Legislature(1993 - 1994)
03/05/1993 02:05 PM House FIN
| 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 FINANCE COMMITTEE
March 5, 1993
2:05 P.M.
TAPE HFC 93 - 38, Side 2, #000 - end.
TAPE HFC 93 - 39, Side 1, #000 - #494.
CALL TO ORDER
Co-Chair Ron Larson called the meeting of the House Finance
Committee to order at 2:05 P.M.
PRESENT
Co-Chair Larson Representative Brown
Co-Chair MacLean Representative Foster
Vice-Chair Hanley Representative Grussendorf
Representative Therriault Representative Martin
Representative Parnell
Representative Navarre and Representative Hoffman were not
present for the meeting.
ALSO PRESENT
Darrel J. Rexwinkel, Commissioner, Department of Revenue;
Judy Knight, Director, Division of Employment Security,
Department of Labor; Representative David Finkelstein; John
Abshire, Deputy Commissioner, Department of Labor;
Commissioner; Paul Arnoldt, Director, Division of Workers'
Compensation, Department of Labor; Mike Greany, Director,
Legislative Finance Division.
SUMMARY INFORMATION
PRESENTATION BY DEPARTMENT OF REVENUE - REVENUE FORECAST
HB 55 An Act making appropriations for the operating and
loan program expenses of state government and to
capitalize funds; and providing for an effective
date.
HB 56 An Act making appropriations for operating
expenses for certain programs for which the costs
are derived from mandated formulas or criteria,
and for expenses for certain leases and contracts
for state services and operations; and providing
for an effective date.
Subcommittee Closeout: Department of Labor was
held in Committee for further discussion.
1
DEPARTMENT OF LABOR
The Department of Labor Subcommittee consists of Chair
Eileen MacLean with members Representative Hudson,
Representative Vezey, Representative Sitton and
Representative Finkelstein.
Co-Chair MacLean explained that the general fund target for
the Department of Labor was $9.483 million dollars; $95.8
thousand general fund reduction from the Governor's FY 94
budget (before any budget amendments). [Attachment #1].
The subcommittee does not recommend any general fund
reductions to the Department.
She added, that the proposed budget which the Governor
submitted for the Department for FY 94 was significantly
reduced from FY 93. The Governor cut $636.8 thousand
dollars or 6.2% percentage from the FY 93 authorized level.
The Department was funded with eighty-four percent federal
and non-general funds.
Co-Chair MacLean noted her concern with the reductions
already made which will effect the Department's ability to
perform the statutorily required work. Past reductions are
currently effecting the Department. Co-Chair MacLean listed
the decrements recommended by the Governor.
* Labor Market Information $100.0 thousand
dollars
* Commissioner's Office $54.8 thousand
dollars
* Worker's Compensation $85.0 thousand
dollars
* Wage and Hour $238.0 thousand
dollars
* Occupational Safety and
Health $147.0 thousand
dollars
* Alaska Safety Advisory
Council $12.0 thousand
dollars
Co-Chair MacLean pointed out that all increments to the
Departments budget were non-general funds. The
Subcommittee's recommendation is the Governor's proposed
budget as amended. The Component Summary [Attachment #1]
represents total funding of $57,480.2 million dollars of
2
which $9,679.6 million dollars is general funds. The
targeted general fund amount is $9,483.8 million dollars and
the Subcommittee recommendation is $195.8 thousand dollars
over that amount. The amount is the combined result of not
taking the target reduction of $95.8 thousand dollars and
the Subcommittee's approval of one budget amendment from
general fund program receipts.
The two amendments are Employment/Unemployment Services
($100.0) and the Commissioner's Office ($4.5). The $100.0
budget amendment is general fund program receipts and would
allow the Department to accept contracts from non-state
agencies for special employment assistance services.
Co-Chair MacLean MOVED to adoption Department of Labor's
Subcommittee report and that it be incorporated into HB 55.
Co-Chair Larson OBJECTED for purposes of additional
information. Co-Chair MacLean provided the Committee with a
copy of HB 203. [Attachment #5].
JOHN ABSHIRE, DEPUTY COMMISSIONER, DEPARTMENT OF LABOR,
noted the Department's support of the Subcommittee's
recommendations and asked that the House Finance Committee
consider the recommendations.
PAUL ARNOLDT, DIRECTOR, DIVISION OF WORKER' COMPENSATION,
DEPARTMENT OF LABOR, addressed Attachment #5. This proposed
bill addresses the declining State revenue and the cuts
which the Division of Workers' Compensation has taken in the
past. The bill recognizes the major issues facing Workers'
Compensation. He provided the Committee with Attachment #4,
a letter from the Workers' Compensation Board.
The Board clarifies their support of a "user fee" program
which would help the Division meet their current needs. HB
203 establishes a phase in process of four to five years
which allows the Division's performance not to be affected
by State funding. The Board is dealing with cuts, and lack
of funding for investigation of uninsured employers in
addressing the escalation of medical costs and other
concerns which reduces the cost of Workers' compensation.
Co-Chair Larson inquired how much revenue would be generated
through the phase in project. Mr. Arnoldt replied the
current the estimate is $585 thousand dollars for FY 94.
The Board wants the funding to support the Division budget.
Should there be funds generated beyond what would be
required to support the discussion, the Board does not want
to fund the general fund.
Co-Chair Larson questioned how claims would be established.
Mr. Abshire stated the insurance company would determine
3
what the individual businesses would be charged. Companies
are charged based on their safety record. Co-Chair Larson
thought the additional two percent impact on a small
business would be too severe for the business to handle.
Mr. Arnoldt countered that the State of Alaska has
experienced medical costs rising $32 million dollars. The
underlaying cause for the escalation is unknown.
JUDY KNIGHT, DIRECTOR, DIVISION OF WORKERS' COMPENSATION,
DEPARTMENT OF LABOR, responded to Representative
Therriault's inquiries regarding STEP funding. She stated
that the STEP Program would sunset this year and the
proposed funding would reauthorize the program. The
revenues from STEP originate from one tenth of one percent
of employee contributions. Based on the estimate of taxable
wages for FY 94, that amount would generate $108.5 thousand
dollars for training grants.
Ms. Knight stated that the Legislature made an appropriation
of designated grants from STEP revenues to the Fairbanks
Native Association. There has been concern that they need
to examine their priorities and program parameters
established for STEP. She added that, the Employment
Security Advisory Council, which collaborated in the
development of the STEP Program, is concerned and opposed to
the designated grants because they dilute the number of
funds available for requests.
Co-Chair Larson distributed Attachment #6, a proposed one
percent reduction scenario. He recommended continuing
discussion of potential regulations for the Department of
Labor. Subcommittee closeout will be held for a future
date.
(Tape Change, HFC 93-39, Side 1).
PRESENTATION BY DEPARTMENT OF REVENUE - REVENUE FORECAST
DARREL REXWINKEL, COMMISSIONER, DEPARTMENT OF REVENUE,
provided the Committee with handouts addressing the five
year average of ANS prices. [Attachment #2 & #3]. FY 92
includes $50.3 million dollars from the Exxon Valdez oil
spill litigation and $25.3 million dollars for legal expense
reimbursement.
The FY 92 and FY 93 (through 2/19/93) amounts include
administrative settlements of $83.7 million dollars and
$121.3 million dollars. Administrative settlements
represent collections of receivables after a request for
informal hearings. Also included are receivable collections
prior to a request for hearing of $97.5 million dollars.
Not included in the projection are the amounts recently
announced by a BP tax settlement of $630 million dollars.
4
Commissioner Rexwinkel noted the largest differences
reflected in Attachment #2 & #3 result from the settlements.
He distributed copies of the proposed OMB spending plan.
[Attachment #7]. Representative Martin asked if the
settlement costs exclude those being placed in the Permanent
Fund. Commissioner Rexwinkel replied they did.
Commissioner Rexwinkel referenced Attachment #3, the letter
from Chuck Logsdon, Petroleum Economist, examining the five
years ANS price estimate. The nominal dollar calculations
are not a true average since it provides the first six
months of FY 93 with a full year's weight. He emphasized
that the market has been volatile and will continue to be.
Representative Therriault asked if the settlement money,
consisting of non-restricted general fund revenues, would
place six percent into the Mental Health Trust Fund.
Commissioner Rexwinkel stated yes.
Representative Brown questioned if the money in the
Constitutional Reserve would be subject to the six percent.
Commissioner Rexwinkel stated that the Mental Health Trust
Income Account would be allocated six percent of the
unrestricted revenues. Although, that percentage does not
come off the money in the Budget Reserve Account.
MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
provided the Committee insight as to differences between the
Department of Revenue's budget projection and that of the
Legislative Finance Division. The difference would amount
to between $.17 cents\per barrel and $.26 cents/per barrel.
He added that last year the Legislature based the current
year's budget on $16.90/barrel price. Currently, the
average is over $18/per barrel price.
Representative Martin asked if the balanced budget would
include "windfalls". Mr. Greany replied that the FY 93
budget was based on assuming a $16.90/per barrel price. No
additional windfalls would be necessary to balance this
year's budget and it would be balanced on the revenue
stream. He added that there is a cushion available for the
remainder of the year.
Representative Hanley commented that the unrestricted
revenue from last year did not cover the current year's
budget. Oil revenues plus additional sources covered last
year's budget. Mr. Greany agreed reiterated that but
additional settlement monies were not necessary to balance
the budget.
ADJOURNMENT
5
The meeting adjourned at 3:15 P.M.
HOUSE FINANCE COMMITTEE
March 5, 1993
2:05 P.M.
TAPE HFC 93 - 38, Side 2, #000 - end.
TAPE HFC 93 - 39, Side 1, #000 - #494.
CALL TO ORDER
Co-Chair Ron Larson called the meeting of the House Finance
Committee to order at 2:05 P.M.
PRESENT
Co-Chair Larson Representative Brown
Co-Chair MacLean Representative Foster
Vice-Chair Hanley Representative Grussendorf
Representative Therriault Representative Martin
Representative Parnell
Representative Navarre and Representative Hoffman were not
present for the meeting.
ALSO PRESENT
Darrel J. Rexwinkel, Commissioner, Department of Revenue;
Judy Knight, Director, Division of Employment Security,
Department of Labor; Representative David Finkelstein; John
Abshire, Deputy Commissioner, Department of Labor;
Commissioner; Paul Arnoldt, Director, Division of Workers'
Compensation, Department of Labor; Mike Greany, Director,
Legislative Finance Division.
SUMMARY INFORMATION
PRESENTATION BY DEPARTMENT OF REVENUE - REVENUE FORECAST
HB 55 An Act making appropriations for the operating and
loan program expenses of state government and to
capitalize funds; and providing for an effective
date.
HB 56 An Act making appropriations for operating
expenses for certain programs for which the costs
are derived from mandated formulas or criteria,
and for expenses for certain leases and contracts
for state services and operations; and providing
for an effective date.
6
Subcommittee Closeout: Department of Labor was
held in Committee for further discussion.
DEPARTMENT OF LABOR
The Department of Labor Subcommittee consists of Chair
Eileen MacLean with members Representative Hudson,
Representative Vezey, Representative Sitton and
Representative Finkelstein.
Co-Chair MacLean explained that the general fund target for
the Department of Labor was $9.483 million dollars; $95.8
thousand general fund reduction from the Governor's FY 94
budget (before any budget amendments). [Attachment #1].
The subcommittee does not recommend any general fund
reductions to the Department.
She added, that the proposed budget which the Governor
submitted for the Department for FY 94 was significantly
reduced from FY 93. The Governor cut $636.8 thousand
dollars or 6.2% percentage from the FY 93 authorized level.
The Department was funded with eighty-four percent federal
and non-general funds.
Co-Chair MacLean noted her concern with the reductions
already made which will effect the Department's ability to
perform the statutorily required work. Past reductions are
currently effecting the Department. Co-Chair MacLean listed
the decrements recommended by the Governor.
* Labor Market Information $100.0 thousand
dollars
* Commissioner's Office $54.8 thousand
dollars
* Worker's Compensation $85.0 thousand
dollars
* Wage and Hour $238.0 thousand
dollars
* Occupational Safety and
Health $147.0 thousand
dollars
* Alaska Safety Advisory
Council $12.0 thousand
dollars
Co-Chair MacLean pointed out that all increments to the
Departments budget were non-general funds. The
Subcommittee's recommendation is the Governor's proposed
7
budget as amended. The Component Summary [Attachment #1]
represents total funding of $57,480.2 million dollars of
which $9,679.6 million dollars is general funds. The
targeted general fund amount is $9,483.8 million dollars and
the Subcommittee recommendation is $195.8 thousand dollars
over that amount. The amount is the combined result of not
taking the target reduction of $95.8 thousand dollars and
the Subcommittee's approval of one budget amendment from
general fund program receipts.
The two amendments are Employment/Unemployment Services
($100.0) and the Commissioner's Office ($4.5). The $100.0
budget amendment is general fund program receipts and would
allow the Department to accept contracts from non-state
agencies for special employment assistance services.
Co-Chair MacLean MOVED to adoption Department of Labor's
Subcommittee report and that it be incorporated into HB 55.
Co-Chair Larson OBJECTED for purposes of additional
information. Co-Chair MacLean provided the Committee with a
copy of HB 203. [Attachment #5].
JOHN ABSHIRE, DEPUTY COMMISSIONER, DEPARTMENT OF LABOR,
noted the Department's support of the Subcommittee's
recommendations and asked that the House Finance Committee
consider the recommendations.
PAUL ARNOLDT, DIRECTOR, DIVISION OF WORKER' COMPENSATION,
DEPARTMENT OF LABOR, addressed Attachment #5. This proposed
bill addresses the declining State revenue and the cuts
which the Division of Workers' Compensation has taken in the
past. The bill recognizes the major issues facing Workers'
Compensation. He provided the Committee with Attachment #4,
a letter from the Workers' Compensation Board.
The Board clarifies their support of a "user fee" program
which would help the Division meet their current needs. HB
203 establishes a phase in process of four to five years
which allows the Division's performance not to be affected
by State funding. The Board is dealing with cuts, and lack
of funding for investigation of uninsured employers in
addressing the escalation of medical costs and other
concerns which reduces the cost of Workers' compensation.
Co-Chair Larson inquired how much revenue would be generated
through the phase in project. Mr. Arnoldt replied the
current the estimate is $585 thousand dollars for FY 94.
The Board wants the funding to support the Division budget.
Should there be funds generated beyond what would be
required to support the discussion, the Board does not want
to fund the general fund.
8
Co-Chair Larson questioned how claims would be established.
Mr. Abshire stated the insurance company would determine
what the individual businesses would be charged. Companies
are charged based on their safety record. Co-Chair Larson
thought the additional two percent impact on a small
business would be too severe for the business to handle.
Mr. Arnoldt countered that the State of Alaska has
experienced medical costs rising $32 million dollars. The
underlaying cause for the escalation is unknown.
JUDY KNIGHT, DIRECTOR, DIVISION OF WORKERS' COMPENSATION,
DEPARTMENT OF LABOR, responded to Representative
Therriault's inquiries regarding STEP funding. She stated
that the STEP Program would sunset this year and the
proposed funding would reauthorize the program. The
revenues from STEP originate from one tenth of one percent
of employee contributions. Based on the estimate of taxable
wages for FY 94, that amount would generate $108.5 thousand
dollars for training grants.
Ms. Knight stated that the Legislature made an appropriation
of designated grants from STEP revenues to the Fairbanks
Native Association. There has been concern that they need
to examine their priorities and program parameters
established for STEP. She added that, the Employment
Security Advisory Council, which collaborated in the
development of the STEP Program, is concerned and opposed to
the designated grants because they dilute the number of
funds available for requests.
Co-Chair Larson distributed Attachment #6, a proposed one
percent reduction scenario. He recommended continuing
discussion of potential regulations for the Department of
Labor. Subcommittee closeout will be held for a future
date.
(Tape Change, HFC 93-39, Side 1).
PRESENTATION BY DEPARTMENT OF REVENUE - REVENUE FORECAST
DARREL REXWINKEL, COMMISSIONER, DEPARTMENT OF REVENUE,
provided the Committee with handouts addressing the five
year average of ANS prices. [Attachment #2 & #3]. FY 92
includes $50.3 million dollars from the Exxon Valdez oil
spill litigation and $25.3 million dollars for legal expense
reimbursement.
The FY 92 and FY 93 (through 2/19/93) amounts include
administrative settlements of $83.7 million dollars and
$121.3 million dollars. Administrative settlements
represent collections of receivables after a request for
informal hearings. Also included are receivable collections
prior to a request for hearing of $97.5 million dollars.
9
Not included in the projection are the amounts recently
announced by a BP tax settlement of $630 million dollars.
Commissioner Rexwinkel noted the largest differences
reflected in Attachment #2 & #3 result from the settlements.
He distributed copies of the proposed OMB spending plan.
[Attachment #7]. Representative Martin asked if the
settlement costs exclude those being placed in the Permanent
Fund. Commissioner Rexwinkel replied they did.
Commissioner Rexwinkel referenced Attachment #3, the letter
from Chuck Logsdon, Petroleum Economist, examining the five
years ANS price estimate. The nominal dollar calculations
are not a true average since it provides the first six
months of FY 93 with a full year's weight. He emphasized
that the market has been volatile and will continue to be.
Representative Therriault asked if the settlement money,
consisting of non-restricted general fund revenues, would
place six percent into the Mental Health Trust Fund.
Commissioner Rexwinkel stated yes.
Representative Brown questioned if the money in the
Constitutional Reserve would be subject to the six percent.
Commissioner Rexwinkel stated that the Mental Health Trust
Income Account would be allocated six percent of the
unrestricted revenues. Although, that percentage does not
come off the money in the Budget Reserve Account.
MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
provided the Committee insight as to differences between the
Department of Revenue's budget projection and that of the
Legislative Finance Division. The difference would amount
to between $.17 cents\per barrel and $.26 cents/per barrel.
He added that last year the Legislature based the current
year's budget on $16.90/barrel price. Currently, the
average is over $18/per barrel price.
Representative Martin asked if the balanced budget would
include "windfalls". Mr. Greany replied that the FY 93
budget was based on assuming a $16.90/per barrel price. No
additional windfalls would be necessary to balance this
year's budget and it would be balanced on the revenue
stream. He added that there is a cushion available for the
remainder of the year.
Representative Hanley commented that the unrestricted
revenue from last year did not cover the current year's
budget. Oil revenues plus additional sources covered last
year's budget. Mr. Greany agreed reiterated that but
additional settlement monies were not necessary to balance
the budget.
10
ADJOURNMENT
The meeting adjourned at 3:15 P.M.
11
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