Legislature(1995 - 1996)
02/01/1996 01:06 PM House CRA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
February 1, 1996
1:06 p.m.
MEMBERS PRESENT
Representative Ivan Ivan, Co-Chair
Representative Alan Austerman, Co-Chair
Representative Jerry Mackie
Representative Kim Elton
Representative Al Vezey
Representative Pete Kott
Representative Irene Nicholia
MEMBERS ABSENT
All members were present.
COMMITTEE CALENDAR
HOUSE BILL NO. 409
"An Act combining parts of the Department of Commerce and Economic
Development and parts of the Department of Community and Regional
Affairs by transferring some of their duties to a new Department of
Community and Economic Development; transferring some of the duties
of the Department of Commerce and Economic Development and the
Department of Community and Regional Affairs to other existing
agencies; eliminating the Department of Commerce and Economic
Development and the Department of Community and Regional Affairs;
adjusting the membership of certain multi-member bodies to reflect
the transfer of duties among departments and the elimination of
departments; and providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 409
SHORT TITLE: DEPT OF COMMUNITY & ECONOMIC DEVELOPMENT
SPONSOR(S): REPRESENTATIVE(S) KELLY, Therriault, James, Kohring
JRN-DATE JRN-DATE ACTION
01/11/96 2409 (H) READ THE FIRST TIME - REFERRAL(S)
01/11/96 2409 (H) CRA, FINANCE
01/16/96 2456 (H) COSPONSOR(S): KOHRING
02/01/96 (H) CRA AT 01:00 PM CAPITOL 124
WITNESS REGISTER
PETE KELLY, Representative
Alaska State Legislature
State Capitol Building, Room 513
Juneau, Alaska 99801
Telephone: (907) 465-2327
POSITION STATEMENT: Presented sponsor statement and answered
questions on HB 409.
MIKE IRWIN, Commissioner
Department of Community and Regional Affairs
P.O. Box 112100
Juneau, Alaska 99811-2100
Telephone: (907) 465-4700
POSITION STATEMENT: Presented department's position and answered
questions on HB 409.
JEFFREY W. BUSH, Deputy Commissioner
Office of the Commissioner
Department of Commerce and Economic
Development
P.O. Box 110800
Juneau, Alaska 99811-0800
Telephone: (907) 465-2500
POSITION STATEMENT: Presented department's position and answered
questions on HB 409.
LAMAR COTTEN, Deputy Commissioner
Office of the Commissioner
Department of Community and Regional Affairs
P.O. Box 112100
Juneau, Alaska 99811-2100
Telephone: (907) 465-4700
POSITION STATEMENT: Presented department's position and answered
questions on HB 409.
PAULA CONRU, Legislative Assistant
to Representative Pete Kelly
Alaska State Legislature
State Capitol Building, Room 513
Juneau, Alaska 99801
Telephone: (907) 465-2327
POSITION STATEMENT: Provided information on HB 409.
ACTION NARRATIVE
TAPE 96-5, SIDE A
Number 0001
CO-CHAIR IVAN IVAN called the House Community and Regional Affairs
Committee meeting to order at 1:06 p.m. Members present at the
call to order were Representatives Ivan, Austerman, Vezey and
Nicholia. Members absent were Representatives Mackie, Elton and
Kott.
HB 409 - DEPT OF COMMUNITY & ECONOMIC DEVELOPMENT
Number 0062
CO-CHAIR IVAN noted that the committee packets for HB 409 contained
the bill, fiscal notes, sectionals and the sponsor statement. He
acknowledged the large number of teleconference sites on line to
listen to testimony from the sponsor and representatives from the
Department of Community and Regional Affairs and the Department of
Commerce and Economic Development. He announced that public
testimony would be taken Saturday, February3, 1996, from 1:00 to
5:00 p.m.
CO-CHAIR IVAN noted that Representative Mackie had joined the
meeting.
Number 0165
REPRESENTATIVE PETE KELLY read from the sponsor statement for HB
409:
"House Bill 409 consolidates Alaska's economic development programs
currently located in the Department of Community and Regional
Affairs and the Department of Commerce and Economic Development.
It combines the two agencies into one focused entirely on
development. Under HB 409, this new department is called the
Department of Community and Economic Development. Non-development
functions currently housed within C&RA and DCED are assigned to
other existing agencies. HB 409 does not seek to eliminate or
reduce services; it merely reorganizes them.
"The missions of C&RA and DCED are similar - to promote economic
development for Alaska as a whole as well as for our local
communities. The two complement each other and are designed to
coordinate their activities. However, coordination can be
difficult across agency lines and could be better facilitated by
having these development programs housed under one roof. This type
of streamlining has been discussed for years, throughout the course
of several administrations.
"Economic development and jobs for our families is a top priority.
As we continue in the current environment of budget cutting, these
services become more threatened each year. As chairman of DCRA and
DCED, I see HB 409 as a vehicle to take some of the pressure off
cutting these services or their delivery, whether they are urban or
rural, by reducing the bureaucracy associated with them and
improving their operations through efficiency.
"Alaska's fiscal crisis has made consolidation and streamlining
necessary to achieve savings. Our economic dependence on a single
industry emphasizes our need for efficient and effective
development programs. The Governor has taken a first step by
transferring the ARDORS from Commerce to C&RA and combining the
Divisions of International Trade and Economic Development in
Commerce into one unit. A joint task force on international trade
is focusing on ways to consolidate Alaska's trade efforts. These
are important first steps. HB 409 is another part of the process.
HB 409 will create budget savings, but just as importantly, better
coordinated and more effective programs. It will protect the
services and their delivery in the long run."
Number 0300
CO-CHAIR IVAN asked if there were questions. Hearing none, he
invited Representative Kelly to join the committee at the table.
MIKE IRWIN, Commissioner, Department of Community and Regional
Affairs (DCRA), presented an overview of the disadvantages of HB
409. He prefaced his remarks by noting that representatives from
DCRA, the Department of Commerce and Economic Development (DCED),
and the other six affected departments were present.
Number 0485
COMMISSIONER IRWIN explained that HB 409, as drafted, would
basically eliminate DCRA and DCED as they currently existed.
Certain functions would be combined into a new department, slightly
bigger than the current DCRA; the functions of six other state
agencies would expand. He expressed that the intent behind HB 409
was unclear. He saw it not as streamlining; instead, he viewed it
as a massive rearrangement of functions of state government. He
noted that on the surface, there was a desire to achieve
efficiencies. In response to that concern, Commissioner Irwin
stated that duplication and overlap between DCED and DCRA were
virtually nonexistent. The Administration had made initial
reductions for FY 97 reflecting their starting point on a path
towards measurable efficiencies, he said. The FY 97 budget
reflected a net combined reduction from FY 96 of roughly $2.2
million in general fund expenditures for the two departments,
exclusive of an additional $5.8 million reduction in the two
departments' formula-funded programs. In contrast, under HB 409,
they anticipated a budget increase of approximately $1.6 million in
the first two years.
Number 0755
COMMISSIONER IRWIN conveyed the Administration's observations about
rearranging the executive branch of government. He said they
believed the lead role should be taken by those who, on a day-to-
day basis, were in the business of managing programs and delivering
services. He noted that government did not always run as
efficiently as a well organized business. He compared the
legislature to a board of directors, with the executive branch
being the management team; he asserted that the branches could work
in cooperation with each other.
COMMISSIONER IRWIN commended the sponsor and those who had worked
on HB 409. However, he said, it was a rearrangement of
organizational boxes that did not address the essential questions
of 1) what services the government could and would provide and 2)
how much Alaskans were willing to pay to provide those services.
He asserted that the Administration had structured, in the FY 97
budget, a plan that relative to DCRA and DCED combined programs
within and between those departments; proposed the elimination of
programs and services; and remained true to the core missions that
had evolved over many years and legislative sessions, through
several administrations.
Number 0978
CO-CHAIR IVAN thanked Commissioner Irwin for the testimony and
recognized that Representatives Elton and Kott had joined the
meeting.
CO-CHAIR ALAN AUSTERMAN asked Representative Kelly whether there
had been an analysis of rearrangements and shuffling functions
around before the bill was drafted. He further asked who had
drafted the recommendations as to which functions would be shuffled
around.
Number 1034
REPRESENTATIVE KELLY replied that the bill had resulted from his
work in the House Finance Committee, where he was the chairman for
both the Community and Regional Affairs subcommittee and the
Commerce and Economic Development subcommittee. He said they
needed to take action to protect services. He recognized that
duplications between DCRA and DCED were not exact duplications but
rather duplications of mission. Economic development was needed in
rural Alaska and statewide. Yet within DCRA and DCED there were
numerous regulatory and other functions that did not fit. When the
model began, the drafters wanted to create a new department that
concentrated on economic development; they took the economic
development functions of DCRA and DCED and put them into one
department. The regulatory and other functions were then peeled
off and distributed to other departments that more matched the
mission statements of the programs being sent to those other
departments. Representative Kelly summed up by saying they had
created a model; then the bill was drafted to match the model.
Number 1148
CO-CHAIR AUSTERMAN asked if Representative Kelly's office had set
up the model and decided which functions would go to which
departments.
REPRESENTATIVE KELLY responded that was correct. He added there
had been a great deal of input.
Number 1230
REPRESENTATIVE JERRY MACKIE referred to an organizational chart
prepared by Representative Kelly. He asked Commissioner Irwin
whether financial impacts of moving people and offices had been
analyzed.
Number 1258
COMMISSIONER IRWIN replied they had, superficially. It was an
extremely complex bill, however. With respect to the fiscal
analyses, a whole team of fiscal officers and accountants among the
various agencies had been working hand in hand for the past couple
of weeks. When moving people around, one had to move phone systems
and data processing systems, make leasing arrangements and so
forth. He felt the estimate was conservative; the cost of moving
people was included in the $1.6 million fiscal note for the entire
bill. As far as working with other agencies, the Department of
Revenue's plate was full, especially when talking about the
commissioner and his main managers. The Department of Revenue was
already a large department. HB 409 would increase its personnel by
another 100 people. They questioned whether the department could
take on those services being contemplated.
Number 1423
REPRESENTATIVE MACKIE asked Representative Kelly, in terms of the
overall restructuring proposed, to estimate net loss in terms of
state employees. He added there was no reason for restructuring
without substantial savings and asked where the savings would come
from.
Number 1445
REPRESENTATIVE KELLY responded that from the model currently being
considered, the savings would be $967,000. He asked Paula Conru,
Legislative Assistant, if she could provide specific numbers
regarding personnel positions; Representative Kelly then replied
that he did not have those figures with him.
REPRESENTATIVE MACKIE commented that he would like to have those
figures. Ultimately, if the number of employees providing services
were reduced, services would be affected.
Number 1512
REPRESENTATIVE KELLY replied that departments receiving new
programs would get them intact. There might even be additional
employees.
REPRESENTATIVE MACKIE asked about programs being eliminated.
Number 1540
REPRESENTATIVE KELLY asserted that HB 409 eliminated no programs.
REPRESENTATIVE MACKIE expressed confusion at how the programs could
be distributed intact, eliminating employees without reducing
services, and still save money.
Number 1550
REPRESENTATIVE KELLY responded that essentially there were
administrative services and commissioners' offices in two
departments.
REPRESENTATIVE MACKIE asked if savings would stem from eliminating
one commissioner and support staff, plus one agency's support
staff, rather than eliminating actual programs.
Number 1575
REPRESENTATIVE KELLY said one of the fears about HB 409 was that it
would somehow damage services, particularly in rural Alaska. The
intent of the bill was to protect services in rural Alaska. He had
to make decisions about savings at the budget subcommittee level.
He did not want to discontinue the grants and services that were so
critical to rural Alaska, nor eliminate economic development
functions in DCED.
Number 1610
CO-CHAIR IVAN asked Commissioner Irwin about the figures he had
proposed.
COMMISSIONER IRWIN replied that the $5.8 million amount was for
proposed reductions in the municipal assistance and revenue sharing
formula programs this year.
Number 1647
REPRESENTATIVE ELTON expressed concern that HB 409 was being viewed
"with the soul of accountants." He wanted to know whether the
sponsor had already scheduled a meeting, or whether the committee
could do the same, with the clients receiving the services. He
thought that would be the most compelling testimony.
CO-CHAIR IVAN responded that the current hearing was to invite
comment from state agencies affected by HB 409; Saturday,
February3, was reserved for testimony by the public from 1:00 to
5:00 p.m. He said he wanted to allow time for everyone to properly
address issues and concerns.
Number 1751
JEFFREY W. BUSH, Deputy Commissioner, Office of the Commissioner,
Department of Commerce and Economic Development (DCED), said
Commissioner Irwin had already touched on several points he had
wished to make. Mr. Bush said he would concentrate on programmatic
impacts of some of the proposals in HB 409. The proposal to
eliminate one commissioner, he said, would have an impact on the
resulting commissioner's office. The commissioner of DCED, he
noted, was appointed to 16 boards and state commissions; a great
deal of the commissioner's time, as well as Mr. Bush's, was spent
attending meetings already. The new commissioner would have to
deal with additional commissions, seats and boards. For example,
Mr. Bush said, adding Alaska Housing Finance Corporation board
membership to the DCED commissioner's job would be a significant
burden.
MR. BUSH emphasized that the Administration was committed to
eliminating any duplication of service. He believed there was no
duplication, but welcomed the opportunity to address perceived
duplications that might be brought to his attention. There had
been analysis in the past seven months, resulting in at least two
executive orders affecting the workings between DCED and DCRA, as
well as the internal workings of DCED, specifically designed to
streamline service, he said.
Number 1879
MR. BUSH said the Administration's position was that, in and of
itself, simply moving agency programs around was not productive;
this was a basic premise. The Administration wanted to identify
ways to save money and were putting together proposals from a
budgetary standpoint to do just that. The $2.2 million in savings
among the economic development functions of government was
significant, he said; much of that was the result of administrative
efficiencies they had worked on creating.
Number 1950
MR. BUSH discussed the proposal to transfer regulatory agencies to
other departments. Suggested for transfer to the Department of
Revenue were the Alaska Public Utilities Commission (APUC);
Division of Insurance; and Division of Banking, Securities and
Corporations. He said these should be located within the agency
that dealt with economic development. Although traditionally
viewed as regulatory agencies, their focus, particularly at present
within DCED, was on improving business climate in Alaska and
assisting businesses with starting up. He cited examples within
those agencies that assisted with economic development. Moving
them to the Department of Revenue would change their focus; they
would no longer help businesses but would have more traditional
regulatory emphasis.
Number 2062
MR. BUSH referred to the proposal to move the Division of
Measurement Standards to the Department of Transportation and
Public Facilities (DOTPF). He said this was not a new idea. The
Administration neither opposed nor supported it, but felt it worthy
of discussion. He said there were serious political
considerations. Within DCED at present, he added, the Division of
Measurement Standards had an economic development focus. However,
there might be reasons to transfer the agency to DOTPF.
Number 2137
MR. BUSH referred to the proposal to move the Alaska Minerals
Commission from DCED to the Department of Natural Resources. The
Administration recommended instead that it remain as an economic
development agency. The charge of that agency, he said, was to
identify constraints and suggest methods to remove those
constraints on mining in Alaska; it was an economic development
function.
Number 2156
MR. BUSH commented that the Alaska Products Preference Program,
however, currently located in DCED, might better be located in the
Department of Administration, where other products preferences
programs in the state were already housed.
Number 2184
MR. BUSH referred to the proposal to move the Child Care Facility
Revolving Loan Program, currently located in DCED's Division of
Investments, to the Department of Health and Social Services. The
Division of Investments, he said, currently handled most of the
loan programs operated by the state. He noted that the child care
loan program currently had a zero default rate, unusual in state
loan programs; it was a successful business loan program. The
Administration encouraged it to stay where it was. However, he
said, it was not a significant issue. He explained that many times
if a program was located within one agency, a management contract
would be signed with another agency to operate the program. If the
Child Care Facility Revolving Loan Program were moved the
Department of Health and Social Services, he suggested, a
management contract would probably be signed for that program. He
saw nothing to be gained by moving it.
Number 2232
MR. BUSH said although he hesitated to speak for other agencies, he
wanted to pass along some concerns. In general, he said, although
other departments might be able to absorb the programs in question,
it would hurt their overall missions or they would not be able to
operate the programs as effectively as at present. He cited
examples, including the Department of Revenue's wish to focus on
tax issues.
Number 2291
MR. BUSH said the Division of Occupational Licensing was an "odd
one." Currently located in DCED, where the Administration felt it
should stay, it was slated to be moved to the Department of Labor.
However, the Department of Labor's stated mission was to work with
the labor force in Alaska and to create jobs. Occupational
licensing was not a job creation function. Equally important, Mr.
Bush said, was a fiscal note in the committee packet; $300,000 of
that was due specifically to the Division of Occupational Licensing
being split off from the Division of Banking, Securities and
Corporations and the Division of Insurance. Currently, they all
operated under a single computer system; DCED was in the process of
upgrading that system using FY 96 money appropriated by the
legislature. To split those agencies, he said, would significantly
increase the cost from a practical standpoint. Therefore, he said,
the Administration thought the Division of Occupational Licensing
should remain with the other regulatory agencies.
Number 2352
MR. BUSH indicated that Remond Henderson and Guy Bell, who had
headed up the fiscal analysis, were present from DCED to answer
specific questions after Mr. Bush completed his overview. Mr. Bush
explained that the starting point for compiling the fiscal note was
the fact that the new, proposed department functions should be
located in one place. To minimize costs, the ninth floor of the
State Office Building in Juneau and the seventh floor of the
Frontier Building in Anchorage, both of which currently housed
DCED, had been proposed as that site. The Administration had
calculated the minimum amount of moves possible. Although 400 to
600 people would be affected, the total number of moves was 161.
That was the best number they could arrive at. The Department of
Administration had figured the costs per move; their analysis
resulted in the current fiscal note. Mr. Bush said there were
additional items in the fiscal note, including $50,000 for
professionals to design space, $25,000 each for Juneau and
Anchorage. The Department of Administration believed a full-time
person for one year in both Juneau and Anchorage would be required
to implement the move. There would also likely need to be
additional space leased somewhere; $50,000 for two years was
allocated for that.
TAPE 95-5, SIDE B
Number 0007
MR. BUSH admitted this was not an exact science. Even less exact,
he said, were computer shake-out and data processing costs. Mr.
Bush explained that DCED had been appropriated $350,000 to create
the current computer system, which was in the process of being
built. They predicted that splitting the Division of Occupational
Licensing from the Division of Banking, Securities and Corporations
and the Division of Insurance would cost $300,000 to essentially
create another computer system. Beyond that, DCED included
$250,000 for computer compatibility issues.
Number 0052
MR. BUSH said figures did not include other issues such as the DCRA
building in Juneau, which could not be remodeled without Americans
with Disabilities Act (ADA) issues being raised. In this move, he
said, employees already there would move out and a whole new agency
would move in; it was assumed that could be done without moving any
walls or recabling the building in any way. Mr. Bush emphasized
that the Administration had tried to minimize the fiscal note and
be as accurate as possible within given constraints.
Number 0076
MR. BUSH said DCED had similar concerns to those indicated by
Representative Mackie. They proposed eliminating five positions,
including the commissioner, executive secretary to the
commissioner, administrative services director, secretary to that
director, plus a receptionist. Beyond that, it was difficult to
predict. In moving a program from one agency to another, not only
were people moved, but administrative support as well. For
example, they might end up short on data processors. Beyond the
five positions, DCED could not predict any savings. In the short
run, they saw no administrative savings; in the long run, they
could not predict.
Number 0151
MR. BUSH concluded by saying they were open to discussions on ways
to streamline and save money. But he, at least, was not convinced
that simply moving programs around was the answer. They needed to
look at the programs themselves and identify which programs to
maintain and which ones to eliminate. Hard decisions of that type
would result in significant budget savings.
Number 0223
REPRESENTATIVE MACKIE asked Mr. Bush whether moving the products
preference program could be accomplished by executive order.
MR. BUSH replied that it probably could. It was not a high
priority, he said, and would not necessarily save any money or
efficiencies.
REPRESENTATIVE MACKIE referred to Representative Kelly's
organizational chart and asked if that redistribution could also be
accomplished by executive order if the Administration were
convinced they should make the transfer.
Number 0254
MR. BUSH responded yes, he believed the Administration could do
that, to the extent it was simply moving programs.
REPRESENTATIVE MACKIE commented that he understood the need for HB
409 to create one department instead of two. However, he said,
from the perspective of anyone on the outside looking in, one would
ask why child care and day care assistance would not be better
served in the Department of Health and Social Services, for
example.
Number 0348
REPRESENTATIVE KELLY asked if a representative from the Department
of Natural Resources (DNR) was present; he commented that he
supported the recommendations made at his last meeting with DNR and
would entertain amendments that would accomplish what DNR had
recommended.
CO-CHAIR IVAN advised Representative Kelly, on behalf of the House
Community and Regional Affairs Committee, that the committee was
not privy to the discussions Representative Kelly had participated
in.
Number 0433
LAMAR COTTEN, Deputy Commissioner, Office of the Commissioner,
Department of Community and Regional Affairs (DCRA), said his
testimony would focus on the mission of DCRA. The reason DCRA
functioned well, he said, was because of how the existing services
were interconnected. Since its inception in 1972, DCRA had focused
on developing stronger local economies, stronger local governments
and increased local fiscal responsibility. For DCRA, this meant
focusing on development of human resources, including working with
city councils, borough assemblies, nonprofit organizations in the
public sector, and others. They also focused on what DCRA
characterized as community development, which was the
infrastructure, normally the responsibility of or associated with
the public sector. This infrastructure did not make a lot of
money; it included roads, water and sewer, community halls,
electricity, boat harbors and other waterfront development such as
docks and grids. DCRA did not expect private sector capital to be
attracted to either rural or urban Alaska if basic community
development infrastructure did not exist, with human resources
capable of providing those services.
Number 0570
MR. COTTEN said DCRA had approximately 200 employees in four
divisions. Unlike similar divisions, the administrative services
divisions of DCRA worked directly with a number of communities with
grants. The other three divisions of DCRA worked well together in
trying to meet the basic mission of community and human resource
development. Mr. Cotten cited examples of programs operated by
DCRA, including land and coastal management, the local boundary
commission, and the state assessor's office. He emphasized the
focus on the basics. He cited further examples, including loans
and grants from the Division of Energy and the training of plant
managers in small communities. He said if capital projects were
provided, a small, accessible agency should be available to work
with the communities, whether it be on utilities, land, or
bookkeeping, to get the job done.
Number 0776
MR. COTTEN discussed the Division of Community and Rural
Development, which focused both on grants for community development
and, in some cases, economic development through feasibility
studies to look at economic opportunities in small communities.
Unlike DCED, whose primary focus was the private sector, DCRA
concentrated on communities, especially smaller, rural communities,
with respect to basic community development. Mr. Cotten said that
was a natural break between DCRA and DCED. There was coordination
and linkage, but these points clearly separated the two
departments. He added that the Division of Community and Rural
Development also looked at job training and the State Training
Employment Program (STEP), which was job-related. He explained
that these job training programs fit in well in rural Alaska with
other programs in DCRA, as outreach programs were located statewide
in a variety of areas. In addition, day care and Head Start
programs were an integral part of community development.
Number 0930
MR. COTTEN emphasized that the distinction and success of DCRA as
a department related to its small size, with 200 people; its
presence in rural Alaska as well as the urban centers; its top
priority of coordination and cooperation between the four
divisions; and its focus on the basics. In closing, Mr. Cotten
referred to a bill passed the previous year concerning the Human
Investment Resource Council; the mission of that council was to
look at the appropriate placement of programs. That council began
January 1, 1996. Mr. Cotten suggested that HB 409 might be
disruptive to that process.
Number 1110
CO-CHAIR AUSTERMAN asked about job training programs throughout
Alaska; he wondered if, either currently or under HB 409, those
programs were all under one department. If not, he wondered if
they could they be brought under one department for savings.
COMMISSIONER IRWIN replied that the two main programs were 1) the
Jobs Training Partnership Act and Jobs Training Partnership Office
(JTPA/JTPO); and 2) the STEP program. Both currently were housed
under DCRA; under HB 409, those would move to the Department of
Labor. Commissioner Irwin noted there was also the welfare/JOBS
component, but he did not know what other programs existed. He did
not believe that HB 409 would necessarily consolidate those over to
the Department of Labor along with the STEP and JTPA/JTPO programs.
Number 1175
CO-CHAIR AUSTERMAN said the committee wanted to look at that
scenario if they were going to be streamlining and reorganizing.
COMMISSIONER IRWIN referred to Deputy Commissioner Cotten's remarks
about the Human Resource Investment Council (HRIC) and said he
himself was one of the five commissioners. With the impending
overlays of welfare reform and new work requirements, he expected
a lot of the same types of initiatives. There was a pending
consolidation of federal education training programs and block
grants. A lot of change would have to be managed. If programs
were moved around now under HB 409, a couple of years down the
road, knowing the federal requirements and state welfare reform
requirements, another reshuffling might be required. Commissioner
Irwin questioned whether they were putting the cart before the
horse, at least with respect to those areas of service delivery.
Number 1302
REPRESENTATIVE ELTON referred to Deputy Commissioner Bush's mention
that the commissioner of DCED sat on 16 different boards and
commissions. Representative Elton noted that some of those were
statutorily assigned and asked Representative Kelly if HB 409
reassigned those to the consolidated department's commissioner's
office.
REPRESENTATIVE KELLY replied yes.
Number 1328
REPRESENTATIVE MACKIE asked Representative Kelly whether he had
performed a fiscal analysis or done projections as to the cost, or
if he had asked for the fiscal note to make that determination.
Specifically, he wondered what Representative Kelly felt about the
$1.6 million fiscal note for the current year. Representative
Mackie added that in every subsequent year, there would be a
savings. He asked if the $347,000 reflected the five eliminated
positions mentioned earlier by Representative Kelly and noted that
he could see where it showed positive savings.
Number 1365
REPRESENTATIVE KELLY said he had no reason at this point to
disagree with the different agencies that came up with that number.
He had asked them to do that because he thought they were in the
best position to determine the figures. He added he was only
disappointed that at that time, he did not have an itemized fiscal
note; there was just one fiscal note for all agencies, making it
difficult to analyze possible areas within the fiscal note that
could be reduced. He was awaiting a detailed fiscal note.
Number 1408
REPRESENTATIVE MACKIE asked why take the action if it would not
eliminate services or save any money. He added he could see the
small amount saved. He asked if the five positions were what they
were trying to accomplish savings for.
REPRESENTATIVE KELLY emphasized that the reasoning was to protect
services. He did not want to eliminate services. He disagreed
that it was a $347,000 per year savings; he thought it to be $1
million. He was not currently prepared to give the committee that
model, however. He added that Mr. Bush had cited examples where
there were problems in HB 409.
Number 1483
MR. BUSH advised that the three regulatory agencies that were
direct-line agencies for DCED were on the same computer system and
dependent on that system. Those agencies were the Division of
Insurance; the Division of Banking, Securities and Corporations;
and the Division of Occupational Licensing.
REPRESENTATIVE KELLY said HB 409 was a huge bill and a massive
undertaking. He was relying on the departments and the committee
process to find any errors. He himself had identified $1 million
in savings; Mr. Bush had identified a $300,000 mistake.
Representative Kelly said he was perfectly willing to entertain any
amendments to correct that mistake and any others that might be
found. However, he would disagree in the overall mission of the
bill. It would hurt; there was no question about it. He said he
believed the departments could carry on their mission under the new
structure, only the state could now proceed with a $1 million
savings, at minimum, past the original fiscal note. That was a net
benefit, he said, particularly when he did not have to cut rural
grants and the like. He did not want to cut services; HB 409 did
not attempt to cut services.
Number 1576
REPRESENTATIVE MACKIE suggested there were more programs there than
rural grants.
CO-CHAIR AUSTERMAN referred to a meeting with Representative Kelly
in Co-Chair Austerman's office. At that meeting, Co-Chair
Austerman had asked several questions. He said he had gone through
the bill and 99 percent of it was shuffling one department to the
next. Towards the back, however, starting on page 94, he said, it
added new sections to the bill. He referred to page 94, Article 7
on line 30. There and in other places, new sections were proposed.
He wanted to know why they were new sections and asked why they
were not just renumbered if they simply moved programs to other
departments.
Number 1665
REPRESENTATIVE KELLY deferred to Paula Conru to answer the
question.
PAULA CONRU, Legislative Assistant to Representative Kelly, said
she wanted to check with the bill drafter on that; however, she
believed the new sections were created by lifting existing sections
out of the DCRA title in statute and inserting them the title that
established the new department.
Number 1715
CO-CHAIR AUSTERMAN thought it would make sense if every department
received a different number of some kind.
MS. CONRU explained that the way the bill was crafted, everything
in the DCRA title was lifted out and transferred into the existing
number for DCED.
Number 1749
REPRESENTATIVE KELLY referred to rural grants and explained that,
in the budget cutting the last time, those grants had been some of
the biggest, most tempting dollars to go after. The legislature
had tried to refrain from going after those, he said. As budget
chairman, he reiterated, those were the most tempting.
Number 1796
REPRESENTATIVE MACKIE explained that was why he had raised that
issue. He represented a rural district; rural programs were always
the most tempting for a lot of people, he said. He added he did
not want to take it as essentially a threat. Referring to HB 409,
he said either they needed to redo these or the rural grants would
be gone in the budget cutting process. He said he just wanted to
clarify that a lot of things besides rural grants were involved in
the two departments. He added that Representative Kelly had made
his point well.
Number 1845
REPRESENTATIVE KOTT said that on that same note, they could pass HB
409 and a year later, the rural grants would be gone anyway.
Whether it happened or not, rural grants were always a target. He
asked Representative Kelly when the committee could expect the
agency model that had been discussed.
Number 1880
REPRESENTATIVE KELLY replied within the next week or two.
REPRESENTATIVE KOTT asked the commissioners when the committee
could expect a detailed fiscal note on how the conclusions had been
reached.
Number 1929
MR. BUSH responded that the fiscal note was their best shot. A lot
of energy had gone into it. Mr. Bush pointed out that department
representatives were present to answer specific questions. He
explained that the fiscal analysis was fairly detailed on how it
had been determined, right down to the specific people who would be
moved under HB 409. The Administration had decided that preparing
multiple fiscal notes would not really show savings, because when
moving programs from one department to another, it showed up
negative for one agency and positive for another, with no net gain.
He added that the Administration had thought a consolidated fiscal
analysis, showing overall impact on state expenses, would be most
useful to the committee. He likened the analysis to a moving
target; the numbers might change, and if so, the committee would be
informed. Mr. Bush said he was not sure what questions the
committee might have that answers did not already exist for in the
fiscal note.
Number 2045
REPRESENTATIVE KOTT explained that he had heard comments during the
discussion that indicated the fiscal note was incomplete; he had
wondered if anything else was forthcoming.
CO-CHAIR AUSTERMAN asked Mr. Bush if the committee would be seeing
another fiscal note in the near future or would they be working
with what they had throughout the consideration of HB 409.
Number 2085
MR. BUSH expressed belief that the fiscal note was the final
analysis, for the present. However, based on comments at the
meeting, he expected to see a new model or a change in HB 409; that
would create the need to change the numbers.
Number 2117
COMMISSIONER IRWIN said it was safe to say that as they continued
sifting through the numbers and refining their knowledge, the
Administration would certainly let the committee know of any major
discrepancies that might affect the bill. It had been difficult,
he said, especially with complexities such as those created by a
single employee performing multiple roles within a department.
Number 2232
REPRESENTATIVE KELLY said he was expecting from the Administration
a more detailed analysis of the fiscal note.
Number 2260
COMMISSIONER IRWIN wondered what could be more detailed.
REPRESENTATIVE KELLY replied the analysis was justification of some
of the numbers for some of the moving costs.
MR. BUSH advised that a representative from the Department of
Administration was present to answer any questions about
assumptions on moving costs.
Number 2324
REPRESENTATIVE ELTON said they might be setting an almost
impossible standard. He expected to see a series of changes to the
fiscal note, based on the sponsor's additional analysis. He did
not think he was prepared to ask a detailed question on moving
costs until there was less of a moving target.
Number 2385
CO-CHAIR IVAN said there was time to address this issue and asked
that it be brought up in the future.
CO-CHAIR AUSTERMAN mentioned the upcoming public hearing on
Saturday, February 3, and suggested that following the hearing, the
sponsor could come back with an amendment of some kind.
TAPE 96-6, SIDE A
Number 0001
REPRESENTATIVE MACKIE said if the sponsor wanted more detailed
information from the Administration, the Administration should
provide it. He noted reference to moving 161 positions, each at a
cost of $5,000; he wondered how the Administration had arrived at
that figure, for example. Regardless of the contents of a bill, he
felt it important to have as much information about fiscal impact
as possible. He added that it sounded like the Administration
would provide that to the sponsor, who would provide it to the
committee at the next meeting.
Number 0100
REPRESENTATIVE ELTON referred to recommendations made after the
change of administrations by business groups and other interested
Alaskans. He wondered if anything as major as combining DCRA and
DCED had been suggested at that time.
MR. BUSH said he had not heard of anything.
COMMISSIONER IRWIN said he had been on the executive committee of
the Marketing Alaska effort and had heard no such suggestion.
Number 0200
CO-CHAIR IVAN encouraged the committee to coordinate amendments
with the sponsor and the agencies. He added that he sought as much
input as possible from everyone affected and involved.
REPRESENTATIVE KELLY thanked the departments for their extensive
work in the period of time given them.
ADJOURNMENT
There being no further business to conduct, CO-CHAIR IVAN adjourned
the House Community and Regional Affairs Committee meeting at 2:45
p.m.
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