Legislature(1993 - 1994)
04/30/1994 10:10 AM 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
April 30, 1994
10:10 a.m.
TAPE HFC 94-146, Side 2, #000 - end.
TAPE HFC 94-147, Side 1, #000 - end.
TAPE HFC 94-147, Side 2, #000 - end.
TAPE HFC 94-148, Side 1, #000 - 547.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee to order
at 10:10 a.m.
PRESENT
Co-Chair Larson
Co-Chair MacLean Representative Grussendorf
Vice-Chair Hanley Representative Martin
Representative Brown Representative Parnell
Representative Foster Representative Therriault
Representatives Hoffman and Navarre were not present for the
meeting.
ALSO PRESENT
Bruce Bothelo, Attorney General, Department of Law; Tom
Koester, Independent Counsel, Department of Law; Harry Noah,
Commissioner, Department of Natural Resources; Jeff Jessee,
Advocacy Beneficiaries of Alaska, Anchorage; David Walker,
Attorney, Representing Weiss versus State of Alaska, Juneau;
Phillip Volland, Attorney, Mental Health Clients-Alcohol
Related, Anchorage; Jim Gottstein, Attorney, Alaska Mental
Health Association; Loren Jones, Director, Division of
Alcoholism and Drug Abuse, Department of Health and Social
Services; Deborah Smith, Executive Director, Alaska Mental
Health Board; Jay Hogan, Contract, House Finance Committee;
Tom Waldo, Attorney, Public Interest Interveners.
SUMMARY INFORMATION
HB 201 "An Act amending provisions of ch. 66, SLA 1991, that
relate to reconstitution of the corpus of the mental
health trust, the management of trust assets, and to
the manner of enforcement of the obligation to
compensate the trust; and providing for an effective
date."
CSHB 201 (FIN) was reported out of Committee with a
"do pass" recommendation and with a fiscal impact note
by the Department of Law; and with four fiscal impact
notes by the House Finance Committee, two for the
Department of Health and Social Services, one for the
Department of Natural Resources, and one for the
Department of Administration.
HB 371 "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."
CSHB 371 (FIN) was reported out of Committee with a
"do pass" recommendation and with five fiscal impact
notes, one by the Department of Law; and four by the
House Finance Committee.
HOUSE BILL NO. 201
"An Act amending provisions of ch. 66, SLA 1991, that
relate to reconstitution of the corpus of the mental health
trust, the management of trust assets, and to the manner
of enforcement of the obligation to compensate the trust;
and providing for an effective date."
Co-Chair Larson provided members with a proposed Finance
Committee Letter of Intent (copy on file).
LETTER OF INTENT
for
Finance Committee Substitute for HB 201
It is the intent of the Legislature to finally resolve the
mental health land trust litigation, Weiss v. State, 4FA-
82-2208 Civil, by reconstituting a mental health trust
under the Alaska Mental Health Enabling Act, P.L. 84-830,
70 Stat. 709 (1956), as required by the Alaska Supreme
Court in State v. Weiss, 706 P.2d 681 (Alaska 1985). At
the same time, it is the intent of the Legislature to do
that (1) without prejudicing individual Alaskans, Native
corporations, and municipalities to whom the state has
conveyed land obtained under the Enabling Act, and (2)
without removing land obtained under the Enabling Act from
legislatively designated areas like parks and wildlife
refuges and the control of state agencies to which it has
been transferred or assigned.
To accomplish these varied and seemingly incompatible
goals, the Legislature is exercising a number of the powers
given to it by the Enabling Act and the Alaska
Constitution. The purpose of this letter of intent is to
identify some, but not necessarily all, of those powers,
and to explain how the identified powers are being
exercised to reconstitute the trust, to remove land from
trust status and validate the actions taken with respect
to that land, and to compensate the trust for the land
removed from trust status.
Section 202(e) of the Enabling Act authorizes the
Legislature to provide for management and use of the land.
It also provides for the land to be "sold, leased,
mortgaged, exchanged, or otherwise disposed of ... in order
to obtain funds or other property to be invested, expended,
or used" by the state for the purposes of the Act.
Article VIII, sec. 2 of the Alaska Constitution requires
the Legislature "to provide for the utilization,
development, and conservation of all natural resources
belonging to the state, including land, for the maximum
benefit of the people." The Alaska Supreme Court in State
v. University, 624 P.2d 807 (Alaska 1981), held that art.
VIII, sec. 2 authorizes the Legislature to remove land from
trust status if the trust is fairly compensated for the
land removed.
The Legislature intended to exercise that power in ch. 181
and 182, SLA 1978, but the Alaska Supreme Court held the
1978 legislation invalid in the Weiss decision. In
Fairbanks North Star Borough v. State, 753 P.2d 1158
(Alaska 1988), however, the Alaska Supreme Court held that
the Legislature may cure an earlier invalid act and
validate actions taken under it, and noted that "[c]ourts
have uniformly upheld the validity of curative legislation
if (1) the Legislature originally had the power to
authorize the acts done, and (2) there is no constitutional
impairment of vested rights as a result of the act's
passage."
Under art. VIII, sec. 2 of the Alaska Constitution, there
is no question that the Legislature has the power to remove
land from the mental health trust, and under the Enabling
Act there is no question that the compensation to the trust
can be either money (under the authorization to sell) or
land (under the authorization to exchange). The current
legislation thus ratifies and confirms the 1978 removal
from trust status of certain land obtained by the state
under the Enabling Act, and compensates the trust with land
that will be managed as the Enabling Act requires and money
that will first be used for mental health programs as the
Enabling Act requires.
In returning some land to trust status and providing for
its management by the Department of Natural Resources
consistently with the requirements of the Enabling Act and,
to the extent they are consistent with the Enabling Act,
the statutes governing management of other state land, the
Legislature is (1) exercising its power under the Enabling
Act to provide for the management and utilization of mental
health trust land, (2) discharging its obligation under the
Enabling Act to provide that the land is administered as
"a public trust," and (3) exercising its power under art.
VIII, sec. 2 of the Alaska Constitution to provide for the
utilization, development, and conservation of state land
for the maximum benefit of all Alaskans. The intent of the
Legislature in doing so is to ensure that the land is
administered as required by the Enabling Act and, to the
extent permitted by the Enabling Act, that other public
interests in the land are taken into consideration and
accommodated.
In ratifying and confirming the 1978 removal from trust
status of some land obtained by the state under the
Enabling Act and validating the actions taken with respect
to that land, the Legislature is exercising its powers (1)
under the Enabling Act to sell, lease, mortgage, exchange,
or otherwise dispose of the land, (2) under art. VIII, sec.
2 of the Alaska Constitution as interpreted by the Alaska
Supreme Court in the University case to remove land from
trust status, and (3) to enact curative legislation as
described by the Alaska Supreme Court in the Fairbanks
North Star Borough case.
To the extent it was not accomplished by the 1978
legislation and the ratification and confirmation of that
legislation, in removing from trust status land obtained
by the state under the Enabling Act since 1978, the
Legislature is exercising its powers (1) under the Enabling
Act to sell, lease, mortgage, exchange, or otherwise
dispose of the land, and (2) under art. VIII, sec. 2 of
the Alaska Constitution as interpreted by the Alaska
Supreme Court in the University case to remove land from
trust status.
In validating all actions with respect to the land removed
from trust status, the Legislature is (1) exercising its
power and discharging its responsibility under art. VIII,
sec. 2 of the Alaska Constitution to provide for the
utilization, development, and conservation of state land
for the maximum benefit of all Alaskans, (2) exercising its
power under the Enabling Act to provide for the sale,
lease, exchange, or other disposal of the land, and (3)
discharging its responsibility under the Enabling Act to
act in a way that benefits the beneficiaries of the trust
by bringing this controversy to an end and making it less
likely that continuing the litigation will result in a
backlash against the mental health community and make it
increasingly difficult for its supporters, including those
in the Legislature, to obtain appropriations of
unrestricted state revenue to fund the state's mental
health program.
The Legislature is aware that there has been a significant
difference of opinion about the value of the original one
million acre mental health land grant. In the
Legislature's view, the values used in determining the
amount of compensation the trust should receive for land
removed from trust status -- values that in large part
reflect the mental health plaintiffs' views -- are
substantially higher than fair market value (i.e., the
price a willing buyer would pay a willing seller),
particularly with respect to the subsurface mineral
estate.
The state since 1978 has spent far more on the state's
mental health program than the true fair market value of
the land removed from trust status. Nonetheless, to
eliminate any question about the fairness of the
compensation provided, the Legislature has considered the
very high values that the plaintiffs give to the land not
returned to the trust. The plaintiffs' value for original
mental health trust land not returned to the trust is
between $900 million and $1.4 billion, roughly twice the
value placed on that land by the Department of Natural
Resources ("DNR"). The DNR value for the land is $656
million, of which $473 million is the value of the surface
estate, $173 million is the value of the mineral estate
not including oil and gas, and $10 million is the
plaintiffs' oil and gas value.
The value of the state land designated as mental health
trust land to replace land not returned to the trust is,
by both the plaintiffs' and the state's calculations, more
than $200 million. As a result, even using the plaintiffs'
values, the state's maximum monetary liability to the trust
for land not returned to trust status cannot exceed $1.2
billion ($1.4 billion, the plaintiffs' highest value for
the land not returned, minus the $200 million for the
replacement land), which is $100 million less than the $1.3
billion set-off for past mental health expenditures
authorized by the Alaska Supreme Court. And, even if the
$1.3 billion set-off is not taken into account, the state's
monetary liability to the trust for the land not returned
to trust status will be satisfied by virtue of the $100
million per year allocation of funds to the trust to be
expended on mental health programs as required by the
Enabling Act. By any measure, in other words, the trust
is being more than fairly compensated for the land not
returned to it.
Finally, under the Enabling Act, the Legislature has the
responsibility to determine both the programmatic aspects
of the mental health program of Alaska and the level of
funding to pay for it. Under art. VII, secs. 4 and 5 of
the Alaska Constitution, the Legislature has the
responsibility to "provide for the promotion and protection
of public health" and to "provide for public welfare,"
again calling for decisions regarding both the program and
its funding.
Since statehood, the Legislature has discharged both its
Enabling Act and constitutional responsibilities by
establishing and maintaining a mental health program and
funding it at levels that, as both the Enabling Act and the
Alaska Constitution permit, substantially exceeded both the
revenues from mental health land, as the Alaska Supreme
Court noted in the Weiss decision, and the absolute legal
minimum required by the Alaska Constitution. In the words
of the Enabling Act, however, all of these expenditures
comprise the "necessary expenses of the mental health
program of Alaska." Based on a review of actual amounts
expended, moreover, the Legislature has determined that
state expenditures for the state's mental health program
have totalled more than $1.3 billion from fiscal year 1979
through fiscal year 1994.
In making this determination, the Legislature is mindful
that Congress in the Enabling Act vested responsibility for
both the substantive provisions of Alaska's mental health
program and the decisions as to amounts to be spent in the
Alaska Legislature. As stated in Sen. Rep. No. 2053, 84th
Cong., 2d Sess. (May 25, 1956), reprinted in 1956 U.S. Co
Cong. & Admin. News 3637 ("Senate Report"), the Senate
struck all of the detailed program provisions in the bill
that passed the House of Representatives, "leaving it up
to the people of Alaska to enact their own mental-health
program." The people's power to enact such a program --
i.e., to legislate on the subject -- is vested in the
Legislature under art. II, sec. 1 of the Alaska
Constitution.
The Enabling Act, moreover, divested the federal government
of both fiscal and functional responsibility for the mental
health program in Alaska, and provided in the words of the
Senate Report for Alaska to "assume full responsibility for
enactment of commitment, hospitalization, and care
procedures, and gradually assume responsibility for all
costs" of the program. Under art. IX, sec. 13 of the
Alaska Constitution, no money may be withdrawn from the
state treasury except in accordance with legislative
appropriations.
In terms of revenues from the land grant, the Senate Report
noted that "[a]mounts not needed for the mental health
program can be used for other public purposes as the
Legislature may determine." And the managers in the House
of Representatives accepted a Senate amendment "which
broadens the use of the revenues for use of the Alaska
mental-health program rather than [only] for the
hospitalization and care of the mentally ill in Alaska."
Conference Report No. 2735, 84th Cong., 2d Sess. (July 17,
1956), reprinted in 1956 U.S. Code Cong. & Admin. News
3659.
In light of Congress' intent that the Alaska Legislature
take the lead role in determining the mental health program
of Alaska, and the Alaska Constitution's vesting of
spending authority in the Legislature, it is only
appropriate that the Legislature determine the amount spent
in the past on the state's mental health program. As
noted, from fiscal year 1979 through fiscal year 1994, that
amount totals more than $1.3 billion.
The Legislature respectfully requests that any court
reviewing the Legislature's actions with respect to
resolving the mental health land trust litigation, Weiss
v. State, 4FA-82-2208 Civil, give appropriate consideratio
to these principles underlying the Legislature's actions.
TOM KOESTER, OUTSIDE COUNSEL, DEPARTMENT OF LAW explained that
the purpose of the draft letter of intent is to set out the
constitutional and federally created statutory powers, given
to the legislature, that HB 201 employs, in regards to seeking
the state's obligation under the federal law and the Supreme
Court's Weiss decision to reconstitute the Mental Health Lands
Trust.
Mr. Koester summarized the contents of the draft letter of
intent. He emphasized the need for the legislature to
understand the legal analysis used to concluded that HB 201
satisfies the state's obligation. He stressed that the
legislature is properly exercising powers given by the United
States Enabling Act and the Alaska State Constitution.
Mr. Koester noted that a technical amendment is needed on page
20, line 7 to change "board" to "department." He added that
the status of two land parcels on the land list were
inadvertently reversed. The status of parcels 3171 and 3166
will be reversed by addendum. He explained that one of the
parcels contains the Herring Cove hatchery. The second parcel
is vacant. The intent is for the vacant parcel to go into the
trust.
In response to a question by Representative Brown, Mr.
Koester calculated that if all parties cooperate and an
expedited schedule is adopted by the court then resolution
could take place prior to December 15, 1994. He stressed that
litigation by any party would prevent the final determination
from occurring prior to December 15, 1994. The incentive
package will not take place if the December 15, 1994 deadline
is not met.
Mr. Koester emphasized that reconstitution, under HB 201,
addresses third party purchasers. He clarified that the
incentive package only affects the mental health community.
He stressed that the incentive package is not required by
federal law. The incentive package is designed to encourage
early dismissal of the case. He observed that in the state's
view the reconstituted trust will resolve third party
purchases. He accentuated that the state intends to move to
dismiss the case and dissolve the preliminary injunction in
order to relieve the third party purchasers.
Representative Brown maintained that the December 15, 1994
deadline does not provide sufficient time for Supreme Court
review regarding the power of appropriation.
Mr. Koester stressed that the legal questions surrounding the
power of appropriation have nothing to do with efforts to
reconstitute the Trust. He emphasized that plaintiffs have
requested the power of appropriation in return for early
dismissal. He acknowledged that there are legal questions
regarding the state's ability to give the plaintiffs the power
of appropriation, in regards to the Trust. He noted that the
state will defend the plaintiffs power of appropriation, if
there is an early dismissal. He emphasized the state's belief
that a good faith defense can be made. He conceded that early
dismissal will result in legal uncertainty, in regards to the
plaintiffs power of appropriation of the Trust. He noted that
the state cannot guarantee the court will sustain their power
of appropriation.
Representative Brown asked why the Trust is only preserved in
perpetuity if the incentive provisions take effect. Mr.
Koester explained that the state does not see any reason to
include the incentive package if there is no early dismissal.
He stressed that the state must meet its obligation under
federal law. He noted that federal law states that "lands
granted to the state and the income of the proceeds from any
dispositions shall be administered as a public trust and
proceeds shall first be used to meet the necessary expenses
of the mental health program of Alaska." He summarized that
if mental health lands are sold, federal law states that the
proceeds must first be spent on mental health programs. He
stressed that HB 201 satisfies the state's obligation under
federal law. If plaintiffs agree to an early dismissal the
state has agreed to preserve proceeds from the sale of mental
health lands, to yield mental health permanent fund earnings
to be spent on mental health programs. He maintained that
both options are available to the legislature under federal
law. He underscored that, in the case of an early dismissal,
it is in the public's interest to create the permanent fund
that will earn money which can be spent on mental health
programs in the future. He concluded that if there is no
early dismissal the state should fulfill the obligations of
federal law.
Representative Brown summarized that the legislation, absent
the incentive package, fully discharges the state's
responsibility as trustee and will be upheld by the court.
Mr. Koester agreed with Representative Brown's synopsis.
Mr. Koester argued that the incentive package deadline is not
coercive. He reiterated that it is not part of the state's
obligation. He observed that the Department of Law is not in
a position to call the legislature in to ratify terms of an
agreement. He noted that the Department of Law has not been
able to fully implement previous laws passed by the
legislature, in regards to mental health lands, due to
objections from one or more involved parties. He stressed
that the state is holding out additional benefits in order to
entice plaintiffs to agree to an early dismissal. He
maintained that the incentive package is fair to the state and
its constituent citizens as well as to mental health
plaintiffs.
In response to a question by Representative Brown, Mr. Koester
stated that the land list will be final with the addition of
an addendum regarding parcels 3171 and 3166. He noted that
precise legal descriptions are not included. Parcels are
referenced by parcel number and by reference to other
documents. He noted that the legislation allows adjustment
for precise legal descriptions.
Representative Brown questioned if surface owners have been
notified that subsurface rights are being transferred.
HARRY NOAH, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES
observed that surface owners of property with subsurface
rights being transferred have not been identified or notified.
Commissioner Noah discussed the notification of surface
owners. He observed that compensation for disturbances to the
property of surface owners would require approval by the
owner. Any disagreements would be adjudicated by the
Commissioner of the Department of Natural Resources.
Representative Brown expressed concern with the lease and
management of subsurface rights by the Trust. Commissioner
Noah emphasized that many of the subsurface lands were
original mental health trust lands.
TOM WALDO, ATTORNEY, PUBLIC INTEREST INTERVENERS testified in
support of HB 201. He represents a coalition of five
environmental groups who opposed the Chapter 66 settlement.
He discussed the group's opposition to Chapter 66. He
commented that there was no public notice regarding substitute
land going into the Trust under Chapter 66.
Mr. Waldo discussed the proposed settlement under HB 201. He
stressed that the Department of Natural Resources responded
to concerns regarding land going into the trust and management
of trust land. He observed that, with the exception of two
subsurface rights, there are no state forest, parks or other
legislatively designated areas entering the trust. He noted
that HB 201 requires the Department of Natural Resources to
comply with other state laws governing management of state
lands, to the extent consistent with the Mental Health
Enabling Act. He emphasized that the lands can be managed
through the public planning process to protect the multiple
purpose uses of the state public lands.
In response to a question by Representative Brown, Mr. Waldo
discussed management under the federal public trust
requirement. He concluded that Congress did not wish the
state to ignore the interest of other Alaskans in managing
trust land. He acknowledged that case law is not well
defined.
(Tape Change, HFC 94-147, Side 1)
DAVID WALKER, ATTORNEY, MENTAL HEALTH PLAINTIFF alleged that
the legislation is designed to restrict the abilities of the
beneficiaries. He maintained that the letter of intent makes
assertions that have no basis in fact.
Co-Chair Larson noted that members were provided with
AMENDMENT 4 (copy on file).
PHILLIP VOLLAND, ATTORNEY, MENTAL HEALTH PLAINTIFFS explained
that Amendment 4 contains technical changes to Chapter 66.
Mr. Volland spoke in opposition to the adoption of the draft
letter of intent. He disputed findings outlined in the
letter.
Mr. Volland spoke in support of HB 201. He indicated that his
clients wish to receive the incentive package.
Representative Brown referred to a proposed amendment to HB
371 providing that: "The net income by the mental health
trust fund is appropriated to the mental health trust income
account for uses authorized in AS 37.14.041.
Mr. Volland observed that the amendment was not requested by
plaintiffs. He noted that the amendment may cure a potential
legal defect in regards to the power of appropriation.
Mr. Volland acknowledged that the December 15, 1994 deadline
for resolution would be tight. He stated that plaintiffs
attempted to insert a longer time period. He emphasized that
the court must have a hearing and issue a ruling on the
underlying issue, prior to December 15, 1994, and appeals must
be finalized. He stressed that the case must immediately come
before the court to initiate proceedings. He interpreted the
legislation to incorporate the resolution of appeals. He
understood that if no appeals had been taken by a certain
period of time than provisions would immediately go into
effect. If an appeal has been taken then the appeal must be
resolved prior to the December 15, 1994 deadline.
Representative Brown questioned if language in the legislation
would allow appeals to have taken place. Mr. Volland noted
that there is no way the court can prevent an unnamed class
member from appealing an issue. Mr. Volland clarified that
if there are any appeals pending after December 15, 1994, the
settlement portion of the legislation would not be effective.
JIM GOTTSTEIN, ATTORNEY, ALASKA MENTAL HEALTH ASSOCIATION
suggested that if the state agrees that an appeal can be
taken, than page 20, lines 25 and 26 should be amended to
read, "all appeals have been concluded." He interpreted the
current language to prevent a Supreme Court ruling in regards
to the endowment compensation and appropriation issue. He
asserted that the December 15, 1994 deadline is virtually
impossible.
Mr. Gottstein noted that questions remain regarding how to
notice beneficiaries of the Trust. He suggested that the
deadline be extended to allow legislative review at the start
of the next legislative session. He emphasized that the
legislature could extend the deadline if the case is
proceeding.
DEBORAH SMITH, EXECUTIVE DIRECTOR, MENTAL HEALTH BOARD
discussed Amendment 4. She explained that the amendment
contains minor corrections to Chapter 66 to clarify the
relationship between the four beneficiary boards and the
Mental Health Trust Authority. The Older Alaskans' Commission
would be given the responsibility to plan for Alzheimer and
mentally ill patients. It clarifies that the Alcohol Board
plans for chronic alcoholics with psychosis. It also reduces
the Mental Health Board from 24 to a maximum of 16.
Co-Chair Larson ascertained that there were no objections from
individuals representing concerned parties.
In response to a question by Representative Hanley, Ms. Smith
discussed section 46. She noted that section 46 contains
transitional provisions to provide continuity. Sections 47
and 48 pertain to the adoption of the incentive package.
Representative Martin expressed concern with the reduction of
the Alaska Mental Health Board. Ms. Smith clarified that the
Mental Health Board requested the reduction from 24 to 16
members.
Mr. Koester expressed concern that the sections referenced in
Amendment 4 are accurate.
LOREN JONES, DIRECTOR, ALCOHOLISM AND DRUG ABUSE SERVICES,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES discussed the
Department of Health and Social Services' fiscal note. He
noted that Chapter 66 changed the duties and responsibility
of the Advisory Board on Alcoholism and Drug Abuse. The size
of the Board was increased and the Board was authorized to
hire its own staff separate from the Division. Funding
authorized for these changes was taken out by the Office of
Budget and Management when it became evident that Chapter 66
would not be the settlement vehicle. He noted that if HB 201
becomes effective then that portion of Chapter 66 which gives
the Advisory Board authority to hire staff and be separate
from the Division takes effect. The fiscal note supports the
implementation of that portion of Chapter 66. Discussion
pursued regarding staff and member composition of the four
beneficiary boards.
(Tape Change, HFC 94-147, Side 2)
Mr. Jones stressed that Chapter 66 allows the Alcoholism and
Drug Abuse Board to give advise to the legislature, governor
and state agencies. He noted that the legislature felt that
the Board should be separate from the executive branch. He
stressed that the fiscal note would implement current law.
Representative Hanley stressed that the law has not been
implemented. He suggested that the fiscal note for FY 95
should reflect that settlement would not take place until
December 15, 1994.
Mr. Jones observed that funds cannot be spent until a
settlement takes place. He noted that the fiscal note
reflects the full base cost. He maintained that staff would
not be hired until the law is effected.
Co-Chair MacLean suggested that the FY 95 fiscal note be zero.
Representative Brown expressed concern with the number of
advisory boards. Mr. Jones observed that the legislature
created four boards with the adoption of Chapter 66. He noted
that there are four beneficiary groups supported by four
agencies; the Older Alaskans Commission, Division of Mental
Health, Governor's Council on Disabilities and Special
Education, and the Division of Alcoholism and Drug Abuse. He
emphasized that the Alcoholism and Drug Abuse Board is the
only board currently without staff.
Representative Martin suggested that the boards be
consolidated.
Co-Chair MacLean MOVED to reduce the Department of Health and
Social Services' fiscal note for the Division of Alcoholism
and Drug Abuse, FY 95 to zero. There being NO OBJECTION, it
was so ordered.
Commissioner Noah discussed the Department of Natural
Resources' fiscal note. He noted that an additional $450.0
thousand general fund dollars were added for FY 95. He
explained that the $450.0 thousand dollars were originally
part of the Department's capital projects request. The
request was removed from the capital budget since the
settlement status is unknown.
Representative Hanley pointed out that the capital request was
for $450.0 thousand mental health trust income account
dollars.
Co-Chair MacLean MOVED to change the funding source for $450.0
thousand dollars from the general fund to the Mental Health
Trust Income Account. There being NO OBJECTION, it was so
ordered.
Ms. Smith reviewed the Department of Administration's fiscal
note. She observed that Chapter 66 also effected the duties
and responsibilities of the Older Alaskans Commission. She
reiterated that funding authorized to implement Chapter 66 was
taken out by the Office of Budget and Management when it
became evident that Chapter 66 would not be the settlement
vehicle.
Co-Chair MacLean MOVED to delete funding requested in the
Department of Administration's fiscal note for FY 95. Ms.
Smith emphasized that responsibilities will begin after
December 15, 1994 if settlement takes place. Ms. Smith
suggested that the fiscal note be reduced by half.
Co-Chair MacLean MOVED to AMEND the motion to reduce the FY
95 funding request in the Department of Administration's
fiscal note from $91.9 thousand dollars to $45.9 thousand
dollars. There being NO OBJECTION, it was so ordered.
Ms. Smith discussed the Department of Health and Social
Services' fiscal note, Alaska Mental Health Board. She stated
that the fiscal note will fund the Board's travel. She
advised that the fiscal note could be reduced to reflect a six
month period and smaller board composition. She suggested
that the fiscal note be reduced to $5.2 thousand dollars for
FY 95.
Co-Chair Larson MOVED to reduce the Department of Health and
Social Services' fiscal note request for the Alaska Mental
Health Board to $5.2 thousand dollars in travel for FY 95.
There being NO OBJECTION, it was so ordered.
Representative Hanley observed that the fiscal note request
for the Division of Alcohol and Drug Abuse should also reflect
a half year funding. Ms. Smith agreed that the Alcohol Board
will have responsibilities after December 15, 1994.
Co-Chair MacLean MOVED to increase funding for the Department
of Health and Social Services' fiscal note for the Division
of Alcoholism and Drug Abuse, FY 95 to $150.0 thousand mental
health trust income account dollars. There being NO
OBJECTION, it was so ordered.
Representative Brown restated concerns regarding the tight
time line for settlement. She counseled that the legislature
give discretionary authority to the state to extend the
deadline for a time certain if deliberations are close.
Discussion pursued regarding the ability to reach the December
15, 1994 deadline.
Commissioner Noah assured Representative Brown that the state
will expedite the municipal reselection process.
HB 201 was HELD in Committee for further discussion.
HOUSE BILL NO. 371
"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."
Co-Chair Larson provided members with two proposed committee
substitutes (copies on file). He explained that work draft
from the Earnings Reserve Account and establish a special
account in the Permanent Fund to provide for the endowment.
Work Draft #8-GH2026\E would use a series of appropriations
from the Mental Health Trust Income Account, Department of
Natural Resources, Mental Health Trust Income Account,
Department of Natural Resources land sale contract portfolio,
Alaska Science and Technology Endowment, Constitutional Budget
Reserve Fund or Earnings Reserve Account.
JAY HOGAN, CONTRACT STAFF, HOUSE FINANCE COMMITTEE explained
that the Mental Health Trust Income Account balance will be
$32.2 million dollars at the end of FY 95. He added that
current law allows that any balance from the 6 percent general
fund appropriation to the Mental Health Trust Income Account
can be reappropriated back to the General Fund at the end of
the fiscal year. He noted that money in the Department of
Natural Resources, Mental Health Trust Income Account are
derived from mental health trust land income. He suggested
that the General Fund Mental Health Trust Income Account and
the Department of Natural Resources, Mental Health Trust
Income Account be appropriated in their entirety to lay aside
all question that funding from these accounts were used for
the Mental Health Trust.
Co-Chair Larson counseled that the Committee adopt work draft
Mental Health Trust Income Account - $32.2 million dollars,
Department of Natural Resources, Mental Health Trust Income
Account - $11,957.1 million dollars, Earnings Reserve Account
-$155,842.9 million dollars.
Co-Chair MacLean MOVED to AMEND work draft #8-GH2026\E to
include the following funding sources: Mental Health Trust
Income Account - $32.2 million dollars, Department of Natural
Resources, Mental Health Trust Income Account - $11,957.1
million dollars, Earnings Reserve Account - $155,842.9 million
dollars; delete funding from the Constitutional Budget Reserve
Fund contained on page 2, lines 21 - 23; and incorporate a
title change to reflect the amended funding sources. There
being NO OBJECTION, it was so ordered.
(Tape Change, HFC 94-148, Side 1)
Representative Parnell MOVED to ADOPT work draft #8-GH2026\E
as amended.
Representative Brown provided members with AMENDMENT 1 (copy
on file). Amendment 1 states that: "The net income by the
mental health trust fund is appropriated to the mental health
trust income account for uses authorized in AS 37.14.041. She
argued that the amendment would strengthen the state's legal
case. Mr. Koester agreed that Amendment 1 would strengthen
the legal case.
Representative Brown MOVED to ADOPT AMENDMENT 1. There being
NO OBJECTION, it was so ordered.
Representative Brown provided members with AMENDMENT 2 (copy
on file). Amendment 2 states: "If, on or before November
30, 1994, the Governor determines that it is in the best
interest of the beneficiaries of the mental health trust and
the state that the December 15, 1993 deadline be extended,
the Governor at that time may extend the December 15, 1994
deadline for not more than forty-five days."
Representative Brown explained that the amendment would allow
the Governor to assure that the settlement not expire if the
deadline is not met, but action is proceeding. She clarified
that Amendment 2 would be inserted on page 2.
BRUCE BOTHELO, ATTORNEY GENERAL, DEPARTMENT OF LAW advised
that the possibility of an extension would virtually assure
that the deadline is extended.
Mr. Volland spoke in support of Amendment 2. He accentuated
that it is possible that the deadline cannot be reached
through no fault of any of the involved parties.
Representative Brown MOVED to ADOPT AMENDMENT 2.
Representative Therriault OBJECTED. A roll call vote was
taken on the motion.
IN FAVOR: Brown, Grussendorf, MacLean
OPPOSED: Foster, Hanley, Martin, Parnell, Therriault,
Larson
Representatives Hoffman and Navarre were absent from the vote.
The MOTION FAILED (3-6).
Co-Chair Larson MOVED to ADOPT a title change to HB 371 as
amended to reflect the change in appropriation. There being
NO OBJECTION, it was so ordered.
Co-Chair MacLean MOVED to report CSHB 371 (FIN) out of
Committee with individual recommendations.
CSHB 371 (FIN) was reported out of Committee with a "do pass"
recommendation and with five fiscal impact notes, one by the
Department of Law; and four by the House Finance Committee.
HOUSE BILL NO. 201
"An Act amending provisions of ch. 66, SLA 1991, that
relate to reconstitution of the corpus of the mental health
trust, the management of trust assets, and to the manner
of enforcement of the obligation to compensate the trust;
and providing for an effective date."
Mr. Koester concluded that Amendment 4 was properly drafted
to accurately reflect the intent.
Representative Martin WITHDREW his motion to move CSHB 201
(FIN) from Committee (pending from 4/29/94).
Representative Brown MOVED to ADOPT AMENDMENT 4.
Representative Martin OBJECTED. A roll call vote was taken
on the motion.
IN FAVOR: Parnell, Brown, Foster, Grussendorf, Hanley,
Hoffman, MacLean, Larson
OPPOSED: Martin, Therriault
Representatives Hoffman and Navarre were absent from the vote.
The MOTION PASSED (8-2).
Representative Hanley MOVED to ADOPT a technical amendment on
page 20, line 7 to change "board" to "department." There
being NO OBJECTION, it was so ordered.
Representative Martin MOVED to report CSHB 201 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes.
Representative Brown referred to an amendment suggested by Mr.
Koester to address the ambiguity regarding appeal language.
Representative Brown provided members with AMENDMENT 5 (copy
on file). Mr. Koester explained that Amendment 5 would amend
language on page 20, lines 26 and 31 to add "or any appeals
taken have been finally resolved and the order dismissing
Weiss versus State, 4EA-82-2208 Civil, having been affirmed
on appeal." He asserted that the amendment would improve the
bill and address concerns expressed by Mr. Volland.
Representative Martin WITHDREW his motion to move the bill
from Committee. There being NO OBJECTION, it was so ordered.
Representative Brown MOVED to ADOPT AMENDMENT 5.
Representative Parnell clarified that the case is finally and
conclusively concluded on appeal. If an order has been
affirmed but remanded for consideration and the deadline
passes the incentive provision would not take place.
There being NO OBJECTION, AMENDMENT 5 was adopted.
Representative Martin MOVED to report CSHB 201 (FIN) out of
Committee with individual recommendations. Representative
Brown OBJECTED for purpose of discussion. She emphasized that
a provision should be made to protect the beneficiaries of the
Trust in the event that the process gets bogged down.
Co-Chair MacLean MOVED to report CSHB 201 (FIN) out of
Committee with the accompanying fiscal notes. There being NO
OBJECTION, it was so ordered.
CSHB 201 (FIN) was reported out of Committee with a "do pass"
recommendation and with a fiscal impact note by the Department
of Law; and with four fiscal impact note by the House Finance
Committee, two for the Department of Health and Social
Services, one for the Department of Natural Resources, and one
for the Department of Administration.
ADJOURNMENT
The meeting adjourned at 1:15 p.m.
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