Legislature(1997 - 1998)
02/26/1997 12:01 PM House BUD
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* first hearing in first committee of referral
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Legislative Budget and Audit
February 26, 1997
12:00 Noon
House Finance Committee
Juneau, Alaska
Tapes LBA97#3 Side 1 001-end
Side 2 001-186
CALL TO ORDER
Chairman Phillips convened the meeting of the Legislative Budget
and Audit Committee on February 26, 1997, at approximately 12:00
Noon in the House Finance Committee Room in Juneau, Alaska.
PRESENT
Representatives Senators
Rep. Croft Chrm. Phillips
Rep. Therriault Sen. Pearce
Rep. James Sen. Halford
Rep. Bunde Sen. Adams
Rep. Martin
ALSO PRESENT
Mike Greany, Director, Legislative Finance Division; Bruce
Johnson, Mt. Edgecumbe School; Sharon Devoe, Manager of the
Planning and Programming Branch, FAA; Virginia Stonkus,
Legislative Finance Division; Barbara Thompson, Assistant
Director of the Division of Teaching and Learning Support; Nancy
Slagle, Director of Administrative Services, Department of
Transportation and Public Facilities; Mary Lou Burton, Director
of Budget for the University.
REVISED PROGRAMS
RPL 05-7-0680 Education
Mr. Greany stated that the recommendations on each request must
be considered in view of the venue, whether by this Committee or
in the normal Budget process. Keeping in mind that the
Committee's jurisdiction over the RPLs is derived from two
sources. The first is the statutes that provide for this type of
review. Second is that the appropriations authority is outlined
in the front of the appropriation bills. Therefore, the
Committee does not have original jurisdiction as far as
appropriation powers go. So while in session, when a
recommendation is made subject to the appropriate Finance
committees determining whether to take up the proposal in the
regular budget process through a supplemental. That is why the
write-up may recommend approval, but subject to review by the
Finance committees.
Mr. Greany addressed RPL 05-7-0680, Department of Education,
Vocational Rehabilitation. He recommended the Committee defer
action on this RPL. The history is that at first look the
Voc/Rehab may have sufficient or excess Federal Funds authority
to cover part of this cost. He suggested that this request be
deferred until later in the year when it will be easier to assess
the remaining Federal Funds.
Rep. Martin MOVED to DEFER the RPL to the regular Budget process.
No objections being raised, the MOTION was APPROVED.
RPL 05-7-0681 Education
Mr. Greany made the same recommendation on the next Department of
Education RPL.
Rep. Martin MOVED to DEFER RPL RPL 05-7-0681 to the consideration
of the Legislative body. No objections being raised, the MOTION
was APPROVED.
Sen. Adams raised concern about timing and the Federal Funds if
the proposals had to go through the regular Legislative process.
Mr. Greany stated that there was not a critical time element
involved that would mean the loss of Federal Funds. He also
stated that there would be sufficient Committee meetings later in
the Fiscal Year during which this proposal could be re-evaluated.
RPL 05-7-0699 Education
Mr. Greany recommended that the Committee approve this RPL.
Their review of the expenditure history is that the Federal
authority has been managed very carefully. Also, over 90% of the
funds on the agenda will go directly to school districts. For
that reason, it seems relatively straightforward to approve the
request.
Rep. Martin stated that a major increase in technology like this
should be explored. Since a supplemental appropriation is in
hand with a Capital Budget coming soon, he felt that it would be
better to wait and see where the new technologies money is coming
from.
Sen. Pearce asked if the charter school bill the Committee passed
would fit under the Federal government's criteria for charter
schools. She also asked if that would be a direct pass through
to any charter schools.
Virginia Stonkus (inaudible)
Sen. Pearce asked if the GOS 2000 Technology Program would entail
buying equipment. If so, are there any ongoing operating costs
that will be accrued to any division of the State government
beyond the Foundation formula.
Virginia Stonkus (inaudible over the background noises).
Sen. Adams asked if Ms. Stonkus could explain where the grant
money actually goes to out of the $1 million.
Virginia Stonkus ( inaudible)
Barbara Thompson, Assistant Director of the Division of Teaching
and Learning Support, answered where the grant funds would go.
An application process is being developed at this time.
Currently an application for the Technology Fund is resting with
the US Department of Education for approval. The funds are not
targeted for any specific school district at this time.
Rep. Martin asked how many schools have been approved as charter
schools.
Ms. Thompson stated that there have been four charter schools
approved. These schools have nothing to do with the grant funds
under discussion.
Rep. Martin asked the location of the charter schools.
Ms. Thompson stated that one is out of Galena, one is out of
Fairbanks, one is out of Delta/Greeley and there is a fourth one
out of.
MOVED that RPL 05-7-0699 be APPROVED; no objections being raised,
the MOTION was APPROVED.
RPL 05-7-0700 Education
Mr. Greany recommended approval of the school to work program.
The majority of the funds in this proposal will go out to local
school districts.
Rep. Martin asked if it was realistic to give money to the school
district this late in the school year. He suggested that it
might be more beneficial to wait and give the money at the
beginning of the next school year.
Mr. Greany noted that this is a rolling request. Moneys have
been previously approved and not spent. He responded that if the
funds are not spent at the end of Fiscal Year 97, any unspent
balance would have to come back to the appropriation process in
the next Fiscal Year.
Rep. Bunde wished to clarify that this program is for existing
school to work programs and to confirm the statement that no new
programs would be added was accurate.
Mr. Greany stated that his understanding is that the funds would
be to continue the current work program.
Ms. Thompson stated that existing programs are ongoing. A new
grouping of programs have been funded. The timing of receiving
the Federal grant in November has sort of set a cycle that is a
bit different from the normal State Fiscal Year program year.
Those funds would be directed toward the ongoing activities that
have been stated in the Plan of Service that was approved by the
Department of Labor.
Sen. Halford asked the meaning of "approval is recommended
subject to the in-session opportunity for the Finance committees
to consider the request in the regular Budget process." He
stated that that sentence is a circle.
Mr. Greany stated that the intention was that while the
Legislature is in session, the preferred venue for increases such
as this would be through the regular appropriation process. The
Finance committees, whether Capital or Operating Budget, must
have the opportunity to first assert their jurisdiction. If they
feel that it is appropriate for the Committee to go ahead with
the proposal, then that would give the Committee leave to do
this. The recommendation here is based first on the merits of
the proposal. Then determining which process should handle the
request is necessary.
Sen. Halford suggested such a proposal should always be handled
in the regular Finance committee process unless there is a time
constraint that makes it necessary for the Committee to deal with
the request. He felt that the Committee gets used to go around
the Finance committees.
Mr. Greany stated that he fully agreed with Sen. Halford.
Rep. Martin asked if the potential grants had already been
incorporated into the Budget as a line item. He felt that the
Committee would be approving money that had already been spent.
Ms. Thompson disagreed, stating that the Federal grant award in
November of 1995. It took several months to get the grant awards
out. Consequently, the grant program is several months behind a
normal program fiscal year cycle. In the first year, the
Department of Education had budgeted full authority in the first
year though the full amount of the first year grant was not
expended. Therefore, there was a sizable amount of carry-over
that was not anticipated. Therefore, the Department of Education
finds itself with the authority for the second year's award in
Fiscal Year 97 with a sizable carryover. The Department requests
that all the funding go out to keep things moving.
Rep. Martin asked if any line items were in the budget that would
allow the Committee to elaborate on what the grant will be next
year.
Mr. Greany stated that Department does have a Federal Funds
increment request in their FY 98 Budget for the next phase of
this particular program.
Rep. Bunde MOVED for APPROVAL of RPL 05-7-0700.
Sen. Adams asked if he was correct that if a motion was made and
not approved, then the 45 day rule kicks in allowing the
Administration to go ahead and spend the money. If the RPL is on
the agenda, however, no action or motion is made, then the
Administration cannot spend the money.
Mr. Greany stated that is was not that cut and dried in meaning
in terms of when it was submitted by the Committee for
consideration. The 45 day rule has only been actually invoked
three times. In all three instances, the request had been
specifically turned down. There is no actual experience of the
Committee failing to consider a proposal and then the 45 day rule
being invoked.
Sen. Adams felt that it was vital that all members be clear on
the fact that if a motion is made for any type of action, the
Administration can go ahead and spend the money. However, if the
proposal is on the agenda and no action or motion is taken, then
it is not in force.
Rep. Martin asked if it was logical that supplemental
appropriation would be something that could be used if the total
Legislative body is involved.
Mr. Greany stated that supplemental process is always the
alternative for these kinds of in session requests. The only
real question is whether time was a critical factor in the
decision.
Rep. Bunde MOVED for APPROVAL of RPL 05-7-0700.
One objection was raised by Sen. Halford who clarified that he
did not oppose the program. He stated that he opposed the
Committee approving anything that does not have an emergency
nature and have to be approved. If the proposal can go in a
month from now in a supplemental and the whole Legislature can
look at the proposal, then the Committee is abrogating its duty
to defend the process by approving the proposal here.
Rep. Martin also objected for the same reasons. He hoped that
the Administration would consider the current budget before to
make sure that tentative approval is in that budget.
Rep. Therriault was concerned about the matter that Sen. Adams
had raised that since action had been taken on the proposal, the
Administration will still go ahead. However, Sen. Halford
advocates that the Committee force it into the regular budgetary
process, then the Committee should not even be considering the
proposal.
Rep. Bunde stated that his motivation for the motion was that he
strongly supported the school to work program. After hearing the
support expressed by other members of the Committee for the
program and knowing that the funds will be addressed in another
venue, he WITHDREW the MOTION; no further objections being
raised, the RPL was WITHDRAWN for further consideration.
Sen. Pearce asked Mr. Greany if he felt that any of the RPLs
before the Committee today would fit in the emergency category.
She stated that there were active supplemental bills on both the
House and Senate side and felt that both bodies planned to move
the bills expeditiously. She agreed with Sen. Halford that it is
more appropriate that the full Legislature have an opportunity to
look at the programs. She added that the body is in the process
of working with Legal on some changes to the Executive Budget Act
that can perhaps clarify the whole system a little better.
Sen. Halford suggested that the agencies offering the programs to
the Committee explain why the program is important on a timeline
that will not fit into a supplemental.
Mr. Greany responded to Sen. Pearce that there were only two
items on the agenda that immediately come to mind as time
critical. One was carried over from the last meeting; the DEC
Contaminated Site Cleanup at Alaska Pulp Mill site. This was an
ongoing project and at the time of the last meeting, it was
represented that they were close to running out of authority.
The Finance Committee had checked with the sub-Committee chairs
of DEC and no problem was seen if the Committee went ahead and
took jurisdiction on this request.
Mr. Greany stated that the other program that was time critical
was the Gustavus project. That first came to the Committee at
the November meeting. At that time, the proposal was deferred to
the regular Capital process as at that time the Committee was
told that it would take a reallocation of the Federal Airport
money from other already appropriated and approved projects.
That would mean robbing Peter to pay Paul situation. The RPL was
resubmitted to the January meeting in the same circumstances.
Again, the Finance Committee recommended that it be deferred to
the regular Appropriation process. It was again resubmitted to
this meeting with some new information that it would not take
away from the regular airport allocations from the Federal
government. It was stated that this project would be using some
new discretionary authority that the FAA had access to. As
recently as yesterday, a representative of the FAA submitted a
letter saying that if the Legislature does not authorize this
project by early March, the project would off the list and would
not even be forwarded to Washington, DC That particular
representative from FAA called Mr. Greany yesterday and clarified
that early March meant March 3rd. Mr. Greany still felt that
requests, particularly of a Capital nature, go through the
regular appropriation process. On the other hand, he would hate
to see Alaska lose out on money that was available for a project
that we would like to see happen. So he suggested that the
Committee might consider an alternative of approving the
proposal, but subject to the stipulation that this is in fact
new, additional project-specific money that would in no way
detract or impair already Legislatively approved projects.
RPL 18-7-0241 Environmental Conservation Alaska Pulp
Mill Site
Mr. Greany stated that upon review the recommendation was for
approval.
Sen. Halford MOVED for APPROVAL of RPL 18-0241; no objections
being raised, the MOTION was APPROVED.
RPL 25-7-3284 Transportation/Public Fac. Airports-
Gustavus Airport
Rep. Martin stated he was suspicious of the FAA being pushy for
one particular project. He stated that he would rather give up
an opportunity for Federal funds than succumb to a threat that
circumvents the Legislative budget process.
Sharon Devoe, Manager of the Planning and Programming Branch, FAA
is responsible for the airport improvement program.
Sen. Pearce noted that the memorandum stated that the airport
personnel in Anchorage felt that the runway had a very good
chance of receiving discretionary funding. She questioned if
there were other authorizations already approved in this Fiscal
Year for discretionary funding. With the highway and possibly
with the airport funds, the Legislature always over-authorizes.
This has been a successful strategy for acquiring extra Federal
funds at the end of the year when left-over funds are
redistributed to states with bid-ready projects. She asked what
other projects have already been authorized that would fit in the
discretionary category that would be in the mix as with the
Gustavus project.
Mr. Greany stated that this is the only request that he is aware
of that has come to the Committee for Legislative action.
Sen. Pearce asked if Sen. Halford remembered if the FAA side had
been over-authorized on in the two years.
Sen. Halford stated that last year, the proposals were way over-
authorized and that situation was reversed later in the year. He
stated that he unsure what over projects are on that list and
that perhaps the Gustavus project is unique in some other
qualifying way.
Rep. Bunde brought up Sen. Halford's concern about setting a
precedent of people circumventing the regular Finance Committee
process. He asked if the process that the RPL application went
through would be such timing-wise so as to push the deadline so
that the people submitting the request could avoid the full
Finance Committee process and come directly to LB&A.
Mr. Greany stated that this first came to his committee's
attention through the RPL request in November. At that time, the
project required a reallocation of funds within the existing
allocation. He felt that that was the red flag that the full
Legislature needed to consider this proposal since it would
affect already appropriated approved projects.
Nancy Slagle, Director of Administrative Services, Department of
Transportation and Public Facilities, stated that one of the
reasons the State has done so well in receiving discretionary
funds for the airport improvement programs is due to the
relationship the State has with the Alaska Region of the FAA.
They have been extremely supportive of efforts to improve the
airports. The original RPL submitted in October asked for $3.7
million in additional authorization of top of an existing project
on apron work that is going on at the Gustavus airport. In June
of last year, an inspection of the airport determined that the
runway was sorely in need of resurfacing and was a safety
problem. The safety aspect was the reason the FAA was interested
to get discretionary funds to apply to the resurfacing project.
She said her understanding was that the other projects being
funded from discretionary funds are already authorized. This
proposal would not displace the funds for any of those projects.
Sharon Devoe stated that she felt that it was important to stay
with the process. This particular Gustavus runway rehab project
was supposed to be scheduled for next summer, not this summer.
It would have been included in the Legislative session this year,
to happen next year. Unfortunately, as a result of that airport
inspection, it was determined that the runway is deteriorating a
lot faster than originally projected. Since it had become urgent
to resurface the runway this year, it made sense to do it as the
same time as the apron project was happening. The only way to
get additional funding was to pursue discretionary funding. At
this point, without the authority, the FAA may not have an
opportunity to attain the additional $3 million.
Ms. Devoe pointed out that the projects are being addressed with
two different types of funding. The first is the ?? dollars
which are here is Alaska and the amount designated is already
set. The discretionary funding is a different source of money
for which projects compete on a national basis. It is a
different process that has a much shorter time frame in which to
work.
Sen. Halford asked if there are any other projects in Alaska
that are funded with this same money and could compete within the
Federal system for the same money.
Ms. Devoe stated that unfortunately discretionary money is
project specific. A project is described and then it must
compete with airports of the same size across the country for
similar type of projects. There are no substitutions.
Sen. Halford asked if there were no other projects in Alaska that
could be advanced to compete in that process.
Ms. Devoe stated that no other project would meet the criteria
for this set of discretionary funds.
Sen. Halford stated that he is not opposed to work on the
Gustavus airport. However, it is a very small community with a
very large airport. There are many other communities in Alaska
that are quite a bit larger whose airports are small. There are
a lot of needs in aviation across the State. If there is no
other way to capture the Federal funds, he is not against it.
However, by the same token, he questioned why the choice of the
Gustavus airport is ahead of communities who have much less in
terms in airport and more in terms of population and need.
Ms. Devoe (answered while the tape was being turned over. Her
answer was not recorded)
Sen. Pearce stated that she felt that the question revolved
around who originally selected the project, the DOT or the FAA.
Ms. Devoe stated that the choice comes from the users, from the
FAA inspections, and from DOT in a combined effort.
Sen. Pearce asked if there are forms to be filled out or how does
this happen?
Ms. Devoe stated that there is a process for meeting with users.
In addition, there is also a process referred to as the Aviation
Project Evaluation Board with members from each region who work
with State-wide Aviation to go through all the projected needs
and rank them in order of priority.
Rep. Martin MOVED for APPROVAL of RPL 25-7-3284 subject to the
availability of new, additional project-specific Federal funds
which will in no way affect projects currently authorized by the
Alaska Legislature through the normal Capital appropriation
process. Mr. Greany explained that the approval would be subject
to the condition that these are truly new, additional, project-
specific funds that will in no way impair currently authorized
projects that have been authorized by the Legislature through
last year's appropriations. Sen. Halford then further clarified
that the Department of Transportation can go ahead and apply for
these funds. If unsuccessful in getting these funds, the
approval is void and the proposal must come back and compete in
the in-state process. The proposal does not become an approval
that sits on the books at the head of the lists for next year's
dollars. Mr. Greany confirmed that the project would be specific
to the new found fund source. No further objections being
raised, the MOTION was APPROVED.
Rep. Martin asked that Mr. Greany keep the Committee advised on
this particular project.
RPL 05-7-0711 Education $7 million in Federal Receipts
Rep. Martin stated that this reimbursement to the school
districts where the money has already been appropriated for
approximately $3 per meal. He MOVED for APPROVAL; no objections
being raised, the MOTION was APPROVED.
RPL 45-7-0158 University of Alaska $550,00 in University
Funds for
Partial Renovation of Sitka
Campus
Sen. Adams stated that $300,000 would be received from the City
of Sitka and the balance of the money would borrowed. The timing
is critical for construction completion for classrooms for
classes on village sanitation. Sen. Adams MOVED for APPROVAL of
RPL 45-7-0158. Sen. Halford OBJECTED, asking if the Committee
was approving funds that have yet to be borrowed.
Mary Lou Burton, Director of Budget for the University, stated
that the funds have not been borrowed yet. The Board has
authorized the campus authority to borrow up to $250,000
conditional upon getting Legislative authority to do that. She
stated that the Committee was not approving a loan, but the
ability to receive and expend the proceeds from that loan. That
is normal procedure to come to the Legislature for that
authority. In the past, this type of request is through the
Operating Budget. However, it is not uncommon for the University
to borrow funds for long-term equipment purchases.
Mr. Greany concurred that there would not be any problem with
this proposal. He said that concerns would arise if there was
not a complete financing package.
?? Sen. Halford stated a concern that while the Committee has
additional expenditure authority, if it is authorizing approval
of the "other funds" such as the proceeds of a loan how would
that go forward in large numbers.
Mr. Greany stated that the time to be concerned is if there was
not a complete financing package, which is not the case with this
proposal.
Sen. Halford stated that he had no objection so long as the
Committee's vote is considered to be approval of a $550,000
expenditure. He did not wish to be on record as approving a loan
that he did not know anything about.
Sen. Adams AMENDED the original MOTION to APPROVE RPL 45-7-0158
to include the stipulation provided by Sen. Halford. No further
objections being raised, the MOTION was APPROVED.
Sen. Pearce MOVED that the Director of ?? OMB submit to the House
and Senate Finance Committees as Supplemental requests the RPLs
that were not dealt with by the Committee in this session. No
objections being raised, the MOTION was APPROVED.
SPECIAL AUDIT REQUESTS
Sen. Halford MOVED for an audit of the performance of the oil
industry following the Legislation of the last two years with
regard to local hire, local procurement and local construction.
Sen. Pearce asked if the MOTION focused on the things that have
been improved in the last two years, or if the entire industry
would be examined.
Sen. Halford stated that he wished to examine the promise of
improvement made by the oil industry in hire, procurement and
contract construction.
Sen. Halford MOVED to APPROVE the audit request; no objections
being raised; the MOTION was APPROVED.
Rep. Bunde MOVED for an audit of the compliance with the one
percent Art and Public places, particularly by the University of
Alaska, Anchorage, as well as the entire University program. No
objections being raised, the MOTION was APPROVED.
Chrm. Phillips reminded members that an audit request should be
submitted to the Committee office at least 24 hours prior to the
meeting.
Mr. Welker stated that there were four other audit requests
before the Committee.
Rep. Martin MOVED that the Committee accept a report from the
Task Force pertaining to facility charges for the airport and
allow that report to be made public.
Sen. Adams clarified that the airport IS NOT charging an extra
$3.00 for landing fee.
?? Mr. Welker stated that the report indicates that there has
been a great deal of discussion and opposition to a PFC. It
states that it is the recommendation of the sub-Committee that
this proposal go before the entire Legislature and through the
Legislative process.
Hearing no objections, Chrm. Phillips stated that the sub-
Committees report would be released to the public.
Sen. Pearce MOVED that the Committee APPROVE and ask Legislative
Budget ?? to do the following audits: request by Sen. Donley for
the Department of Law; request by Rep. Therriault for the
Department of Commerce and Economic Development; Sen. Green for
the Department of Natural Resources; Sen. Sean Parnell for the
Department of Commerce and Economic Development. No objections
being raised, the MOTION was APPROVED.
EXECUTIVE SESSION
Rep. Martin MOVED that the Committee enter into EXECUTIVE SESSION
for a short review of confidential audits. No objections being
raised the Committee then met in EXECUTIVE SESSION.
REGULAR SESSION
The Committee resumed REGULAR SESSION.
FINAL AUDITS
Sen. Adams MOVED for unanimous consent that the regular audit for
DCED Board of Education Records be released to its respective
agent. Upon response from the agent, the audit would be released
to the public. No objections being raised, the MOTION was
APPROVED.
Sen. Adams MOVED for unanimous consent that the two audits of the
Department of Labor, Determination of Prevailing Wages and the
Department of Transportation, Alaska Marine Highway Inter-Port
Differential Issues be released to their respective agents. Upon
response from the agent, the audit would be released to the
public. No objections being raised, the MOTION was APPROVED.
ADJOURNMENT
Chrm. Phillips adjourned the meeting at approximately 1:45 p.m.
LBA 2/26/97 Page 12
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