Legislature(1993 - 1994)
03/08/1993 01:34 PM House FIN
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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 8, 1993
1:34 p.m.
TAPE HFC 93-39, Side 2, #000 - end.
TAPE HFC 93-40, Side 1, #000 - end.
TAPE HFC 93-40, Side 2, #000 - 516.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee to order
at 1:34 p.m.
PRESENT
Co-Chair Larson
Co-Chair MacLean Representative Martin
Vice-Chair Hanley Representative Navarre
Representative Brown Representative Parnell
Representative Foster Representative Therriault
Representative Grussendorf
Representative Hoffman was absent from the meeting.
ALSO PRESENT
Representative Barnes; Representative Ulmer; Representative
Vezey; Representative Davidson; Mike Greany, Director,
Legislative Finance Division; Darrel J. Rexwinkel,
Commissioner, Department of Revenue; Lloyd F.Hames,
Commissioner, Department of Corrections; Mel Krogseng,
Legislative Staff, Representative Barnes; Joan Kasson,
Fiscal Analyst, Legislative Finance Division; Michael
Dindinger, Criminal Justice Planner, Department of
Corrections.
SUMMARY INFORMATION
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."
SUBCOMMITTEE CLOSEOUTS: REVENUE
CORRECTIONS
Co-Chair Larson announced that the Legislative Council has
proposed cutting the contract for the Legislative Reporting
Service unless a portion of the contract is paid for by the
House and Senate. The total cost of the current contract is
$80,000 thousand dollars. He asked that members contact his
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in regards to their utilization of the report.
DEPARTMENT OF REVENUE
The Department of Revenue, House Finance Subcommittee
consists of Chair Representative Martin with members
Representatives Vezey, Kott, Grussendorf and Brown.
Representative Martin provided members with a summary sheet
of the Department of Revenue, House Finance Subcommittee's
closeout recommendations (Attachment 2).
Representative Martin observed that the Department of
Revenue receives the least general fund monies but is the
"lifeline of revenues for the whole state."
Representative Martin MOVED to INCORPORATE the House Finance
Subcommittee's recommendations for the Department of
Revenue. Representative Navarre OBJECTED.
Representative Martin reviewed the Subcommittee's
recommendations. He reflected that the FY 93 authorized
budget was $101,489.7 million dollars.
Representative Martin noted that Charitable Gaming is being
transferred to the Department of Revenue from the Department
of Commerce and Economic Development. The Department's
budget will be inflated by $681.4 thousand dollars by this
transfer.
Representative Martin discussed decrement recommendations by
the Subcommittee:
* Treasury Management - <5,690.4 million dollars>
This would reduce the Department's program receipt
authority by $5,690.4 million dollars. This
represents excess authority for investment
management fees.
Representative Martin argued that the Department can present
a request for increased program receipt authority from the
Legislative Budget and Audit Committee if the need arises.
He asserted that the reduction gives a truer picture of the
cost of government.
* Travel - 7 percent across the board reduction
* Child Support Enforcement - <44.6 thousand
dollars>
This reduction would result in the closure of the
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Juneau and Fairbanks offices. There would be an
additional $86.6 thousand dollar reduction in
matching federal funds.
* Oil and Gas Litigation Audit - <$114.8 thousand
dollars>
This reduction would be taken from the front
section of the budget.
* Letter of Intent - Administration and Support
"It is the intent of the legislature that the
Department of Revenue delete all unfunded PCN's."
Representative Martin noted that the Subcommittee received a
request to reinstate five positions deleted from the FY 93
Operating Budget. The Subcommittee did not consider the
request. Representative Martin explained that he felt the
entire House Finance Committee should consider the request.
He observed that there is a request in the supplemental to
begin implementation of the positions.
Representative Martin pointed out that other amendments by
Representative Brown were not considered by the
Subcommittee.
Representative Navarre asked that Commissioner Rexwinkle
comment on reductions to the Division of Oil and Gas
Litigation Audit.
DARYL REXWINKLE, COMMISSIONER, DEPARTMENT OF REVENUE
explained that the Department of Revenue requested $414.5
thousand dollars in the front section of the budget to
offset the reduction taken in the back section of the
budget. He stressed that the Department needs "every
dollar" to continue with the audit function and collection
of back taxes. The Department also submitted a budget
amendment to restore the back section of the budget to the
FY 93 funding level. The amendment would reduce the front
section of the budget by $149.0 thousand dollars. He
stressed that the Division of Income and Excise Audit and
Oil and Gas Audit collect the majority of the State's
revenues. He emphasized that there are still a lot of back
taxes on the books. He pointed out that the Department of
Revenue needs appropriate staff in order to aggressively
pursue back taxes.
Representative Hanley asked for further clarification of the
budget amendments. Commissioner Rexwinkle explained that
the amendment would:
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* Add $297.0 thousand dollars - Income and Excise
Audit
This would include five positions.
* Add $338.0 thousand dollars - Oil and Gas Audit
This would add 4 positions and contractual
services of $68.5 thousand dollars.
* The front section would be reduced by $149.5
thousand dollars
* This would result in a net increase of $485.5
thousand dollars.
In response to a question by Representative Hanley,
Commissioner Rexwinkle explained that the front section
would only contain contractual costs. Representative
Hanley wondered why contractual costs are not contained in
the main section of the budget. Commissioner Rexwinkle
stated that the contractual costs are on an annual basis.
He noted that the Department has also submitted a
supplemental request.
Co-Chair Larson summarized that the Department transferred
$414.0 thousand dollars from the back section to the front
section of the operating budget. He noted that the
Subcommittee is recommending that this amount be reduced by
$114.0 thousand dollars and transferred to the back section
of the budget. He suggested that the Committee would need
an amendment to transfer the funding.
Representative Martin agreed that the contractual should
remain in the front section.
Representative Brown maintained that the Divisions of Income
and Excise Audit and Oil and Gas Audit have been seriously
under-funded. She asserted that every dollar cut from these
divisions cost the State $10 dollars in uncollected
revenues. She reminded members that testimony by the
Department indicated that the Divisions are near the statute
of limitations in bring cases to court. She emphasized that
the Department would need an additional $1 million dollars
to bring cases to current. She observed that the
Subcommittee did not consider the Department's amendment for
$485.0 thousand dollars. She summarized that the Department
needs an additional $1.5 million dollars in order to collect
taxes owed to the state and to keep the programs current.
She stressed that money should not be reduced from the
"bread butter" of the State.
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Representative Martin spoke in support of the Subcommittee's
decision to bring amendments before the full committee. He
asserted that the State has made money from settlements
because of the current administration. Representative Brown
noted that current settlements were initiated in previous
years.
Representative Brown reiterated that the Subcommittee did
not take up the Administration's amendments.
Representative Brown referred to the Subcommittee's proposed
reduction to Child Support Enforcement. She noted that the
Subcommittee's proposed reduction will result in the loss of
federal receipts in excess of the reduction. She asserted
that the State of Alaska will pay more in AFDC payments as a
result of payments that will not be collected.
Representative Brown spoke against the reduction of program
receipt authority and travel in the Treasury Management
component. She observed that the new investment boards need
to educate their members. She pointed out that the value of
the portfolio determines investment management fees. She
asserted that it will cost the State to pay for staff to
petition the Legislative Budget and Audit Committee.
Representative Grussendorf spoke against the closure of
Juneau and Fairbanks Child support offices. He emphasized
that the program is a service that is difficult to replace
by mail.
Representative Navarre discussed the subcommittee closeout
process. Co-Chair Larson explained the subcommittee
closeout process.
Representative Therriault asked for a clarification of
reductions to the Child Support Enforcement component.
Commissioner Rexwinkle explained that the federal government
pays the majority of the program's costs. Two positions
will be eliminate; one from Juneau and one from Fairbanks.
The offices will be closed. The caseloads will be
transferred to Anchorage without additional positions.
Co-Chair Larson reiterated the motion to INCORPORATE the
Subcommittee's recommendations for the Department of Revenue
into HB 55. Representative Navarre OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Foster, Hanley, Grussendorf, Martin, Parnell,
Therriault, MacLean, Larson
OPPOSED: Navarre, Brown
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The MOTION PASSED (8-2).
DEPARTMENT OF CORRECTIONS
The House Finance Subcommittee on the Department of
Corrections consists of Chair Representative Barnes with
members Representatives Green, Parnell, Ulmer and Brown.
Representative Barnes provided members with backup materials
on the Subcommittee's recommendations and findings (copy on
file).
Representative Barnes noted that the Governors proposed FY
94 budget for the Department of Corrections is $123,963.0
millon dollars. The Subcommittee's recommendation is
$115,831.8 million dollars. She observed that the
Subcommittee's proposed budget is $4.571.6 million dollars
above FY 93 authorized (without supplementals).
Representative Barnes discussed the FY 93 reduction plan.
She referred to the Alaska Department of Corrections' FY 93
Budget Reduction Plan (Attachment 2). She asserted that the
documentation demonstrates that department officials
attempted to circumvent the legislative process. She
alleged that there was not an attempt to carry out the FY 93
budget agreement as agreed upon by the Conference Committee.
She observed that the original plan agreed to by the House
was that the 6th Avenue, Anchorage and Palmer facilities be
closed.
Representative Barnes noted that the plan was changed in the
Senate. She referenced a memorandum by Richard Franklin.
She observed that the memorandum states that, "Wildwood is
our oldest facility in terms of age of buildings.
Considerable upgrade is needed. The Master Plan will, it
appears, recommend increasing the core capacity of the
facility to enable us to take advantage of additional bed
space potentially available there."
Representative Barnes alleged that the State of Alaska could
reduce the daily cost of housing prisoners from $122.87
hundred dollars to $45.00 dollars a day, by sending
prisoners out-of-state. She noted that health care is
included in the out-of-state cost.
Representative Barnes was informed that the State of Alaska
owns the Wildwood facility. She stated that she was not
aware that legislative approval was given for the purchase
of the facility. She asserted that the Legislature never
adopted the Master Plan.
Representative Barnes noted that the Department of
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Administration managed the Wildwood lease. The lease was
transferred to the Department of Natural Resources. The
lease was latter transferred to the Department of Natural
Resources.
(Tape Change, HFC 93-40, Side 1)
Representative Barnes observed that the purchase of the
Wildwood facility was over $10.7 million dollars. According
to AS 36.30.080 leases of over $10 million dollars must
obtain legislative approval. She noted that the sale of
Wildwood was divided into two bond issues. An additional
117 acres of land was purchased for $2.2 million dollars.
The Department of Environmental Conservation and the
Department of Law warned that the site is contaminated and
that purchased buildings contained asbestos. She asserted
that the purchase of Wildwood is a clear circumvention of
the legislative process.
Representative Barnes emphasized that Department of
Corrections Finance Subcommittee has maintained that no new
facilities be constructed. She stressed that a 20 bed wing
is being built on to the Spring Creek facility. The
addition to Spring Creek will be used to house misdemeanor
offenders that will perform maintenance work on the
facility.
Representative Navarre felt that the Department was
justified in their actions. He urged members to read the
provided documents. He reiterated that a memorandum by
Richard Franklin stated that: "The Master Plan will, it
appears, recommend increasing the core capacity of the
facility to enable us to take advantage of additional bed
space potentially available there... At a latter date, then,
Wildwood can be reopened as an enlarged, more efficient
operation and other facilities downsized accordingly if
state wide population allow."
Representative Barnes emphasized that the legislative branch
must be aware of what is being done in its name. She
directed members to materials provided in backup packages.
Representative Barnes informed members that inmate health
care has been separated into its own BRU. She discussed
inmate health care. She noted that in some instances inmate
health care is performed through contract. She asserted
that one contractor does not have an Alaska business
licence. She alleged that the State is not receiving 50
cents on the dollar for inmate health care. She gave
examples of health care costs.
Representative Barnes directed members to backup material on
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out-of-state placement. She reiterated that the State of
Alaska spends $122.87 dollars per day for in-state prisoner
placement. She maintained that the State would spend $45.00
dollars a day for prisoners out-of-state. She added that
$45.00 dollars a day includes transportation and health care
costs.
MEL KROGSENG, LEGISLATIVE STAFF, REPRESENTATIVE BARNES
provided members with a component summary of the Department
of Corrections and a Subcommittee Transaction Summary for
the House (Attachment 3). She reviewed Attachment 3.
* Office of the Commissioner - <$361.9 thousand
dollars below the Governor's proposed>
New positions were deleted. Travel was reduced by
50 percent. The Special Assistant position was
deleted. A Special Assistant position was
transferred from Statewide Programs to administer
Project Hope. Contractual was reduced to FY 93 CC
level.
* Parole Board - <$28.3 thousand dollars below the
Governor's proposed>
* Correctional Academy - $325.8 thousand dollars
This is the same funding level as the FY 93 level
funded in the Department of Administration.
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* Administrative Services - $2,728.9 million dollars
Several new positions were denied. The Directors
position was deleted. The Efficiency Analyst
position was moved from the Office of the
Commissioner to oversee the Division of
Administrative Services.
* Data and Word Processing - $3,347.7 million
dollars
Computer equipment requests were denied. They
will be looked at in the capital budget.
* Statewide Programs - $7,078.0 million dollars
* Inmate Health Care - $14,205.6 million dollars
This includes funding for personnel in
institutions.
* Correctional Industries Administration - $975.1
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thousand dollars
In response to a question by Co-Chair MacLean, Ms. Krogseng
clarified that Inmate Health Care includes an increase of
$104.2 thousand dollars for 204 outside inmates at a cost of
$1.4 per day. She added that the cost of inmate care per
day in the State of Alaska was over $6 a day in 1988 or
1989.
* Institution Director's Office - $521.8 thousand
dollars
* Out-of-state Contractual - $4,558.1 million
dollars
* Transportation - $679.9 thousand dollars
* Facilities Capital Improvement Unit - $135.2
thousand dollars
Ms. Krogseng outlined appropriations for facilities as
listed on Attachment 3. She noted that there will be an
increase in institutional facilities of just under $1
million dollars over FY 93 Authorized.
* Community Corrections Director - $726.8 thousand
dollars
* Northern Region Probation - $2,505.1 million
dollars
* Southcentral Region Probation - $3,979.3 million
dollars
* Southeast Region Probation - $674.4 thousand
dollars
Ms. Krogseng noted that the Department's total budget is
$115,831.8 million dollars.
Co-Chair Larson asked where the chaplin program is funded.
Ms. Krogseng noted that the Department requested a new
program coordinator for chaplin services in the amount of
$67.0 thousand dollars. The request was denied.
Co-Chair MacLean noted that the House Transaction Summary
lists the reopening of the Wildwood facility. Ms. Krogseng
explained that the amount listed was the Governor's request
to reopen the facility. The Subcommittee has reduced the
budget by more than this amount. The Subcommittee is
recommending that the facility be used for pretrial only.
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Co-Chair MacLean questioned the type of offender that would
be transferred out-of-state. Representative Barnes replied
that medium security offenders would be transferred. She
added that the State of Alaska classification system is
higher than other parts of the country. High risk offenders
in the State of Alaska may be classified as medium risk in
other States. The Minnesota State classification system
would be used in determining which prisoners would be
transferred as medium security.
Representative Martin asked if federal prisoners would be
given first priority for transfer. Representative Barnes
noted that there are approximately 90 federal prisoners.
She thought that the majority of prisoners transferred would
be state prisoners. She alleged that 40 percent of the
inmate population is from out-of-state.
Representative Martin asked how much the Cleary case has
contributed to the health care cost of prisoners. He
questioned if the Cleary Case should be challenged.
Representative Barnes referred to Russ vs. State. The case
states that the standard to be used for medical care in
institutions, essential care. She pointed out that the
Governor vetoed the language. She added that the State's
standards go beyond Cleary. She felt that the State should
go back to court to challenge Cleary.
Representative Parnell MOVED to INCORPORATE in to HB 55, the
Department of Corrections Subcommittee report as outlined in
the Transaction Summary, dated March 7, 1993.
Representative Navarre OBJECTED.
Representative Ulmer provided members with a memorandum to
the Co-Chairs, dated March 8, 1993 (Attachment 4). She
reviewed her memorandum. She maintained that the Department
of Corrections was under-funded in FY 93.
Representative Ulmer disputed statements that the Department
did not try to comply with legislative directives. She felt
that the Department tried to adjust to a more realistic
level of expenditures, make more use of community
corrections and find efficiencies. She asserted that the
former Commissioner's departure and delay in appointment
hindered the Department's ability to implement programs.
Representative Ulmer felt that the Subcommittee's proposed
reductions are based on assumptions that are not good public
policy. She referred to the proposal to send inmates out-
of-state. She noted that the average daily cost per inmate
at Wildwood is $76 dollars. The average daily out-of-state
cost is $52 dollars. She noted that the institution that
the Subcommittee proposes to send inmates to is in
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Minnesota. The facility is not yet open. She asserted that
the cost of operation at the new facility is unknown.
Representative Ulmer asked whether it is good state policy
to export jobs. She noted that the decision to export
fundamental public services to other states is a major
public policy question. She noted that transferring inmates
will cause hardship to inmate families. She emphasized the
impact of jobs lost in the Kenai area.
Representative Ulmer addressed the Training component. She
noted that the Alaska Police Standards Council has strict
requirements in regards to correctional, probation and
parole officers. She felt that this component was under-
funded in FY 93.
Representative Ulmer felt that the Administration Component
is being under-funded. She emphasized that the budget is
below the FY 93 level. She stressed that management
problems will be worsened by the lack of support services.
Representative Ulmer expressed concern that rehabilitation
programs are not being emphasized. She stressed that
inmates must get job training and education in order to
assure that they will not reoffend. She observed that
recommendations made in a study to the Department of
Corrections have been ignored.
Representative Ulmer asserted that the Subcommittee's
proposed budget will worsen the current problems.
Representative Barnes clarified that the average cost of
inmate care in the State of Alaska is $122.87 dollars a day.
The Appleton, Minnesota facility is a public facility. The
Subcommittee has been assured by the Minnesota facility that
a contract for $45 dollars a day can be reached.
(Tape Change, HFC 93-40, Side 2)
Representative Barnes emphasized that the Minnesota facility
is well built, up to date, with educational and recreational
facilities. She reiterated that the Department of
Corrections' budget is almost $5 million dollars above FY
93. She noted that the previous Commissioner had closed
Wildwood and was making an attempt to implement the
community correction programs.
Representative Barnes restated issues and concerns regarding
the direction of the FY 93 budget. She alleged that, "money
is not an object, became the call word of the day."
Representative Brown agreed that there has been a lack of
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leadership in the Department of Corrections. She spoke in
support of the current leadership.
Representative Brown referenced, "Department of Corrections,
Briefing Paper on the Transfer of Prisoners to out-of-state
facility," (copy on file). She pointed out that population
figures which the charts were based on are incorrect.
MICHAEL DINDINGER, ACTING DIRECTOR, DIVISION OF
ADMINISTRATIVE SERVICES, DEPARTMENT OF CORRECTIONS agreed
that the charts were compiled with incorrect assumptions.
He emphasized that the Department is over emergency caps in
10 of 12 facilities.
Representative Barnes pointed out that inmate placements are
mixed. Misdemeanor, maximum and medium security inmates are
housed together. The use of guards could be more efficient
if misdemeanor offenders were not housed with high security
offenders.
Representative Navarre stressed that the overall
administrative cost should include out-of-state offenders in
order to be more accurate. He added that the daily average
cost of Wildwood would be $59 if it housed 204 inmates. He
pointed out that the pretrial facility is the most
expensive. He asserted that it does not make sense to close
Wildwood. He agreed that the Department of Corrections has
been mismanaged. He emphasized the need to concentrate on
current obligations to assure that the Department is run
efficiently. He spoke in support of legislative oversight
but emphasized that management of government is the
prerogative of the executive branch. He spoke in support of
the changes made by the Department. He pointed out that the
Department is attempting to accomplish a mission that was
put to them within budget constraints. He noted that
sentencing changes that could ease some of the problems of
the Department have not been changed. He asserted that the
Legislature, in some cases, forced the Department into
making decisions more hurriedly than they would like. He
felt that the Department tried in good faith to accomplish
their directives.
Representative Barnes emphasized that the State has reached
the point that necessitates the proposals of the
Subcommittee. She asserted that the Legislature must build
on what it can afford in the future. She felt that the
Subcommittee's proposed budget is built on what the State
can afford in the future.
Representative Martin spoke in support out-of-state
placements. He thought that some inmates that are out-of-
state residents would be closer to families.
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Representative Navarre questioned data that concluded that
40 percent of the inmates are from out-of-state. He asked
if the inmates were residents at the time they committed
their crime. He agreed that inmates born out-of-state may
account for 40 percent.
Representative Barnes noted that a inmate survey listed the
Fairbanks facility as the favored place of incarceration.
Representative Ulmer asked for substantiation of statistics
stating that 40 percent of Alaskan inmates are from out-of-
state. She noted that the statistics are not consistent
with those of the Alaskan Sentencing Commission.
Representative Grussendorf suggested that the Wildwood
facility will be needed within a couple of years. He
emphasized that state employees at the Wildwood facility
will be adversely affected by the closure. He thought that
the State will probably have to send prisoners out-of-state
as well as open Wildwood.
Representative Navarre asked that Commissioner Hames address
the problems of contamination at Wildwood, cost savings that
will result from the purchase of Wildwood and the per day
cost of the Wildwood facilities as compared to other
facilities of the State. He asserted that Wildwood would
not be the most appropriate facility for closure. He noted
that the facility was partially closed in 1992 for repairs.
He also asked that the Commissioner address the effect of
the Subcommittee's proposed budget on the Department.
LLOYD J. HAMES, COMMISSIONER, DEPARTMENT OF CORRECTIONS
expressed his appreciation for the work of the Subcommittee.
Commissioner Hames stated that he will provide cost
comparisons to the Committee.
Co-Chair MacLean asked why contaminated property was
purchased. Commissioner Hames could not answer. He
mentioned the possibility of federal indemnification.
Representative Barnes explained that the Core of Engineers
has been charged with clean up of old military sites in the
State of Alaska. Four to seven hundred sites have been
identified. Due to funding no sites have been completely
cleaned.
Representative Navarre asked the assessment of the current
Wildwood facility and what the cost would be to replicate
Wildwood with a new facility. Commissioner Hames stressed
that the cost of Wildwood is difficult to ascertain since
the purchase of the Wildwood facility was accompanied by
additional buildings. Representative Navarre asked that the
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Commissioner supply the Committee with justification of the
purchase.
Representative Brown asked if the Commissioner will be able
to implement community alternatives with the current budget
proposal. Commissioner Hames admitted that it will be
difficult but assured her that it is his intention to stress
community alternatives. He referenced statistics of inmate
population contained in the master plan. He emphasized that
alternative punishments are vital to combat a growing inmate
population.
Representative Martin asked if Alaska pampers inmates. He
asked if medical coverage should be reduced. Commissioner
Hames replied that he shares concerns over the cost of
medical care. He stated that all states feel that prisoners
are too well cared for. He noted that he must comply with
the law. He emphasized that bootcamps could be used for
appropriate offenders. Alternatives such as bootcamps would
not have to have all the apparatus of other facilities.
Representative Grussendorf asked if the State would be
responsible for extra major medical care for out-of-state
placements. Representative Barnes replied that inmate care
within the facility would be covered. Major medical care
would be the responsibility of the State of Alaska. She
emphasized that medical care in Minnesota is less expensive.
Co-Chair Larson reiterated the motion to INCORPORATE into HB
55 the Department of Corrections Subcommittee's
recommendation. Representative Navarre reiterated his
OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Brown, Grussendorf, Hanley, Martin, Parnell,
Therriault, Larson, MacLean.
OPPOSED: Navarre
The MOTION PASSED (8-1).
HB 55 was HELD in Committee.
ADJOURNMENT
The meeting adjourned at 3:43 p.m.
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