Legislature(1995 - 1996)

02/27/1995 01:40 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                     HOUSE FINANCE COMMITTEE                                   
                        FEBRUARY 27, 1995                                      
                            1:40 P.M.                                          
                                                                               
  TAPE HFC 95 - 31, Side 1, #000 - end.                                        
  TAPE HFC 95 - 31, Side 2, #000 - end.                                        
  TAPE HFC 95 - 32, Side 1, #000 - end.                                        
  TAPE HFC 95 - 32, Side 2, #000 - #165.                                       
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark  Hanley called  the  House  Finance Committee                 
  meeting to order at 1:40 P.M.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Kohring                         
  Co-Chair Foster               Representative Martin                          
  Representative Mulder         Representative Navarre                         
  Representative Brown          Representative Parnell                         
  Representative Grussendorf    Representative Therriault                      
  Representative Kelly                                                         
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Nancy Slagle, Director, Division of Budget Review, Office of                 
  Management and  Budget; Mike  Greany, Director,  Legislative                 
  Finance  Division; Annalee  McConnell,  Director, Office  of                 
  Management and  Budget; Tina  Kobayashi, Assistant  Attorney                 
  General, Department of Law; Barbara Ritchie, Deputy Attorney                 
  General, Department  of Law;  Susan Cox,  Assistant Attorney                 
  General,   Department   of   Law;    Arthur   Snowden,   II,                 
  Administrative  Director,  Alaska  Judicial Council,  Alaska                 
  Court   System;  Sharon   Barton,   Director,  Division   of                 
  Administrative  Services,   Department  of   Administration;                 
  Margaret Pugh, Commissioner, Department of Corrections; Jeff                 
  Morrison,  Director,  Division  of Administrative  Services,                 
  Department of  Military and  Veterans Affairs;  Bob Baratko,                 
  Director, 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.                    
                                                                               
            HB  137   was  HELD   in  Committee  for   further                 
            discussion.                                                        
                                                                               
                                                                               
                                1                                              
                                                                               
                                                                               
  HB 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.                                                    
                                                                               
            HB  178  was   HELD  in   Committee  for   further                 
            discussion.                                                        
  HOUSE BILL 137                                                               
                                                                               
       "An   Act   making   supplemental  appropriations   for                 
       operating  expenses of state government for fiscal year                 
       1995; and providing for an effective date."                             
                                                                               
  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."                                       
                                                                               
  Co-Chair Hanley  provided the Committee  with a copy  of the                 
  letter received  from the  Office of  Management and  Budget                 
  (OMB)  regarding the  supplemental  funding requests  of the                 
  Governor.  [Attachment #1].                                                  
                                                                               
  Representative  Grussendorf  remarked that  the supplemental                 
  funding request  from the  Department of Transportation  and                 
  Public Facilities (DOTPF)  for the Alaska Marine  Highway in                 
  the  amount  of  $739  thousand   dollars  for  repairs  and                 
  maintenance to  the Columbia  ferry was  not  included.   He                 
  warned that  the ferry  would not  be ready  for the  summer                 
  season without the requested funding.                                        
                                                                               
  Representative Grussendorf reminded  Committee members  that                 
  the ferry generates  revenue and that summer  schedules have                 
  been  published.     Co-Chair  Hanley  noted  that   at  the                 
  recommendation of the DOTPF Subcommittee, that line item was                 
  deleted from the supplemental funding request.                               
                                                                               
  Co-Chair  Hanley  presented   an  overview  of  the   letter                 
  submitted from OMB and provided a work  draft for HB 137.  A                 
  new  section for the Citizens' Foster  Care Review was added                 
  in  the amount of $48 thousand dollars appropriated from the                 
  general fund to the Department of Administration (DOA).  The                 
  additional appropriation would provide for the  continuation                 
  of the  program through  June 30,  1995.  Also,  the sum  of                 
  $1,315,780 was requested  from the  Office of the  Governor,                 
  Division of OMB,  in order to  pay the costs resulting  from                 
  salary  adjustments compliance with  29 U.S.C. 201-219 (Fair                 
  Labor Standards Act)  for the  fiscal year  ending June  30,                 
                                                                               
                                2                                              
                                                                               
                                                                               
  1993,  and FY93,  moving from  capital  improvements project                 
  receipts and general fund.                                                   
                                                                               
  Representative Mulder  MOVED that  the committee  substitute                 
  for HB  137, 9-GH0036\F,  Crammer, 2/27/95,  be the  version                 
  before  the   Committee.    Representative   Brown  OBJECTED                 
  explaining that the draft  had just been distributed  to the                 
  Committee and that no one had  the opportunity to review the                 
  material.    Representative  Brown WITHDREW  THE  OBJECTION.                 
  There  being  NO FURTHER  OBJECTIONS,  CS HB  137  (FIN) was                 
  adopted as the version before the Committee.                                 
                                                                               
  DEPARTMENT OF LAW                                                            
                                                                               
  TINA  KOBAYASHI, ASSISTANT  ATTORNEY GENERAL,  DEPARTMENT OF                 
  LAW, spoke to Section  #1, Page 1, Attachment  #2, reduction                 
  of $500  thousand dollars for  the oil  and gas  litigation.                 
  She indicated that the budget had  been planned based on the                 
  $18  million dollar request being  fully funded and that the                 
  reduction would handicap the litigation process.                             
                                                                               
  Representative Parnell  explained that  the Joint House  and                 
  Senate   Committee  had   requested   from  the   Department                 
  additional  information  in  order to  review  the  need for                 
  further funding.                                                             
                                                                               
  NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF                 
  MANAGEMENT  AND  BUDGET, OFFICE  OF  THE  GOVERNOR, reminded                 
  Committee members that  the $18  million dollar request  had                 
  been a reduction from the original request  of $20.8 million                 
  dollars.                                                                     
                                                                               
  Representative Brown interjected that it  would be a mistake                 
  not to fully fund the litigation  effort indicating that the                 
  funding  would  address many  cases  and that  funding would                 
  cover costs for a six month period.                                          
                                                                               
  DEPARTMENT OF REVENUE                                                        
                                                                               
  Co-Chair Hanley noted  that Section  #2, Page 1,  Governor's                 
  amended request for the Mental  Health Trust Authority start                 
  up costs in the  amount of $298.3 thousand dollars  would be                 
  reduced by the House Subcommittee request.   The total House                 
  request would be in the amount of $155 thousand dollars.                     
                                                                               
  Ms. Slagle commented that the trustees for the Mental Health                 
  Authority would be appointed next  week.  She requested when                 
  those trustees are appointed, if additional needs exist, the                 
  trustees  could  return to  the  Legislature  for additional                 
  funding.   Co-Chair Hanley  advised the  situation would  be                 
  considered.                                                                  
                                                                               
                                                                               
                                3                                              
                                                                               
                                                                               
  DEPARTMENT OF MILITARY AND VETERANS AFFAIRS                                  
                                                                               
  Co-Chair  Hanley  referenced  Section  #3,  Page  1  of  the                 
  supplemental appropriation,  for the fall  flooding and  the                 
  Disaster Relief Fund.  The Governor's amended request was in                 
  the  amount  of $45.7  million  dollars, whereas,  the House                 
  Subcommittee  request  was in  the  amount of  $43.9 million                 
  dollars which  would cover costs  to date.   Co-Chair Hanley                 
  advised that  the  costs accruing  at  this time  should  be                 
  placed in the FY96 operating budget.                                         
                                                                               
  JEFF   MORRISON,   DIRECTOR,   DIVISION  OF   ADMINISTRATIVE                 
  SERVICES,  DEPARTMENT  OF  MILITARY  AND  VETERANS  AFFAIRS,                 
  requested  further  information  regarding  the  Committee's                 
  intent for further funding.  Co-Chair Hanley explained  that                 
  the  Subcommittee  had  concern  with  providing 100%  state                 
  funding  for  projects  with costs  yet  undetermined.   Mr.                 
  Morrison  clarified  that traditionally,  the interpretation                 
  given to disaster funding,  was that once the fund  has been                 
  allocated from, that project remains open until the disaster                 
  is  financially  closed  out.     He  concluded,  any  funds                 
  remaining would be returned to the Disaster Relief Fund.                     
                                                                               
  Mr. Morrison added, the only reimbursement received from the                 
  federal government has been the 75/25% portion.  The federal                 
  government determines  eligibility  for  the  100%  funding,                 
  following completion  of  an  audit.    The  audit  will  be                 
  completed when the  disaster is closed out.  Co-Chair Hanley                 
  recommended waiting to pay until the audit was completed.                    
                                                                               
  DEPARTMENT OF CORRECTIONS                                                    
                                                                               
  Representative    Mulder,    Department    of    Corrections                 
  Subcommittee  Chair   provided  supplemental   appropriation                 
  budget overview.                                                             
                                                                               
  Representative Mulder  began,  Section #4(a),  Page  1,  the                 
  Governor  and  House  Subcommittee  recommend  $67  thousand                 
  dollars be funded  for the  court appointed Cleary  monitor.                 
  Section #4(b)  request to establish and staff  the Office of                 
  the Commissioner in Juneau.   The Governor recommended $44.5                 
  thousand  dollars, the  House Subcommittee  recommended zero                 
  funding.   Representative Mulder reminded the Committee that                 
  the  Subcommittee  recommendations  reflected court  ordered                 
  items,   resulting  from   increased  capacity   or  outside                 
  unanticipated contracts.                                                     
                                                                               
  Representative  Mulder  referenced  Section #4(c),  Page  1,                 
  request  in  the  amount  of  $98  thousand  dollars  to the                 
  Commissioner's Office  for the estimated cost resolution for                 
  two personnel  legal  actions, with  funding recommended  by                 
  both the Governor and  the House.  Section #4(d)  funding in                 
                                                                               
                                4                                              
                                                                               
                                                                               
  the amount of $9.8 thousand dollars  for the Board of Parole                 
  was   recommended  by  the   Governor,  whereas,  the  House                 
  Subcommittee recommended zero funding.                                       
                                                                               
  Representative   Mulder   referenced   Section  #4(e),   the                 
  supplemental funding  request for the  Correctional Officers                 
  Training Academy.   The Governor's supplemental request  was                 
  in  the amount of $366.3 thousand  dollars which would cover                 
  both  a  fall and  spring  training; the  House subcommittee                 
  recommended that amount be changed  to $172 thousand dollars                 
  in  order  to cover  the  cost  of the  fall  training only.                 
  Section #4(f),  Page 1,  increased costs  for inmate  health                 
  package, supplemental appropriation request  by the Governor                 
  was  in the  amount  of  $2.1  million  dollars;  the  House                 
  Subcommittee recommendation was in the  amount of $2 million                 
  dollars.                                                                     
                                                                               
  He continued, Section #4(g), Page 1, supplemental request by                 
  the   Governor    for   statewide    operations/correctional                 
  industries was requested  in the  amount of $293.3  thousand                 
  dollars, whereas, the House Subcommittee recommended funding                 
  in the amount of $99 thousand dollars.                                       
                                                                               
  Representative  Mulder  explained  that  Section  #4(h)  was                 
  recommended for full  funding as  requested by the  Governor                 
  and  the House Subcommittee on Corrections  in the amount of                 
  $2.35 million  dollars which  would  cover costs  associated                 
  with   the   Arizona  prison   contract.      Section  #4(i)                 
  supplemental   request  would   provide   funding  for   the                 
  Department to hire three additional Administrative  Clerk II                 
  positions for the remainder of FY95.  The hire would free up                 
  Correctional Officers for  safety and security tasks  at the                 
  Sixth  Avenue  Correctional  Facility  in  Anchorage.    The                 
  Governor   recommended  that  section  be  funded  at  $51.9                 
  thousand   dollars,   whereas,   the    House   Subcommittee                 
  recommended zero funding of that component.                                  
                                                                               
  Section #4(j), Page 1, request  would provide two additional                 
  adult Probation Officers plus housing, feeding and  clothing                 
  for increased inmate capacity at  the Spring Creek facility.                 
  The Governor and the  Subcommittee agreed on funding at  the                 
  requested amount of $156.6 thousand  dollars.  Section #4(k)                 
  supplemental  request  in  the  amount  of  $772.3  thousand                 
  dollars  was  recommended  by both  the  Governor  and House                 
  Subcommittee in order  to add ten additional  positions plus                 
  housing, feeding, and clothing to  reduce the vacancy factor                 
  and  would also  provide for  up  sizing of  59 beds  at the                 
  Wildwood Correctional Center.                                                
                                                                               
  Representative Mulder pointed out  that Section #4(l),  Page                 
  2, supplemental  request  would reduce  the  prison  vacancy                 
  factor.  The Governor's amended request was in the amount of                 
                                                                               
                                5                                              
                                                                               
                                                                               
  $3.1  million  dollars,  whereas,   the  House  Subcommittee                 
  recommended zeroing out the funding.   Section #4(m), Page 2                 
  request  was fully funded  in the amount  recommended by the                 
  Governor  and  the  House  Subcommittee  for  increased  CRC                 
  capacity for statewide  operations in  the amount of  $726.3                 
  thousand dollars.   Section #4(n), Page 2,  would request to                 
  provide an increase for probationary visits to smaller towns                 
  and  communities  under  the  Department's  supervision  for                 
  statewide operations.  The Governor's amended request was in                 
  the amount  of $31.8  thousand dollars,  whereas, the  House                 
  Subcommittee requested zero funding.  Section #4(o), Page 2,                 
  supplemental request in  the amount of $52  thousand dollars                 
  for  funding  for transferred  positions  from Wildwood  and                 
  would  also  include  food,  clothing,  and  gratuities  for                 
  prisoners at Point MacKenzie.   Full funding was recommended                 
  by both the Governor and the House Subcommittee.                             
                                                                               
  Representative Navarre pointed out that all the Subcommittee                 
  members did not agree on the deletion of Section #4(d), Page                 
  1,  the personal  services component.   He  felt the  impact                 
  would result in not implementing the Board's  decisions.  He                 
  added,  that action  would keep prisoners  in prisons  for a                 
  much longer  period of  time, costing  the  State more  than                 
  funding Section #4(d).                                                       
                                                                               
  (Tape Change, HFC 95-31, Side 2).                                            
                                                                               
  Representative Brown advised without  additional funding for                 
  the spring  academy, the public's  safety could be  at risk.                 
  Representative Martin disagreed,  stressing that the current                 
  budget for the Department has funds to operate adequately.                   
                                                                               
  MARGARET  PUGH,  COMMISSIONER,  DEPARTMENT  OF  CORRECTIONS,                 
  responded  to  the discussion  of  Representative Brown  and                 
  Representative  Martin.   She  spoke  to the  spring academy                 
  need,   emphasizing  the   necessary  standards   which  the                 
  Department must have  for the  participating troopers.   The                 
  State is obligated to provide the training.  Co-Chair Hanley                 
  emphasized that the spending pattern must end.  He added, if                 
  the request is not  critical to the life, health  and safety                 
  of the  correctional officers or inmates, it will be denied.                 
                                                                               
                                                                               
  ANNALEE  MCCONNELL,  DIRECTOR,  OFFICE  OF  MANAGEMENT   AND                 
  BUDGET,  commented on  the impact  to  each program  and the                 
  ramifications  of all the changes  needing to be absorbed by                 
  the Administration for the next  three months.  She strongly                 
  recommended that the  current Administration can  not change                 
  those choices done in the prior Administration.  The current                 
  Administration  is willing  to work  in the future  with the                 
  funding level established by the  Legislature and the amount                 
  spent.  She reiterated to ask  the Knowles Administration to                 
                                                                               
                                6                                              
                                                                               
                                                                               
  reduce  spending  established by  the  Hickel Administration                 
  will create difficulty for the  Departments and undue public                 
  safety.                                                                      
                                                                               
  Commissioner  Pugh  noted  that   there  are  currently  207                 
  prisoners housed  in Arizona;  prison  growth continues  and                 
  limits are being pushed with those prisoners having left the                 
  state.   She  added,  the Cleary  maximum  capacity for  our                 
  current system is  2,665 prisoners.  Beyond that  point, the                 
  State would be  fined.  Currently, the system is immediately                 
  below that figure.                                                           
                                                                               
  Commissioner Pugh  commented  on  the  need  for  additional                 
  funding for the correctional activities.  She explained that                 
  service teaches the prisoners basic life skills, how to keep                 
  a job,  how to go back and forth to work, when to get up and                 
  when to go bed.   With the increased population  in prisons,                 
  the  need for increased  prison operation jobs  expands as a                 
  management tool.                                                             
                                                                               
  Representative Grussendorf his voiced concern  on the cut to                 
  Section #4(n), Page 2.  Commissioner Pugh remarked that  the                 
  S.E. Region  received unallocated  cuts in  prior years  and                 
  without  the  requested   supplemental  funding,   probation                 
  officers  will  not  be  able  to   travel  to  the  smaller                 
  communities in Alaska particularly  in the Southeast region.                 
                                                                               
                                                                               
  Commissioner  Pugh  noted  the  Department's  most   serious                 
  repercussions would result from the zero funding for Section                 
  Committee to reconsider  funding a portion of  that request.                 
  Representative Mulder pointed out  that each facility within                 
  the  FY95  budget was  fully  funded through  the Governor's                 
  requested amount, except  for the Spring Creek  and Wildwood                 
  Centers.  He emphasized the amount funded by the Legislature                 
  was the amount requested by the last Administration.                         
                                                                               
  Representative Brown disagreed  with Representative  Mulder,                 
  stating  that  there  was  a  divergence  between  what  the                 
  Governor  was  asking for  and  what the  Legislative budget                 
  actually funded.   Representative Navarre noted that  if the                 
  spending exceeded the amount given in the first eight months                 
  of the  fiscal year,  the Department  can not  make up  that                 
  funding  in the remaining  four months of  that fiscal year.                 
  Representative  Martin  interjected  that   the  Legislature                 
  controls the  budget and  that spending  over and  above the                 
  amount   allocated  should  not  result  in  a  supplemental                 
  appropriation.                                                               
                                                                               
  Representative  Brown stated that  some of  the supplemental                 
  requests are due to underfunding of  the last budget.  Those                 
                                                                               
                                7                                              
                                                                               
                                                                               
  funds were  spent because  the Department  felt that  public                 
  safety  would  be  jeopardized  as  the   prison  population                 
  continued to grow.  Representative Mulder responded that the                 
  numbers  he  used were  those  generated by  the Legislative                 
  Finance Division.   He  understood that  the shortfalls  had                 
  been addressed through the use of  fiscal notes.  The actual                 
  Governor's FY95 Governor's  amended amounts compared to  the                 
  FY95   Operating   Authorized   matches   line   by    line.                 
  Representative Brown argued that those  were one time fiscal                 
  notes authorized on  a bill and not  the base of  the budget                 
  funding.   She added  that the  base of  the budget  was not                 
  adequate to fund the necessary  level of employees in  order                 
  to maintain safety.                                                          
                                                                               
  DEPARTMENT OF PUBLIC SAFETY                                                  
                                                                               
  Co-Chair Hanley  pointed out that  Section #5,  Page 2,  the                 
  request  to fill ten  vacant positions for  the Alaska State                 
  Troopers was zeroed out.  He  indicated that the request had                 
  been a policy call of the Governor and should be included in                 
  the FY96 Operating Budget.                                                   
                                                                               
  OFFICE OF THE GOVERNOR                                                       
                                                                               
  Co-Chair Hanley  explained Section #1,  Page 3, supplemental                 
  request  for the  Division  of  Elections for  unanticipated                 
  overtime and costs associated with recounts.  The Governor's                 
  amended request in the amount of $212.2 thousand dollars was                 
  decreased by the House Subcommittee request of $170 thousand                 
  dollars.                                                                     
                                                                               
  (Tape Change, HFC 95-32, Side 1).                                            
                                                                               
  DEPARTMENT OF ADMINISTRATION                                                 
                                                                               
  Representative  Kohring,  Chairman   of  the  Department  of                 
  Administration  Subcommittee  provided  an  overview of  the                 
  supplemental recommendations  for that Department.   Section                 
  deleted.  Section #3, Page 3, Office of Public Advocacy/OPA,                 
  Governor's request in the amount of $530 thousand dollars to                 
  cover  operational  shortfalls,  was  reduced by  the  House                 
  Subcommittee in the amount of $200 thousand dollars.                         
                                                                               
  He continued, Section #4, Page 3, Public Defender request to                 
  cover  the  operational shortfalls,  the  Governor's amended                 
  request was in the amount of $125 thousand dollars, whereas,                 
  the House Subcommittee  recommended reducing the  request to                 
  $50 thousand dollars.   Representative Kohring advised  that                 
  Section  #5, Page  3, Retirement  and  Benefits/EPORS system                 
  request  would  cover  the  operational  shortfall  for  one                 
  legislator.  The Governor  requested supplemental funding in                 
                                                                               
                                8                                              
                                                                               
                                                                               
  the amount  of $37.5  thousand dollars,  whereas, the  House                 
  Subcommittee recommended  funding of $27.5  thousand dollars                 
  which would provide funding for the insurance portion of the                 
  request.                                                                     
                                                                               
  Section #4,  Page 3, the  leasing and facilities  request by                 
  the Governor  and the  House Subcommittee  for full  funding                 
  supplemental request in  the amount of $93  thousand dollars                 
  to  cover operational  shortfalls.   Representative  Kohring                 
  added,  Section  #7,  Page  3,  the Alaska  Public  Officers                 
  Commission, the  Governor's amended supplemental  request in                 
  the amount  of $49.5  thousand dollars,  whereas, the  House                 
  Subcommittee recommended $35 thousand dollars to address the                 
  hearing for the Gravo case.   He admitted that hearing funds                 
  were justified although  he felt  that the amount  requested                 
  was too high.   Section #8, Page 3,  Personnel EEO/Personnel                 
  EEO  supplemental  request  funding  to  be used  for  labor                 
  arbitration costs, the  Governor's requested $139.6 thousand                 
  dollars, whereas, the House Subcommittee recommended zeroing                 
  the amount out.  Representative Kohring ascertained that the                 
  need was not emergency in nature and that those costs should                 
  be addressed in the FY96 Operating Budget.                                   
                                                                               
  Representative Grussendorf questioned the recommended cut to                 
  Section #8, Page 3, advising that  the FY96 Operating Budget                 
  request  would  include  program  receipts  generated   from                 
  negotiations of the contract requests.                                       
                                                                               
  Ms. Slagle  stated that  Section #8  were arbitration  costs                 
  dealing  with employee grievances.   The courts  have made a                 
  determination that the  State has failed  in the efforts  to                 
  deal with clearing  up the  arbitrations.  The  supplemental                 
  request  was  a  portion  of   the  effort  of  the  current                 
  Administration to comply with the court ruling.                              
                                                                               
  SHARON   BARTON,   DIRECTOR,   DIVISION  OF   ADMINISTRATIVE                 
  SERVICES,   DEPARTMENT   OF  ADMINISTRATION,   explained  to                 
  Representative  Grussendorf  that  there was  not  a  direct                 
  connection   between   the   labor  negotiations   and   the                 
  arbitration  costs.     She  added,  although   the  request                 
  establishes the States credibility with the Unions.                          
                                                                               
  Representative Brown  noted her  concern with the  decreased                 
  funding of Sections #3 and #4, Office of Public Advocacy and                 
  the Public Defender.  She asserted that these issues are not                 
  discretionary, they  are constitutional rights.   Ms. Barton                 
  added, these costs must be paid, either now or later.   Both                 
  programs  have  been  managed tightly  and  not  funding the                 
  supplemental request fully  will not  save the State  money.                 
  The result will  end in a court appeal in order to defer the                 
  case.                                                                        
                                                                               
                                                                               
                                9                                              
                                                                               
                                                                               
  DEPARTMENT OF LAW                                                            
                                                                               
  Co-Chair  Hanley  stated   that  in  Section  #9,   Page  3,                 
  supplemental request for the Mental Health Lands, the amount                 
  recommended  to  be funded  would be  the  amount due.   The                 
  additional amount of $435 thousand anticipated costs for the                 
  non settling plaintiffs  for the  court of  appeals was  not                 
  considered  by the Subcommittee.  Those  costs have not been                 
  reduced to judgments to date.                                                
                                                                               
  Ms. Slagle pointed out that  the Governor's request included                 
  estimated costs for  the fiscal  year.  Historically,  those                 
  costs   were   funded    in   the   supplemental    request.                 
  Representative Martin questioned the  increased departmental                 
  costs during the last six months.                                            
                                                                               
  BARBARA RITCHIE, DEPUTY ATTORNEY GENERAL, DEPARTMENT OF LAW,                 
  advised that there were many substantial costs at the end of                 
  the  procedure  resulting  from   a  large  booklet  mailing                 
  throughout the State and an appeal file.                                     
                                                                               
  Co-Chair  Hanley  referenced  Section  #10,  Page  3,  Legal                 
  Service  operations  request  amount  to  repay the  federal                 
  government for inappropriate cost  allocations in the amount                 
  of $500 thousand dollars as recommended  by the Governor and                 
  the House Subcommittee.  Section #11, Page 3,  Legal Service                 
  operations request for  judgments and claims request  by the                 
  Governor in the amount of $4.3 million dollars, whereas, the                 
  House Subcommittee request  in the  amount of $494  thousand                 
  dollars be funded.  Ms. Ritchie provided  the Committee with                 
  a handout listing the current judgments in the Department of                 
  Law.  [Attachment #3].                                                       
                                                                               
  Co-Chair Hanley directed  the Department  of Law to  testify                 
  regarding  the  supplemental requests  not contained  in the                 
  handout.  He  stated that an  amendment would be drafted  to                 
  include the amount requested by the Department.                              
                                                                               
  SUSAN COX,  ASSISTANT ATTORNEY GENERAL,  DEPARTMENT OF  LAW,                 
  explained the statutes which  specifically govern commercial                 
  fishing  and regulations.   The  Courts had been  applying a                 
  general statute, Title XVI, which provided that courts could                 
  fine people  up to  $5 thousand  dollars.   Many fines  were                 
  ordered.  In 1987, the Court  of Appeals determined that the                 
  ceiling for violations  was in effect until  the Legislature                 
  enacted the  law in  1988 which  passed a statute  regarding                 
  penalties  for  commercial  fishing   violations.    In  the                 
  meantime, there have  been four  court of appeal  decisions.                 
  The class actions have consisted of three subsections.                       
                                                                               
  Co-Chair Hanley stated  that the House Subcommittee  did not                 
  recommend  funding Section  #12, Page  3, the  Gubernatorial                 
                                                                               
                               10                                              
                                                                               
                                                                               
  election lawsuit which the Governor  requested in the amount                 
  of $50 thousand dollars.                                                     
                                                                               
  ALASKA COURT SYSTEM                                                          
                                                                               
  ARTHUR SNOWDEN, II, ADMINISTRATIVE DIRECTOR, ALASKA JUDICIAL                 
  COUNCIL, ALASKA COURT SYSTEM, testified to Section #60, Page                 
  7, the Court  System for  the North Slope  Royalty case  and                 
  grievance settlement.  The Governor's amended request was in                 
  the amount of  $158.6 thousand  dollars, whereas, the  House                 
  Subcommittee  request  was in  the  amount of  $120 thousand                 
  dollars.    He  pointed  out that  the  $40  thousand dollar                 
  disparity will short  the oil and  gas litigation fund.   He                 
  urged the Committee to reconsider  the reduced allocation to                 
  that Department's supplemental funding.                                      
                                                                               
  Co-Chair Hanley asked if one judge  would be shifted for the                 
  trial.    Mr.  Snowden replied  that  Judge  Carpenetti from                 
  Juneau would be trying the case for  six months.  It was the                 
  intent of the Court System to bring a retired judge in order                 
  to handle the Juneau case load.   The entire Juneau caseload                 
  will increase for the next six  months by sixty percent.  At                 
  this point, the back log is over a year and a half.                          
                                                                               
  DEPARTMENT OF REVENUE                                                        
                                                                               
  Representative  Martin,  Subcommittee Chair,  overviewed the                 
  Department of Revenue proposed supplemental budget.  Section                 
  Gaming Task  Force  meetings was  zeroed  out by  the  House                 
  Subcommittee.     Section  #14,   Page  3,   the  Governor's                 
  supplemental request in  the amount of $15  thousand dollars                 
  was  also  zeroed out  by  the  House Subcommittee  for  the                 
  license denial appeal costs in  the Alcohol Beverage Control                 
  Board  (ABC) Egegik hearing.  Section  #15, Page 3, treasury                 
  management  for additional  safekeeping and  debt management                 
  advisor  fees  was   initially  zeroed  out  by   the  House                 
  Subcommittee,  although,  Representative  Martin  asked  for                 
  reconsideration of that component.  The Governor's requested                 
  amount of funding is $259.5 thousand dollars.                                
                                                                               
  Representative  Martin  continued,   Section  #16,  Page  4,                 
  supplemental  request of  the  Governor's  amended  for  the                 
  Permanent Fund Dividend for additional data processing costs                 
  in the amount of $91 thousand dollars  was zeroed out by the                 
  House  Subcommittee.    Section  #17,  Page  4, supplemental                 
  request  by  the Alaska  Mental  Health Trust  Authority for                 
  additional costs requested by the Governor in  the amount of                 
  $283.1  thousand dollars  was also zeroed  out by  the House                 
  Subcommittee.                                                                
                                                                               
  BOB BARATKO, DIRECTOR, DIVISION  OF ADMINISTRATIVE SERVICES,                 
                                                                               
                               11                                              
                                                                               
                                                                               
  DEPARTMENT OF REVENUE, replied that  the deletion of Section                 
  enforcement component of the division.   Also, he continued,                 
  the deletion  of Section #14 in which the ABC Board will not                 
  be able to  have the appeal  in accordance with the  statute                 
  will be difficult, pointing out  that the budget for appeals                 
  has currently been expended.   The community has a  right to                 
  request  a hearing within their community.   This request is                 
  for a non issuance of a  license, a local option, therefore,                 
  that  population has the right  to testify.  Co-Chair Hanley                 
  recommended testifying via teleconference.                                   
                                                                               
  Mr. Baratko emphasized how important  funding of Section #15                 
  was.  Those  fees were removed  from the budget three  years                 
  ago and made an off budget item.  The two functions  of that                 
  division are tied  together; currently, there exists  a lack                 
  of  management  capabilities.   The  substance  of  the bond                 
  account  is  not changeable  and  the  accounts  need to  be                 
  separated, whereas, volatility exists and  the State will be                 
  vulnerable  without funding  this  request.   Representative                 
  Martin suggested approving the request.                                      
                                                                               
  Representative Grussendorf recommended better  educating the                 
  public and the legislators about  charitable gaming with the                 
  growing  increase  to  that industry.    The  task force  as                 
  recommended  by  the  Governor  would  be  able  to  provide                 
  education  to  interested  parties.   He  affirmed  that the                 
  supplemental  request  was minimal  in  relationship  to the                 
  profits which could  be made for  the State by funding  that                 
  request.  Representative  Martin agreed  that the amount  of                 
  money generated  through charitable  gaming was  large.   He                 
  added, with  the legalization of pull tabs, the increase has                 
  quadrupled.   His  major concern  is the  choice of  persons                 
  chosen for that task force.  Representative Navarre stressed                 
  that removing funding  from the audit portion  of charitable                 
  gaming  would  be  unacceptable; the  State  is  required to                 
  perform that function.                                                       
                                                                               
  Co-Chair Hanley agreed that the task force  was a beneficial                 
  idea, although, that funding should be contained in the FY96                 
  Operating  Budget.   Mr.  Baratko  clarified that  the first                 
  meeting  of the  task force  has been  scheduled and  public                 
  noticed given for  March 16,  1995.   Co-Chair Hanley  urged                 
  that the Governor not take the  funds necessary for the task                 
  force  out  of   the  audit  function  of   the  Department.                 
  Representative  Martin  recommended  that  the high  revenue                 
  generating vendors pay the costs of the task force.                          
                                                                               
  (Tape Change, HFC 95-32, Side 2).                                            
                                                                               
  DEPARTMENT OF EDUCATION                                                      
                                                                               
                                                                               
                               12                                              
                                                                               
                                                                               
  Co-Chair  Hanley  explained  Section   #18,  Page  4,   K-12                 
  Support/Foundation Program for increased  student enrollment                 
  as requested by  the Governor  in the amount  of $2  million                 
  dollars, House  Subcommittee recommended zero  funding.   He                 
  thought  that  the  Department should  adjust  the  units to                 
  illustrate  the  difference  between  the  fall  and  spring                 
  student count.                                                               
                                                                               
  Ms.  Slagle advised that the districts do have a drop in the                 
  spring count.  Although, those districts do have hired staff                 
  on contract for the level of  students they had in the fall.                 
  A reduction can not be made in the middle of the year.                       
                                                                               
  Representative   Kohring,   House  Subcommittee   Chair  for                 
  Education, explained  Section #19, Page 4, education program                 
  support for  the  federal vocational  education  grants  was                 
  recommended to be zeroed out by  the House Subcommittee.  He                 
  understood  that it was  a temporary request.   Section #20,                 
  Page  4, additional funding for  the WAMI program for Alaska                 
  Postsecondary Education, Governor's supplemental  request in                 
  the amount of $22.2  thousand dollars was zeroed out  by the                 
  House Subcommittee.  Representative Kohring recommended that                 
  those funds be taken from another account.                                   
                                                                               
  Representative  Kohring  concluded,  Section  #21,  Page  4,                 
  supplemental request in  the amount of $1.8  million dollars                 
  was  accepted  at  the  Governor's   request  by  the  House                 
  Subcommittee.  He  pointed out the  emergency nature of  the                 
  request.  Many children have  experienced ill effects by the                 
  contaminated water.  He added that the clean up costs should                 
  come from  the Oil  and  Hazardous Waste  Clean Up  Response                 
  Fund.                                                                        
                                                                               
  HB  178  and  HB 137  were  HELD  in  Committee for  further                 
  discussion.                                                                  
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 3:55 P.M.                                           

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