Legislature(1997 - 1998)

08/15/1997 08:38 AM House BUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                            MINUTES                                            
             LEGISLATIVE BUDGET AND AUDIT COMMITTEE                            
                        August 15, 1997                                        
                           8:38 a.m.                                           
                                                                               
                                                                               
TAPES                                                                        
                                                                               
BUD-97, Tape 155                                                               
                                                                               
CALL TO ORDER                                                                
                                                                               
Chairman Phillips convened the meeting  of the Legislative Budget              
and  Audit Committee  on August  15, 1997  at approximately  8:38              
a.m. in the Anchorage LIO, Anchorage, Alaska.                                  
                                                                               
PRESENT                                                                      
                                                                               
Senator Phillips, Chair                                                        
Senator Donley                                                                 
Senator Halford                                                                
Senator Pearce                                                                 
Senator Torgerson, Alternate                                                   
Representative Croft                                                           
Representative James                                                           
Representative Therriault                                                      
                                                                               
ALSO PRESENT                                                                 
                                                                               
Representative  Davis  (Anchorage  LIO), Mike  Greany,  Director,              
Legislative   Finance  Division;   Jim  Hauck,   Fiscal  Analyst,              
Legislative Finance Division;  Randy Welker, Legislative Auditor,              
Division  of  Legislative  Audit;  Annalee  McConnell,  Director,              
Office of  Management and Budget (Senate  Finance Committee Room,              
Juneau,   Alaska);    David   Eberle,   Director,    Design   and              
Construction,  Central Region,  Department of  Transportation and              
Public   Facilities;  Nancy   Slagle,  Director,   Administrative              
Services,  Department  of  Transportation and  Public  Facilities              
(Fairbanks).                                                                   
                                                                               
SUMMARY INFORMATION                                                          
                                                                               
^RPL 25-8-6002                                                                 
                                                                               
Chairman Phillips asked for a brief description of the RPL.                    
                                                                               
MIKE  GREANY, DIRECTOR,  LEGISLATIVE  FINANCE DIVISION  explained              
that  the  RPL  would  authorize construction  of  a  maintenance              
facility  in Soldotna  for the  Department of  Transportation and              
Public Facilities (DOT) using  certificate of participation (COP)              
financing.  The request  would  use the  interim  process of  the              
Legislative Budget  and Audit Committee  (LB&A) to  approve funds              
in the form  of statutory designated receipts;  funds would arise              
from a  contract between the trustee  of the COPs and  DOT, which              
would manage construction  of the facility. He  detailed that the              
COPs would  be sold in  the later part  of September and  at that              
point the contract would be  executed. He continued that the debt              
service  on the  COPs  would  be due  sometime  in  March of  the              
following year and would require  a general fund appropriation to              
pay  for  a  portion  of the  project.  The  Legislative  Finance              
Division  had provided  an analysis  on the  funding details.  He              
highlighted that ideally approval of  the project would have been              
handled  during  legislative  session,   but  LB&A  approval  was              
required  if the  project was  to go  forward during  the current              
interim.                                                                       
                                                                               
Chairman Phillips noted that Senator Donley joined the meeting.                
                                                                               
Representative  Croft wondered  if  the problem  would have  been              
solved if the bill had included an immediate effective date.                   
                                                                               
Mr. Greany replied in the  negative. He explained that there were              
two pieces  of legislation. The  legislation that  authorized the              
use of the  COPs (in the form  of SB 34) was  one requirement. He              
elaborated  that the  bill did  not have  an immediate  effective              
date; therefore it  went into effect 90 days  after being signed.              
He communicated that  the bill did not  include authorization for              
funding the project; expenditure  authority needed to be provided              
to  DOT in  the form  of a  bill or  through the  legislative RPL              
process.  He  noted  that  upon funding  and  completion  of  the              
project DOT would lease the facility.                                          
                                                                               
Representative  Croft asked  for verification  that there  should              
have been  an appropriations  measure with  the bill.  Mr. Greany              
pointed to the  division's timeline outlined in  its analysis. He              
noted that if  the committee approved the RPL it  would be acting              
on  faith  that everything  would  come  together correctly.  The              
appropriate course  of action would be  that SB 34 would  go into              
effect on September 10, 1997.  Subsequently the contract with the              
trustee of the COP would  be executed in late-September to early-              
October. The  committee was tasked  with approving funding  for a              
project where two key events still needed to take place.                       
                                                                               
Senator Pearce  reminded speakers to identify  themselves for the              
record.                                                                        
                                                                               
Representative  Croft wondered  whether  there  was any  possible              
legal impediment to the bill becoming effective on September 10.               
Mr.  Greany  replied  in  the  negative.  He  believed  the  more              
significant leap of  faith depended on the signing  of a contract              
related to the COPs later in September.                                        
                                                                               
Representative Croft asked what would  delay the execution of the              
contract.  He  wondered whether  an  appeal  would be  cause  for              
delay. Mr. Greany  was hesitant to speculate  on potential causes              
for delay.                                                                     
                                                                               
Senator  Halford   pointed  to  the  analysis   provided  by  the              
Legislative  Finance  Division  and  noted  that  a  supplemental              
appropriation would  also be required  in March of  the following              
year to  cover the  first debt service  payment. He  had believed              
that  there was  a net  zero transaction  and that  the operating              
cost would  be carried  as part  of the  previous budget.  He was              
hesitant to  vote for something  that would  require supplemental              
funding. He wondered  what would happen if the  RPL was approved,              
but the supplemental was not.                                                  
                                                                               
ANNALEE  MCCONNELL, DIRECTOR,  OFFICE  OF  MANAGEMENT AND  BUDGET              
responded  that the  first debt  payment would  not be  due until              
July  1,  1998;  therefore,  supplemental funding  would  not  be              
required.                                                                      
                                                                               
Mr. Greany followed  up on Senator Halford's  question related to              
the debt  service and cost.  He remarked  that a fiscal  note had              
been attached  when the bill  had been before the  Senate Finance              
Committee. He  explained that the  note had  been zero for  FY 98              
because the Department of Revenue's  assumption had been that the              
COPs  would not  be issued  until  February 1998  with the  first              
payment due  in August  1998 (FY 99).  He detailed  that whenever              
the project came along the money  for the lease purchase would be              
included  in  a  section  dealing with  debt  service  for  lease              
purchase payments; it  would join projects such  as Spring Creek,              
Palmer and Kenai court facilities, and other.                                  
                                                                               
Senator Halford  asked whether  the Legislative  Finance Division              
would  back the  amount out  of the  basis when  adjustments were              
made to  the governor's budget  for the following year.  He asked              
if there would  be a savings on the other  side that was normally              
rolled into the operating budget.                                              
                                                                               
Mr.  Greany  would need  to  follow  up.  He was  not  completely              
familiar with  the tradeoff  with what was  spent on  the current              
facility that would be replaced.                                               
                                                                               
Ms. McConnell  communicated that  the new  facility would  not be              
occupied in the next year  due to construction. She detailed that              
the project  timing had been  moved up  since the passage  of the              
bill. She noted that the  opportunity had not been anticipated in              
the budget process in terms  of the expenditure authority side of              
the equation.  She would work  to develop a mechanism  that would              
allow a project to move forward  in the future without needing to              
come back to the legislature for approval.                                     
                                                                               
Senator Halford  pointed to the  fiscal analyst report  and noted              
that it indicated that unappropriated  general funds would be the              
funding  source covering  initial  work until  the  COPs were  in              
place. He wondered if the practice was common.                                 
                                                                               
Mr. Greany  answered that the  situation would be similar  to DOT              
going through  the federal highway reimbursement  process where a              
substantial amount  of work was  done on  a project up  front and              
the  federal government  was  billed for  its  portion later.  He              
elaborated that money would be used  out of the state treasury to              
front the  costs, which  would be reimbursed  by an  outside fund              
source  at  a later  time.  He  acknowledged that  unappropriated              
general funds did  raise an alarm bell, which was  why the report              
included a  note indicating  that the practice  should not  set a              
precedent moving forward.                                                      
                                                                               
Senator Halford asked if there  was specific budget language that              
covered DOT's ability to expend  on the future receipt of federal              
funds. Mr. Greany responded that there was nothing specific.                   
                                                                               
RANDY  WELKER,  LEGISLATIVE   AUDITOR,  DIVISION  OF  LEGISLATIVE              
AUDIT, reminded  the committee that  during the past  session the              
statutory  definition for  program  receipts  had been  modified.              
Front section language appropriated  all additional federal funds              
and designated  program receipts (previous language  had referred              
to  all federal  funds and  all program  receipts). He  explained              
that designated  program receipts were  from a source  other than              
the state that were restricted to  a specific use by the terms of              
a gift-grant  bequest or  contract. He  discussed that  there was              
not currently a  contract between the state and  the trustee that              
would hold  the receipts  of the COP  once issued.  He reiterated              
earlier comments  by Mr. Greany  related to steps in  the process              
that had  yet to take  place. He expressed concern  about whether              
the RPL was properly before  the committee because a contract had              
not been  obtained; therefore,  he was  unsure the  situation fit              
the definition of designated program receipts.                                 
                                                                               
Representative  Croft asked  what  the effect  would  be "of  the              
stars not aligning."  He wondered if there would be  no COP funds              
to  reimburse  the  state  in  the event  of  delay.  Mr.  Welker              
answered in the affirmative.                                                   
                                                                               
Representative Croft surmised that it  would be more likely items              
would be delayed than completely  falling apart. He surmised that              
the legislature  would be temporarily  fronting the  funds during              
any  delay period.  Mr. Welker  responded that  the general  fund              
would be fronting the funds.                                                   
                                                                               
Representative Croft  asked if  the maximum  cost to  the general              
fund would be  $3 million. Mr. Welker did not  believe the amount              
for construction could extend beyond  the amount specified in the              
legislation.  There  was  also  appropriation  for  some  of  the              
original planning  and design;  he did not  know the  balance. He              
affirmed  that  treasury  would  pay  the  warrants  without  the              
benefit of receipts coming in.                                                 
                                                                               
Representative James  believed that  the committee's  approval of              
the RPL  would only authorize  the COP contracting. She  asked if              
any general fund appropriation would  be made after the beginning              
of the next fiscal year.                                                       
                                                                               
Mr. Welker responded  that the debt service on the  COPs would be              
a  separate issue  down the  road. The  RPL before  the committee              
dealt  with providing  DOT with  expenditure  authority to  allow              
construction   to  begin   in  the   current  season   (with  the              
anticipation of the COP proceeds in the future).                               
                                                                               
Representative Therriault  stated that the legislature  had built              
into  the fiscal  note the  anticipation that  payments would  be              
made in  the following  fiscal year. He  observed that  they were              
now  working to  jump  through all  kinds of  hoops  to move  the              
project up. He  questioned whether the move was  wise. He pointed              
to   backup  provided   that  detailed   continued  environmental              
degradation would occur due to  the operation of the facility. He              
wondered  what the  degradation was  from. He  addressed the  net              
zero aspect and did  not know how it was possible  to move out of              
something  that  was owned  outright  into  a facility  requiring              
purchase for  no cost. He noted  that operational costs may  be a              
wash; however,  there would still  be a purchase price.  He noted              
that it  was helpful to learn  that the first 6payment  would not              
be until  the next fiscal year.  He was not supportive  of taking              
action that would require a supplemental.                                      
                                                                               
Ms. McConnell  noted that the  project had already  been approved              
by the legislature under SB 34.  The current issue was related to              
timing and not  to the merits of the project.  She explained that              
questions related  to additional operating costs  were valid, but              
had  been part  of the  consideration at  the time  the bill  was              
passed. She  stated that there were  some important environmental              
reasons related to  Kenai fisheries; the opportunity  to have the              
project  completed  an  entire  season  earlier  than  originally              
projected was  positive. She addressed  questions related  to the              
state's  responsibility  for funding  if  the  COP contract  fell              
through. She  relayed that the  administration was  not expecting              
any  problems with  the COP  process. She  discussed how  similar              
issues had been handled in the  past and explained that there had              
been a Public  Facilities Planning and Design  fund that operated              
as  a bridge  mechanism. The  administration would  look at  that              
mechanism  and others  to  use  in the  future.  She addressed  a              
question on  designated program receipts and  detailed that there              
was budgetary  authorization for  a number of  designated program              
receipts where contracts  were not yet in place.  She thanked the              
committee for meeting on the RPL.                                              
                                                                               
Representative  Therriault agreed  the  legislature had  provided              
designated  program receipt  authority to  some projects  without              
contracts; however, in those cases  the work did not move forward              
prior   to   securing  the   contracts.   He   stated  that   the              
administration was asking  the legislature to approve  the use of              
general  funds  for  use  on  a  project  prior  to  obtaining  a              
contract. He  asked for verification  that the situation  was not              
the same as other instances.                                                   
                                                                               
Ms. McConnell agreed;  however, she pointed to  AS 37.10.087 that              
covered the situation  at hand. The statute outlined  that when a              
construction  account  established  to receive  the  proceeds  of              
general   obligation   bonds   is   temporarily   exhausted   the              
commissioner  of Administration  on  recommendation  of the  bond              
committee and with the approval  of LB&A may temporarily transfer              
money  from the  general fund  to the  bond construction  fund or              
account. She  referred Mr. Greany's earlier  testimony on similar              
situations  related   to  federal  funds.  She   noted  that  the              
situation  was  not unknown,  but  it  was important  to  control              
tightly. The  administration was  comfortable that it  would have              
the COP process would go smoothly.                                             
                                                                               
Representative Therriault  noted that  in the statute  related to              
bonds  versus  COPs;  he  surmised  that  there  may  be  a  fine              
distinction  between  the  two.   He  reiterated  that  in  other              
circumstances where authorization had  been provided prior to the              
signing of a contract the  construction work had not begun before              
the contract approval.                                                         
                                                                               
Ms. McConnell agreed that the point was valid.                                 
                                                                               
Senator Torgerson  referred to a  legal opinion he  had requested              
from Legislative  Legal Services to determine  whether LB&A could              
approve an increase  in expenditures prior to  the effective date              
of a bill. He read from the opinion:                                           
                                                                               
     ...however,   it  would   be  more   in  keeping   with  the              
     legislative oversight  function mandated by  AS 37.07.080(h)              
     if  LB&A  withheld  consideration  of the  approval  of  any              
     expenditure of  additional funds  for the facility  until at              
     least September 10.                                                       
                                                                               
Senator  Torgerson  noted  that   September  10  was  the  bill's              
effective date. He continued to read from the legal opinion:                   
                                                                               
     The request and approval of the RLP is clearly premature                  
     until this legal authority, the issuance of the certificate               
     of participation...                                                       
                                                                               
Senator  Torgerson noted  that the  opinion  specified that  LB&A              
could only approve  an increase in expenditures  for the Soldotna              
maintenance  facility based  on the  speculation by  the governor              
that the  money would be  available. He noted that  the peninsula              
delegation  (Representative   Phillips,  Representative  Hodgins,              
Representative Davis,  and Senator  Torgerson) had seen  bids and              
contract proposals and it was  not happy with the process related              
to how  things had come together.  He relayed that a  protest had              
been filed;  an answer to the  protest had been received  and all              
claims had  been denied. He  understood that  several contractors              
were considering  filing a  legal suit, but  would appeal  to the              
[DOT]  commissioner   first  (as  required  under   statute).  He              
stressed that  the stars were  not lining  up in relation  to the              
awarding  of the  contract. He  believed  LB&A committee  members              
would most likely  have similar concerns if they were  to see the              
contract bids.                                                                 
                                                                               
Representative Therriault asked Senator  Torgerson to address the              
legal  opinion  that  any  action should  be  contingent  on  the              
effective date of the legislation.                                             
                                                                               
Senator Torgerson  replied that  the legislature would  be acting              
in good faith  in its agreement with the trustees  of the COP. He              
explained  that  the legal  opinion  advised  the legislature  to              
withhold consideration  until the effective  date of the  bill if              
no  contract  was in  place.  He  addressed  bond loans  and  the              
construction fund and language did  not say action could be taken              
prior to the effective date of an issuance.                                    
                                                                               
Representative  Therriault   asked  about  a   concern  expressed              
related  to continued  environmental  degradation.  He asked  for              
more detail.                                                                   
                                                                               
Senator  Torgerson   believed  the   key  word   was  "potential"              
degradation.  He  surmised there  was  always  the potential  for              
something to  happen to  the Kenai River  due to  the substantial              
amount  of  equipment,  oil,  and   gas  onsite.  He  noted  that              
precautions were taken. He relayed  that approximately $1 million              
had been  spent on clean up  at the facility in  the past several              
years;  approximately  $600,000  in  additional  funds  had  been              
appropriated the prior  year to continue cleanup  efforts. He did              
not believe there was an ongoing pollution problem onsite.                     
                                                                               
Senator Pearce wondered if the  appeal to the commissioner on the              
bid award  was related to  the construction on the  new facility.              
Senator Torgerson replied that an  appeal had been filed with the              
commissioner related  to certain provisions  of the award  of the              
contract.  He elaborated  that  it had  been  a design-build  bid              
approach  and  there  were  questions  on how  it  had  been  put              
together.  He shared  that  the protest  officer  had issued  his              
opinion and had turned down all portions of the protest.                       
                                                                               
Senator Pearce wondered  how long the commissioner  would have to              
address  the appeal.  She surmised  the commissioner  may be  the              
appropriate person to address the question to.                                 
                                                                               
Senator  Torgerson  believed the  commissioner  would  be in  the              
office the  following day.  He relayed that  the appeal  had been              
made  to the  commissioners of  the Department  of Administration              
and DOT.                                                                       
                                                                               
Senator Pearce wondered  whether the question was  related to how              
the  RFP  had  been  assembled.  She  wondered  about  the  legal              
question.  Senator Torgerson  answered that  the question  was on              
discrepancies  on how  the RFP  had gone  together. He  explained              
that eight  contractors had been  fairly close together  in price              
and one  contractor came  in approximately  $1 million  under the              
others. The  contractor that  would be  awarded the  contract had              
not  followed up  on various  narratives and  did not  have clear              
building descriptions.  There were  approximately eight  items of              
concern, but  the contract  officer had determined  it was  not a              
problem. The officer noted that  the more expensive bids included              
more bells and  whistles. He noted that the question  at hand was              
whether  the  building  would be  functional;  DOT  believed  the              
answer was yes; however, other contractors did not agree.                      
                                                                               
Senator  Pearce wondered  about the  appeal timeline  to the  DOT              
commissioner. She asked  what the timeline would be  if the other              
seven contractors filed suit. She  believed waiting for September              
10 may be easy due to the appeal issues.                                       
                                                                               
DAVID EBERLE, DIRECTOR, DESIGN  AND CONSTRUCTION, CENTRAL REGION,              
DEPARTMENT  OF  TRANSPORTATION  AND PUBLIC  FACILITIES  responded              
that the appeal process did  not necessarily prevent award of the              
contract. Statute  stated that the  award of a contract  could be              
proceeded with unless  the contracting officer chose  to stay the              
award on  the belief  that there was  reasonable chance  that the              
protesting  party would  succeed or  if it  was not  in the  best              
interest of the state to  proceed. The department's intent was to              
proceed with awarding  the contract to the  successful bidder. He              
communicated   that  the   appeals  process   would  go   forward              
notwithstanding the  award; he believed  the commissioner  had 15              
days to deal with the appeal.                                                  
                                                                               
Representative James  asked if the  process had been done  in the              
past. She  wondered the approval  of the RPL would  set precedent              
for similar scenarios to occur in the future.                                  
                                                                               
Ms. McConnell replied that it was  valid for LB&A to state on the              
record  that it  did  not want  the current  situation  to set  a              
precedent  going forward.  She  believed it  would be  consistent              
with  her  intent  to  establish a  mechanism  to  avoid  similar              
situations in the  future. She did not want to  lose sight of why              
there was an  effort to move the project forward.  In addition to              
wanting  to move  quickly with  remediation on  the current  site              
(which could  not be done until  a new facility had  been built),              
there was  concern that  because the  building had  been designed              
before  understanding environmental  protections  needed for  oil              
there was ongoing aggravation of leaching towards the river.                   
                                                                               
Representative  James  was  concerned  about the  validity  of  a              
pollution problem and  using it as an excuse to  move the project              
forward.                                                                       
                                                                               
Mr. Greany  believed they were  in unchartered waters.  He stated              
that his sonar was "picking up some underwater rock piles."                    
                                                                               
Representative Davis  referred to  the legal  opinion's statement              
that "the request for approval  for the RPL was clearly premature              
until  there  is legal  authority  to  issue the  certificate  of              
participation." He  asked whether the legislation  was itself the              
legal authority.  Mr. Welker replied  that the  legislation would              
provide the  legal authority on  its effective date  of September              
10.                                                                            
                                                                               
Representative Davis agreed. He did  not believe the contract was              
the relevant issue  at hand. He surmised the  issue the committee              
needed to address was the legal appropriation process.                         
                                                                               
Senator Pearce  recalled that the $600,000  allocated for cleanup              
at the current facility was  intended to determine what needed to              
be cleaned  up. She opined  that the Department  of Environmental              
Conservation (DEC) and the Department  of Natural Resources (DNR)              
would need  to come  back to  the legislature  for funds  once an              
understanding of the degradation  had been obtained. She believed              
the biggest  concern had  been related to  salt leaching  from an              
old storage facility.  She felt it was important  to proceed with              
cleanup, but  noted that money  had been appropriated to  build a              
facility  on the  site. She  added that  the cart  may have  been              
slightly before the  horse. She did not  believe more degradation              
would occur if the project  did not move forward immediately. She              
noted that Senator Torgerson had  more knowledge of the issue and              
she would  take her lead  from him  on the appropriate  course of              
action.                                                                        
                                                                               
Senator  Torgerson  discussed that  a  debate  had occurred  over              
whether to include  the environmental cleanup in  the project and              
bonding; it had  been decided that the state did  not want to set              
the  precedent to  include an  unknown  amount for  cleanup to  a              
project  funding. Approximately  $600,000  had been  appropriated              
for cleanup.  There had been  correspondence from DEC  and others              
estimating that  cleanup after the  building had  been demolished              
would be  approximately $250,000;  however, the  departments were              
unsure  about  the  estimate. He  agreed  with  Senator  Pearce's              
recollection  of  the  legislature's  intention  related  to  the              
$600,000   funding.  He   addressed  that   the  only   potential              
environmental problem he  could think of was  that the building's              
floor drains flowed to a tank  that was pumped out; years ago the              
contents had been emptied into  Soldotna's sewer system; however,              
that  had  been cleaned  up.  He  did  not  know of  any  ongoing              
pollution issues. Salt  was still used [for roads],  but the pile              
had been moved away from the Kenai River.                                      
                                                                               
Representative Davis  agreed that  enough work  had been  done to              
take  care of  any immediate  pollution issues.  There were  some              
underground  fuel  tanks that  state  vehicles  were still  being              
serviced from that  needed to be taken care of  when the facility              
was relocated.  He believed  any degradation  to the  Kenai River              
had been taken care of.                                                        
                                                                               
Representative Croft  wondered whether  the committee  could make              
an  appropriation authority  effective on  September 10  and only              
effective if the  award of the contract had not  been stayed by a              
hearing officer or the court.                                                  
                                                                               
Mr.  Greany  replied in  the  affirmative.  He cautioned  against              
placing conditions  on the  approval. He  pointed to  a situation              
when the  legislature had attempted to  condition appropriations,              
which the governor had ignored.                                                
                                                                               
Senator  Halford wondered  about cash  flow requirements  for the              
fall if  the RPL  was approved. He  wondered whether  the funding              
could be cut in half to  continue moving the project forward, but              
without setting a bad precedent going forward.                                 
                                                                               
Senator Pearce asked  if the committee could return  to the issue              
on September  10. She wondered  if construction could  take place              
if the construction approval was not given until September.                    
                                                                               
Senator  Torgerson believed  construction may  be delayed  if the              
approval was  put off for  too long.  He added that  $400,000 had              
been appropriated to DOT for site  work; he had expected the work              
to be done the prior April; however, nothing had been done.                    
                                                                               
Ms. McConnell  wondered whether an  approval could  be structured              
so  the  contractor could  begin  preparing  for mobilization  to              
begin work on  September 10. She wondered if  the structure would              
work in the contracting process.                                               
                                                                               
Mr. Eberle replied  that the contract had not been  awarded as of              
yet. He would be reluctant to  enter into a contract knowing that              
it  could not  be awarded  based on  the offered  price that  was              
entirely  founded  on the  schedule  that  had been  offered.  He              
elaborated  that if  a month  or  more was  lost his  inclination              
would be to  not award the contract  and to hold it  over. He did              
not  believe the  situation would  be fair  to the  state or  the              
bidder.                                                                        
                                                                               
Representative Croft believed it made  sense to place a condition              
on the approval that the work  would not go into effect until the              
legal effective  date of the  bill. He wondered if  the September              
10 day  or other conditional  language would cause a  problem for              
DOT.                                                                           
                                                                               
Mr. Eberle  replied that he  did not  believe there was  merit in              
the  other bidders'  complaint to  the commissioner;  he did  not              
believe a court would find in  their favor. He opined that if the              
department  made the  award that  it would  proceed. He  believed              
that if  the project  did not  begin for  another month  that the              
entire  construction  season  would  be  lost.  The  delay  would              
provide  a  dilemma  for  the  department as  it  would  need  to              
negotiate with  the contractor awarded the  contract to determine              
cost implications. He  would prefer to not enter  into a contract              
if a  delay was eminent.  He reiterated that the  situation would              
not be fair to the state or other bidders.                                     
                                                                               
Senator  Halford wondered  whether  there was  cash available  to              
move forward  with excavation work  in the current season  if DOT              
was faced  with re-awarding and  redefining a contract.  He asked              
whether  there  was  a  way  to  separate  excavation  work  from              
building work.                                                                 
                                                                               
Mr. Eberle  answered that cash  flow could be  explored; however,              
the   contractor  would   have   to   order  building   materials              
immediately  in order  for  the contract  completion  date to  be              
maintained.  He detailed  that concrete  work  and enclosing  the              
structure  would  need to  occur  prior  to  winter to  meet  the              
completion  date  of mid-June  the  following  year. He  believed              
there  may  be some  flexibility  on  how  much would  be  needed              
between the  present day and  September; however, he  guessed the              
project would  need between $1  million and $1.5  million between              
present day and November.                                                      
                                                                               
Senator Halford asked  a question related to the  COP. Mr. Eberle              
deferred the question to Ms. McConnell.                                        
                                                                               
Ms.  McConnell replied  that if  the  RPL began  on September  10              
there would be the same situation  as with the bill that the days              
would  just march  on until  the  effective date.  She could  not              
provide a legal opinion, but  surmised that the contract could be              
awarded with  cash being available  after September 10.  The bill              
and the expenditure authority would  then become effective on the              
same day.                                                                      
                                                                               
Representative James  was uncomfortable  with the  situation. She              
believed  it  was  a  problem  to award  the  contract  prior  to              
September 10.                                                                  
                                                                               
Senator  Pearce   was  concerned  about  the   process.  She  was              
concerned that  if the committee  denied the RPL the  45-day rule              
would start; she did not want  to go in that direction. She would              
prefer that  DOT withdraw  its request rather  than adding  a new              
layer of  confusion. She was  uncertain about the  best direction              
to take.                                                                       
                                                                               
Senator  Phillips asked  about the  governor's  intention if  the              
committee denied  the RPL.  Ms. McConnell  had not  addressed the              
possibility  with the  governor.  She had  been  hopeful after  a              
recent  conversation with  Senator Torgerson  that the  RPL would              
move forward.  She recognized that  the situation was  not ideal,              
but that  the situation had arisen  due to a slip  in the process              
and not because of anything  intentional. She addressed a concern              
expressed  by Representative  James and  noted that  the governor              
had  already  signed the  bill;  therefore,  his intentions  were              
known. She recognized  the awkwardness of the  situation and felt              
comfortable with a  statement from the committee that  it did not              
want to set  a precedent and did not want  the situation to arise              
again.                                                                         
                                                                               
Senator  Torgerson  expressed  that   he  was  unhappy  with  the              
process. He requested that if  the committee moved forward on the              
RPL that it  be contingent upon the commissioner's  review of the              
protests  received. He  was concerned  about  the legal  aspects;              
however, he believed there was  enough legislative intent to move              
forward. He opined  that the bid process needed to  be looked at;              
the protests needed to be answered before moving forward.                      
                                                                               
Representative  Davis believed  the RPL  should be  withdrawn. He              
stated that approval or disapproval  of the RPL was an indication              
of intent by  the committee. He opined that  disapproval would be              
problematic.  He  believed  options  existed  that  could  answer              
questions. He  felt that  it was  a shame to  have gotten  to the              
current  situation  and noted  that  everyone  was aware  of  the              
project's importance.                                                          
                                                                               
Senator Pearce  MOVED that the  committee ask  the administration              
to withdraw RPL 25-8-6002.                                                     
                                                                               
Senator Halford  asked if the  committee was playing a  game with              
the 45-day rule. Senator Phillips replied in the affirmative.                  
                                                                               
Senator  Pearce noted  that the  intention  was to  not stop  the              
clock.  She questioned  the characterization  of playing  a game.              
She believed  the situation  was unique  and that  perhaps unique              
responses were called for.                                                     
                                                                               
Representative  Croft OBJECTED  to the  motion. He  stressed that              
there was no power that would  prevent the law from taking effect              
on September 10. He believed  the legal opinion was equivocal. He              
pointed  out that  another section  of the  legal opinion  stated              
that the committee did have the  authority to move forward on the              
RPL.                                                                           
                                                                               
Representative  James  understood Representative  Croft's  point;              
however, if  the committee  moved the  RPL forward,  she stressed              
the  importance of  the condition  specifying that  the situation              
should not occur again in the future.                                          
                                                                               
Senator Pearce MOVED  to WITHDRAW the motion with the  hope of an              
alternative solution.  There was  OBJECTION to the  withdrawal of              
the motion.                                                                    
                                                                               
Senator Phillips asked Senator Pearce to restate her motion.                   
                                                                               
Senator Pearce  MOVED that the  committee ask  the administration              
to withdraw  RPL 25-8-6002. She  understood that the  45-day rule              
began  the day  the RPL  was submitted  and not  with any  action              
taken by the committee.                                                        
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Senator   Halford,    Representative   James,   Senator              
Torgerson,  Representative  Therriault, Senator  Pearce,  Senator              
Phillips, Senator Donley                                                       
OPPOSED: Representative Croft                                                  
                                                                               
The MOTION PASSED (7/1).                                                       
                                                                               
Ms. McConnell asked  whether the committee wanted  to take action              
on proceeding with the contract proceeding on September 10.                    
                                                                               
Senator Phillips replied that the  action was to not consider the              
RPL.                                                                           
                                                                               
Senator  Donley noted  that the  committee had  voted to  ask the              
administration  not to  do something,  but they  could decide  to              
move forward or not.                                                           
Representative  Croft  noted  that  the committee  had  taken  no              
action on the RPL.                                                             
                                                                               
Senator Torgerson  clarified that  if the  administration refused              
to remove the  RPL it would remain on the  committee's agenda for              
the August 21, 1997 meeting.                                                   
                                                                               
Ms.  McConnell  clarified  her   interest  in  understanding  the              
committee's intent related to moving forward with a contract.                  
                                                                               
Representative Croft Moved RPL 25-8-6002  with the amendment that              
the authority take effect on September 10, 1997.                               
                                                                               
Representative James asked whether  the amendment should be voted              
on prior to voting on the RPL. Senator Phillips agreed.                        
                                                                               
Senator Halford asked  whether it was in order to  move action on              
an issue that  had already been dealt with in  a contrary way. He              
restated the committee's prior action on the RPL.                              
                                                                               
Senator Phillips asked Representative Croft to renew his motion.               
                                                                               
Senator Torgerson expressed objection  to the motion. He believed              
the  committee  had effectively  tabled  the  issue. He  did  not              
believe a motion was in order.                                                 
                                                                               
Representative  Croft  clarified  that the  committee  had  asked              
another party to  take action, but he did not  believe it was the              
same as the committee taking  action. He stressed that his motion              
was not a contrary action.                                                     
                                                                               
Representative Croft  MOVED that  RPL 25-8-6002  become effective              
after September 10, 1997.                                                      
                                                                               
Senator Donley MOVED to table the motion.                                      
                                                                               
A roll call vote was taken  on the motion to table Representative              
Croft's motion.                                                                
                                                                               
IN FAVOR: Representative  James, Senator  Halford, Representative              
Therriault,  Senator Donley,  Senator  Pearce, Senator  Phillips,              
Senator Torgerson                                                              
OPPOSED: Representative Croft                                                  
                                                                               
The motion PASSED (7/1).                                                       
                                                                               
                                                                               
Senator Pearce discussed the upcoming August 21, 1997 Senate                   
Finance Committee and LB&A meetings.                                           
                                                                               
ADJOURNMENT                                                                  
                                                                               
The meeting was adjourned at 10:02 a.m.                                        
                                                                               
                                                                               

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