Legislature(1995 - 1996)
02/16/1995 01:45 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
FEBRUARY 16, 1995
1:45 P.M.
TAPE HFC 95 - 22, Side 1, #000 - end.
TAPE HFC 95 - 22, Side 2, #000 - end.
TAPE HFC 95 - 23, Side 1, #000 - #075.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:45 P.M.
PRESENT
Co-Chair Hanley Representative Kohring
Representative Martin Representative Therriault
Representative Brown Representative Kelly
Representatives Grussendorf, Parnell, Mulder, Foster and
Navarre were not present for the meeting.
ALSO PRESENT
Mike Greany, Director, Legislative Finance Division; Nancy
Slagle, Director, Division of Budget Review, Office of
Management and Budget; Representative John Davies; Michael
Nizich, Director, Division of Administrative Services,
Office of the Governor; Sharon Barton, Director, Division of
Administrative Services, Department of Administration; Mike
McMullen, Acting Director, Division of Personnel, Department
of Administration; Eric Swanson, Budget Analyst, Division of
Administrative Services, Department of Administration; Brant
McGee, Director, Office of Public Advocacy, Department of
Administration, (Testified Via Teleconference); John Salemi,
Director, Public Defender, Public Defender Agency,
Department of Administration, (Testified Via
Teleconference); Richard Pegues, Director, Division of
Administrative Services, Department of Law; Barbara Ritchie,
Deputy Attorney General, Civil Division, Department of Law;
Robert Baratko, Director, Division of Administrative
Services, Department of Revenue; Mary Sutton, Finance
Officer, Division of Administrative Services, Department of
Revenue.
SUMMARY
HB 137 An Act making supplemental appropriations for
operating expenses of state government for fiscal
year 1995; and providing for an effective date.
1
HB 137 was HELD in Committee for further
discussion.
HOUSE BILL 178
"An Act making supplemental and special appropriations
for the expenses of state government; making and
amending capital and operating appropriations; and
providing for an effective date."
Following comments by Co-Chair Hanley, Representative Brown
asked if it was procedurally correct for the Committee to
consider HB 178. She pointed out no public notice had been
given and that the public should be given the opportunity to
testify. Co-Chair Hanley reassured the Committee that the
public would be given the opportunity to comment on that
legislation.
HOUSE BILL 137
"An Act making supplemental appropriations for
operating expenses of state government for fiscal year
1995; and providing for an effective date."
Co-Chair Hanley provided the Committee with a copy of the
Governor's FY95 Supplemental Requests update, 2/15/95 (2:45
P.M.). [Attachment #1].
NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, advised that
Office had received confirmation on federal participation
for the flood disaster in the amount of an 85% federal share
toward the public assistance portion.
OFFICE OF THE GOVERNOR
MICHAEL NIZICH, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, OFFICE OF THE GOVERNOR, addressed Section #1,
Division of Elections request in the amount of $212.2
thousand dollars to cover additional costs resulting from
the Governor's race in the amount of $77 thousand dollars.
Also unbudgeted was overtime costs in the amount of $48
thousand dollars. He added, the primary request resulted
from an in-house ballot tabulation system request in the
amount of $170 thousand dollars.
Mr. Nizich noted that at the beginning of the fiscal year,
the in-house tabulation system began from a request through
the Office of the Lt. Governor. The system network was run
in an effort to achieve better functioning of the mainframe
for ballot counting. Representative Brown voiced that the
system had not been an improvement and asked for a break-
2
down of the system costs. Representative Therriault asked
the impact to that component without supplemental funding.
Mr. Nizich replied, that the Division has a current court
order to oversee two REA elections and there is a $30
thousand dollar need for mailings due by the end of the year
for which the Division is obligated.
DEPARTMENT OF ADMINISTRATION
Ms. Slagle addressed Section #2, the Department of
Administration's request in the amount of $36.7 thousand
dollars for RATNET to maintain full-year service. She noted
that the Legislative Budget and Audit Committee (LBA) has
given approval in the amount of $20 thousand dollars. Co-
Chair Hanley asked if there would be an update on the status
of the three week layoff due to the cable break.
SHARON BARTON, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF ADMINISTRATION, explained that the
breakdown will save the State money, although the figure is
not currently available. The rebate will reduce the
supplemental request. Without the supplemental approval,
RATNET would be off the air approximately two weeks.
Representative Kohring asked if RATNET was an essential
service. Ms. Barton advised that RATNET is a critical
service which keeps rural Alaska informed. Representative
Brown added, RATNET is a portion of the emergency
broadcasting system available to village Alaskan
communities.
BRANT MCGEE, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
OFFICE OF PUBLIC ADVOCACY, DEPARTMENT OF ADMINISTRATION,
testified in support of Section #3 supplemental request in
the amount of $530 thousand dollars for the Office of Public
Advocacy (OPA) to maintain services. The request will be
exclusive to cover supplemental costs for the current
caseload in that Office.
JOHN SALEMI, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
PUBLIC DEFENDER, PUBLIC DEFENDER AGENCY, DEPARTMENT OF
ADMINISTRATION, testified in support of Section #4
supplemental request in the amount of $125 thousand dollars
for the Public Defender Agency to maintain services. Last
year, FY94, the Agency represented 17,000 cases with fifty-
eight lawyers on staff. He pointed out that many of the
expert witnesses required to be used in serious felony cases
must come from out-of-state. Also, there are no labs in
Alaska that can provide DNA testing. Mr. Salemi asserted
that the State's high case load requires additional funding.
Representative Brown asked if the FY95 budget was
underfunded. Mr. Salemi emphasized that it had been.
3
Ms. Barton spoke to Section #5 supplemental request in the
amount of $37.5 thousand dollars for Elective Public Office
Retirement System (EPORS), retirement of one legislator and
increased insurance costs. That person was eligible on
February 1, 1995 and that request would cover costs for that
person. The remaining funds would cover the increased 3%
health insurance costs covered for the program.
Representative Therriault requested further information on
that program.
ERIC SWANSON, BUDGET ANALYST, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF ADMINISTRATION, noted that the
edibility for the 3% health insurance increase would be
negotiated on a month by month basis. Ms. Barton added, the
cost for the retiree would amount to $2500 dollars per
month, which would include health insurance costs. Mr.
Swanson reiterated, $26 thousand dollars of the request
would go toward health insurance costs; the remainder would
cover the newly retired person.
Ms. Barton spoke to Section #6 supplemental request in the
amount of $93.0 thousand dollars for leasing and those
increased costs with current leases. She added, the long
term revenue generated for the State would be $19 million
dollars cost savings. This year was a $1.7 million dollar
cost savings.
Ms. Barton proceeded with Section #7 supplemental request in
the amount of $49.5 thousand dollars, Alaska Public Offices
Commission (APOC) costs for a full APA hearing in the case,
State versus Gravo. That hearing must be accomplished by
June 14, 1995, and the cost estimates for the hearing
officer was provided by the Department of Law.
Representative Brown questioned if those costs could be
absorbed by a current employed attorney addressing the case.
Ms. Barton replied that APOC has no one qualified on staff
to direct that hearing. APOC has been advised by the
Department of Law that a professional attorney should be
hired; this case will establish a precedent in that area.
Ms. Barton concluded, Section #8 of the supplemental request
for the amount of $139.6 thousand dollars, Division of
Personnel/Labor Relations which would reduce backlogged
arbitrations. The Division has currently been challenged by
the courts to deal with the arbitration backlog. The
Division has developed a five point plan. Additional staff
and funds are needed to address with the current crisis.
Six new positions are being requested. Ms. Barton stated
the claims are labor contract issues by employees against
their employer.
4
MIKE MCMULLEN, ACTING DIRECTOR, DIVISION OF PERSONNEL,
DEPARTMENT OF ADMINISTRATION, advised that some of the cases
date back to FY89. He added, the cases have been
prioritized according to State liability. Representative
Brown asked if the requested positions would be temporary
hires. Mr. McMullen responded that based on the volume of
work during the past eleven years, six new positions appear
to be needed in order for the Department to function
adequately, henceforth.
Representative Kelly asked why the request was placed in the
supplemental budget rather than the FY96 operational budget.
Mr. McMullen replied that there are currently more cases
than the division can process. The supplemental
appropriation could allow the division to start the process
by April 1, 1995 rather than waiting until July 1, 1995.
Ms. Barton pointed out that the Division has been criticized
by the State court for not addressing the issue earlier.
(Tape Change, HFC 95-22, Side 2).
DEPARTMENT OF LAW
BARBARA RITCHIE, DEPUTY ATTORNEY GENERAL, CIVIL DIVISION,
DEPARTMENT OF LAW, testified in support of Section #9 in the
amount of $1.8 million dollars for the Weiss versus the
State of Alaska case. This amount would cover projections
for the plaintiff costs in the Mental Health Lands Trust
case.
Co-Chair Hanley asked if the State was paying for both sides
of the case. Ms. Ritchie stated that the cost request are
anticipated on the basis that the court will uphold the
settlement.
RICHARD PEGUES, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF LAW, noted that the amount at the
time of appeal was $893 thousand dollars. The amount that
has been approved for the non settling plaintiffs was $872
thousand dollars; the amount for the settling plaintiffs was
$312 thousand dollars. [Attachment #2].
Ms. Ritchie testified in support of Section #10 in the
amount of $500 thousand dollars to be used for the U.S.
Department of Health and Human Services to fund judgments to
settle outstanding claims for FY93 & FY94 resulting from
inappropriate charges made for cost allocation plans.
Ms. Ritchie spoke to Section #11 in the amount of $494
thousand dollars for Judgments and Claims for various cases
before the State with the exception of the Weiss case. Ms.
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Ritchie provided a breakdown of judgments to the Committee.
[Attachment #3].
Ms. Ritchie explained Section #12 in the amount of $50
thousand dollars litigation costs associated with the
challenge to the '94 elections. This request would cover
attorney fees resulting from recent litigation.
Representative Therriault questioned the hourly rate paid to
the attorneys in question. Mr. Pegues advised that rate
varied between $80 per hour - $106 per hour.
DEPARTMENT OF REVENUE
ROBERT BARATKO, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF REVENUE, spoke to Section #13, in
the amount of $33.8 thousand dollars for the Charitable
Gaming task force meetings. The request is dictated by the
requirement of the Department to support a thirteen member
task force appointed by Governor Knowles to address
Charitable Gaming. The expenses include the travel, per
diem, and the administrative support system.
Co-Chair Hanley pointed out that the new Governor had
appointed the task force to address this concern. Mr.
Baratko noted that the task force was organized to survey
charitable gaming in the State in order to insure that the
charities received the appropriate amount of revenues from
the amount generated from gaming. Representative Brown
asked if a task force was the most appropriate way to gather
the needed information. Mr. Baratko advised that there are
a number of regulations that are in court at this time
pertaining to audit capabilities and requests for
information from the operators. He added, the function of
the task force will be to review the regulations.
Mr. Baratko continued, the members of the task force have
been named and the meeting dates are firm. Co-Chair Hanley
stated that he will encourage members of the Committee to
vote against these type of policy calls. Representative
Kohring recommended that the money be deducted from the
Commissioner's travel budget. Mr. Baratko replied that
funds can not be transferred across the lines within the
Department.
Mr. Baratko spoke to Section #14 in the amount of $15
thousand dollars for the Alcohol Beverage Control (ABC)
Board hearing on a license denial. He added, that ABC
denied an application and an individual appealed that
decision; now the ABC Board has appointed an hearing officer
who wants to hold a hearing request. Representative Martin
stressed that $15 thousand dollars was too much for one
6
hearing. He suggested that the hearing could occur by
teleconference. Mr. Baratko reiterated that the Division
does not have the money to pay for the scheduled hearing.
Mr. Baratko continued, Section #15 supplemental request in
the amount of $259.5 thousand dollars for the debt
management and custodial fees previously netted against
earnings and bond sales. Co-Chair Hanley asked which fund
pays for those accounts. Mr. Baratko understood that they
would be general funds, coming to the State as surplus after
payments from the bond portion. Representative Therriault
asked if this was a funding source change.
MARY SUTTON, FINANCE OFFICER, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF REVENUE, explained that the security
lending portion originates where funds are invested and then
further borrowed by someone else. The State then receives
102% return on the loan. In the above case, the desire for
that borrowing has not existed, therefore, there is not
income that has been attributed to funds yet and the amount
of debt that has been issued has been minimized. Therefore,
the costs that might have been absorbed by the debt issuance
is not existing. This was not a budgeted item; it was
removed from the budget several years ago. She added, the
request would change a mechanism in the report budgeting.
Ms. Sutton spoke to Section #16 supplemental request in the
amount of $91.1 thousand dollars for the Permanent Fund
Division (PFD) data processing. She pointed out that the
PFD anticipated a shortfall for data processing charge back
fees. These fees are to be paid to the Department of
Administration. The cost would cover the conversion of
programs, following the conversion, a savings for FY96 would
exist. Representative Brown asked for further backup
material on the request. Ms. Sutton offered to provide that
material to the Committee.
Mr. Baratko testified on Section #17 in the amount of $283.1
thousand dollars for the Alaska Mental Health Trust
Authority in order to implement costs not in the fast-track
supplemental.
Representative Kohring remarked that HB 173 would allocate
$300 thousand dollars for establishing the Authority and the
supplemental requests an additional amount of $283 thousand
dollars for implementing the Authority.
(Tape Change, HFC 95-23, Side 1).
Mr. Baratko pointed out that those would be funds taken from
the interest of the corpus, and if those funds are not used
they would be returned to the Authority.
7
Co-Chair Hanley provided a copy of a letter sent to Annalee
McConnell, Director, Office of Management and Budget,
requesting a list of the projected surplus' projects
anticipated to reduce the net impact of the proposed budget
supplemental. [Attachment #4].
HB 137 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 3:15 P.M.
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