Budget process.
Mr. Greany stated that the Committee has been working with the
Department of Public Safety to get their grants built into the
regular ongoing Budget process rather than through the Budget and
Audit Committee. This particular request had come in previously
in a larger amount. It was suggested that they re-evaluate the
program needs in view of all their Federal projects. He feels
this second response is reasonable.
RPL 12-7-0085 Public Safety $129,000 in Federal
Receipts for
Laboratory Service -
Genetic
Fingerprinting
Approved.
Sen. Phillips MOVED for APPROVAL 12-7-0085; no objections were
raised, the MOTION was APPROVED.
Rep. Davies objected, asking whether the supplies required for
the new process would be equivalent in amount to be spent for
supplies this year.
Mr. Greany stated that the equipment will be a one-time cost and
the supplies will depend upon the level of activity. After the
initial outlay, the supplies will have to be replenished
dependent upon the crime activity levels.
RPL 12-7-0095 Public Safety $140,200 in Federal
Receipts for
Records & Identification
- Nat'l
Crime History Program
Approval.
Sen. Phillips MOVED for APPROVAL 12-7-0095; no objections were
raised, the MOTION was APPROVED.
RPL 12-7-0097 Public Safety $984,700 in Federal
Receipts for
Highway Safety Planning -
Various
Federal Grants
Approved.
Rep. Davis MOVED for APPROVAL 12-7-0097; no objections were
raised, the MOTION was APPROVED.
RPL 18-7-0240 Environmental Conservation $60,800 in
Federal Receipts for
Storage Tank - Leaking
Under-
Ground Tank Investig.
Deferred.
Mr. Greany asked for a deferral on this RPL until the Committee
had time to properly characterize the funds source. It is
possible that this may not be truly Federal funds. If they are
General Funds, they may not be available to the Committee.
Sen. Phillips MOVED for DEFERRAL of RPL 18-7-0240; no objections
were raised, the MOTION was APPROVED.
RPL 18-7-0241 Environmental Conservation $242,000 in
OHSRPR Funds for
Contaminated Sites -
Alaska Pulp
Mill Closure
Deferred.
Sen. Davis MOVED for DEFERRAL of RPL 18-7-0241; no objections
were raised, the MOTION was APPROVED.
RPL 18-7-0242 Environmental Conservation $273,100 in
GF/Program Receipts
for Contaminated Sites -
Ketchikan
Pulp Ward Closure
Approved.
Mr. Greany stated that this RPL related to the Department of
Environmental Conservation's activities overseeing the shutdown
process of the Ketchikan Pulp Mill. This shutdown is to occur
toward the end of March. There is a number of things going on,
the particulars of the permit for the mill changes as the mill
phases out of productions. Apparently different type of
contaminants will enter the air and water during shutdown than
would be released during 100% operation.
Rep. Davis MOVED for APPROVAL of RPL 18-7-0242; no objections
were raised, the MOTION was APPROVED.
RPL 20-7-0012 Corrections $1,248,453 in
Federal Receipts for
Institutions - Increase
Prison
Capacity
Withdrawn.
Chrm. Martin stated that RPL 20-7-0012 had been withdrawn from
the audit process.
RPL 21-7-0165 Community & Regional Aff $50,000 in Federal
Receipts for
Community & Rural
Development
Head Start Collaboration
Deferred.
Chrm. Martin announced that the DEFERRAL of RPL 21-7-0165; no
objections were raised.
RPL 25-7-3284 Transportation/Public Fac $3,000,000 in
Federal Receipts for
Airports CIP - Gustavus
Airport
Improvements
Deferred.
Sen. Phillips MOVED for DEFERRAL of RPL 25-7-3284; no objections
were raised, the MOTION was APPROVED.
RPL 41-7-0017 Court System $57,842 in Federal
Receipts for
Race and Ethnic Bias
Elimination
in Court Grants
Approved.
Rep. Davies MOVED for APPROVAL of RPL 41-7-0017; no objections
were raised, the MOTION was APPROVED.
RPL 41-7-0018 Court System $25,107 in Federal
Receipts for
Computerized Case
Management/
Internet Access
Approved.
Sen. Phillips MOVED for APPROVAL of RPL 41-7-0018; no objections
were raised, the MOTION was APPROVED.
RPL 41-7-0035 Court System $60,200 in Federal
Receipts for
Foster
Care/Adoptions/Judicial
Process Assessment
Approved.
Rep. Davis MOVED for APPROVAL of RPL 41-7-0035; no objections
were raised, the MOTION was APPROVED.
Sen. Halford reiterated that the Committee would appreciate being
asked to approve a proposal prior to the work being done.
RPL 41-7-0033 Court System $7,000,000 in
University Receipts
for Arctic Region Super
Computer -
Receipts Accounting
Approved.
Chrm. Martin asked for clarification of whether the budget would
be adjusted by $7 million on the General Fund program receipts.
Mr. Greany stated that this does not involve the General Fund
program receipts. It involves the University receipts. If
approved, the existing Federal authority would be restricted for
reduction. In its place, an equal amount of University receipts
will be authorized to make a dollar for dollar fund switch.
Since the funds are not coming directly from the Federal
government, but through a third party, the funds would be
characterized as University receipts.
Rep. Davis MOVED for APPROVAL of RPL 41-7-0033; no objections
were raised, the MOTION was APPROVED.
Rep. Davies MOVED that the Committee rescind its action regarding
RPL 10-7-4038, EVOS Trust Funds. Rep. Davis MOVED to approve the
RPL. A ROLL CALL VOTE was taken:
IN FAVOR: Rep. Davies, Rep. Davis, Sen. Adams,
Sen. Halford,
Sen. Phillips, Chrm. Martin.
OPPOSED: Rep. Bunde
The MOTION was APPROVED for the EVOS Trustee Council in RPL 10-7-
4038 by a vote of 6 to 2.
ADJOURNMENT
Chrm. Martin adjourned the meeting at approximately ?? a.m.
LBA 1/13/97 Page 12
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