Legislature(1995 - 1996)
03/30/1995 01:52 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
March 30, 1995
1:30 P.M.
TAPE HFC 95-74, Side 2, #000 - end.
TAPE HFC 95-75, Side 1, #000 - end.
TAPE HFC 95-75, Side 2, #000 - #598.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:52 p.m.
PRESENT
Co-Chair Hanley Representative Martin
Co-Chair Foster Representative Mulder
Representative Brown Representative Navarre
Representative Grussendorf Representative Parnell
Representative Kelly Representative Therriault
Representative Kohring
ALSO PRESENT
Mike Greany, Director, Legislative Finance Division; Alison
Elgee, Deputy Director, Department of Administration; Diane
Kaplan; Annalee McConnell, Director, Office of Management
and Budget, Office of the Governor; Bruce Bothelo, Attorney
General, Department of Law; Karen Perdue, Commissioner,
Department of Health and Social Services.
SUMMARY
HB 100 An Act making appropriations for the operating and
loan program expenses of state government and to
capitalize funds; making appropriations under art.
IX, sec. 17(c), Constitution of the State of
Alaska, from the constitutional budget reserve
fund; and providing for an effective date.
HB 100 was HELD in Committee for further
discussion.
HOUSE BILL NO. 100
"An Act making appropriations for the operating and
loan program expenses of state government and to
capitalize funds; making appropriations under art. IX,
sec. 17(c), Constitution of the State of Alaska, from
the constitutional budget reserve fund; and providing
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for an effective date."
* Note: All amendments are on file with the
Legislative Finance Division.
DEPARTMENT OF FISH AND GAME
Representative Mulder MOVED to RESCIND the Committee's
action in adopting Amendment F&G-1 (copy on file). He noted
that the amendment would add $81.0 thousand dollars to the
Department of Fish and Game, Office of the Commissioner.
There being NO OBJECTION, it was so ordered.
Representative Mulder MOVED to AMEND Amendment F&G-1 by
deleting the funding source of "35.0 thousand dollars from
the Department of Health & Social Services, Office of the
Commissioner" and inserting "$35.0 thousand dollars from
the Department of Fish and Game, Subsistence, Special
Projects."
Representative Navarre expressed objection to the amendment
and suggested that the funding be taken from the budget of
the Legislature.
Representative Mulder argued in support of Amendment F&G-1.
Representative Navarre maintained that the amendment does
not fix problems within the Department of Fish and Game.
There being NO OBJECTION, the amendment to Amendment F&G-1
was adopted.
Representative Navarre MOVED to AMEND Amendment F&G-1 by
deleting the funding source of "$35.0 thousand dollars from
the Department of Fish and Game, Subsistence, Special
Projects" and inserting " $35.0 thousand dollars from the
budget of the Legislature."
A roll call vote was taken on the MOTION.
IN FAVOR: Brown, Grussendorf, Kelly, Navarre
OPPOSED: Kohring, Martin, Mulder, Parnell, Therriault,
Foster, Hanley
The MOTION FAILED (4-7).
There being NO OBJECTION, Amendment F&G-1 was adopted as
amended.
ALASKA COURT SYSTEM
Representative Navarre offered an amended Amendment Court-1,
add $50.0 thousand dollars from the Alaska Revolving Loan
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Fund to the Alaska Court System, Trial Courts for anger
management (copy on file).
Representative Parnell spoke in support of the amendment.
A roll call vote was taken on the MOTION.
IN FAVOR: Brown, Grussendorf, Navarre, Kelly, Martin,
Parnell, Foster, Hanley
OPPOSED: Kohring, Mulder, Therriault.
The MOTION PASSED (8-3).
DEPARTMENT OF EDUCATION
Representative Martin MOVED to adopt Amendment DOE-9 (copy
on file). He explained that the amendment would add $80.0
thousand dollars for the "Alaska Maps for Alaska's Students"
project.
MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION
explained that the funding source would be non-general fund
receipts from the University's bookstore.
There being NO OBJECTION, it was so ordered.
DEPARTMENT OF ADMINISTRATION
Representative Brown MOVED to adopt Amendment DOA-6A (copy
on file). She explained that the amendment would substitute
the "Public Broadcasting Endowment Trust" for the Alaska
Public Broadcasting Commission. She emphasized the need to
transfer functions to a private non-profit organization for
support of the state's broadcasting system.
ALISON ELGEE, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION stated that the transfer could be made
without statutory change. She added that intent language
would not be sufficient to allow the Endowment Trust to
manage the grants distribution.
Representative Kohring OBJECTED. He felt that it was
inappropriate to have a separate BRU for a private entity.
DIANE KAPLAN, DIANE KAPLAN AND COMPANY spoke in support of
the amendment. She gave a brief history of the origin of
the Public Broadcasting Trust Endowment. She noted that the
Trust commissioners are the major donors to public
broadcasting in the State. She emphasized that the members
are bi-partisan. The goal of the Trust is to raise an
endowment of $100.0 million dollars to replace state funds.
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In response to a question by Representative Mulder, Ms.
Kaplan stated that The Trust would follow guidelines by the
Department of Administration for grantees of state dollars.
Representative Martin expressed concern that the amendment
would amount to a grant to the Trust without competitive
bidding. Co-Chair Hanley noted that designated grants are
awarded without competitive bidding.
Representative Kohring spoke against the amendment. He
reiterated that it is not good public policy to provide a
grant to a private entity. Representative Brown clarified
that the intent is to reduce state contribution over time.
She could not define the period of time needed before state
contribution could be eliminated. Ms. Kaplan estimated that
it would take a minimum of 10 to 15 years to eliminate state
funding.
In response to a question by Representative Navarre, Ms.
Kaplan noted that transfer of the grant authority to the
Public Broadcasting Endowment Trust would eliminate an
estimated $170.0 thousand dollars in state overhead
associated with the management of grants by the Alaska
Public Broadcasting Commission (APBC).
Representative Kohring noted that the Letter of Intent by
the Department of Administration Subcommittee states that
sole service radio stations be protected. He emphasized
that no seed money will result from a transfer of the
management of grants to individual radio stations to the
Endowment Trust.
In response to a question by Representative Therriault, Ms.
Kaplan expounded that savings would result from a transfer
to contractual services. She noted the lack of flexibility
within the state personnel system. She reiterated that
overhead can be reduced. She stated that administrative
costs for management by the Alaska Public Broadcasting
Commission is estimated at $170.0 thousand dollars. The
Endowment Trust estimates that services could be contracted
for $50.0 thousand dollars.
Representative Mulder expressed concern with a lack of
legislative accountability. Representative Kohring echoed
remarks made in regards to the lack of legislative
accountability. Representative Brown pointed out that the
Department of Administration would have some oversight. She
emphasized that the Endowment Trust would be before the
Legislature for funding in the following year. She
suggested that the grant could be issued with the caveats
that no sole service stations be closed and no funding be
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provided to public television to clarify the legislative
intention.
Representative Brown WITHDREW Amendment DOA-6A, to be
considered at a later time. Ms. Kaplan acknowledged the
need to provide accountability. She emphasized that the
Endowment is requesting the tools to become more self
sufficient. She noted that the Alaska Public Broadcasting
Commission receives funds and sends them out to stations.
She recalled that previous reductions have been across the
board. She emphasized the need to ensure service.
Representative Kohring stressed that the issue is who is
going to oversee the state support to public broadcasting,
the Alaska Public Broadcasting Commission or the Public
Broadcasting Endowment Trust. He stated that he supports
the concept of private support through the Trust.
DEPARTMENT OF NATURAL RESOURCES
Representative Brown MOVED to adopt Amendment DNR-13 (copy
on file). She explained that the amendment would fund the
Senior Citizens/Disabled Veterans Tax Relief programs. She
emphasized the burden of unfunded mandates to
municipalities. The Alaska Revolving Loan Fund would be the
funding source. She noted that there is approximately $6.0
million dollars in the Alaska Revolving Loan Fund.
Representative Therriault OBJECTED to the motion. A roll
call vote was taken on the MOTION.
IN FAVOR: Brown, Grussendorf, Foster
OPPOSED: Kelly, Kohring, Martin, Mulder, Navarre, Parnell,
Therriault, Hanley
The MOTION FAILED (3-8).
(Tape Change, HFC 95-75, Side 1)
FRONT SECTION
Co-Chair Hanley provided members with a committee substitute
for HB 100, Work Draft #9-GH0022\C (copy on file).
MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION compared
The work draft to the original version of HB 100, Front
Section. He noted that Sections 1 - 4 are the same. He
noted that Section 5 caps the amount of general fund dollars
that can be used to replace a shortfall in federal Title XX
funds at $6,310,800 million dollars.
Mr. Greany noted that Sections 6 - 10 are identical.
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Section 11 incorporates an amendment proposed by the
Governor. A new Section 11 (c) was added to use the
available balance in the Alaska Debt Retirement Fund in
order to reduce the need for an additional appropriation for
new general obligation debt.
Mr. Greany noted that the words "from the balance" was added
to Section 13 to clarify the section.
Mr. Greany reviewed Section 17. He noted that Section 17
(d) transfers $70.0 million dollars from the Alaska Housing
Finance Corporation (AHFC) to the general fund. Section 17
(e) adds transitional language to provide that expenditures
allowed in Sections 17 (a), (b) and (c) are subject to the
program review requirements of the Legislative Budget and
Audit Committee. He emphasized that Section 17 (e) will
assure legislative review and oversight during interims.
Mr. Greany observed that Section 18 is adjusted to reflect
funding recommendations for the Disaster Relief Fund made by
the Subcommittee.
Mr. Greany clarified that Section 20 (b) should be reduced
from "$3,591,300.0 million dollars to "$2,591,300.0" million
dollars to reflect action previously taken by the Committee.
He observed that $1.0 million dollars was transferred by the
Committee from the Oil and Hazardous Substance Release
Response Account to the Department of Transportation and
Public Facilities for operations and maintenance. He added
that a new section is needed to transfer the $1.0 million
dollars to the general fund.
In response to a question by Representative Therriault, Mr.
Greany explained that the appropriation in Section 20 is
needed to authorized the transfer of funds from the general
fund, where the money is collected, to the Oil and Hazardous
Substance Release Response Account for expenditures.
Mr. Greany stated that Sections 22 and 23 (b) reflect the
cap of the amount collected under Sections 22 (a) and
Section 23 (a).
Mr. Greany noted that the appropriation of $21,586,500
million dollars in Section 24 reflects the funding level
adopted by the House Finance Subcommittee for the Department
of Administration, Information Services Fund.
Mr. Greany observed that Section 25 reflects the amounts
adopted by the House Finance Subcommittee on the Department
of Law for oil and gas litigation. He stressed that the
funding will not be duplicated in the operating budget of
the Department of Law.
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Mr. Greany commented that Section 29 will be amended to add
an additional citation of AS 42.06.285 to include revenue
generated by pipeline carriers.
Mr. Greany noted that Section 31 incorporates the
recommendations of the House Finance Subcommittee on the
Department of Transportation and Public Facilities for
funding of the Alaska Marine Highway System Fund at
$28,263,200 million dollars.
Mr. Greany pointed out that Section 32 is identical to FY
95. He observed that repairs to Four Dam Pool facilities
are anticipated to be needed for the intertie between
Petersburg and Wrangle. The Alaska Energy Authority has
submitted a request for $20 million dollars to achieve
needed repairs. This appropriation was not included in the
Governor's capital legislation. He noted that the Four Dam
Pool utilities are considering withholding their debt
service payments to the Four Dam Pool Transfer Fund in order
to use the money for the repairs.
Mr. Greany noted that Section 33 reflects an amendment
requested by the Governor to fund $9,097,800 million dollars
for the Alaska Clean Water Loan Program.
Mr. Greany reviewed Sections 34 and 35. He noted that these
sections were originally included in HB 101. Section 34
reflects shared taxes and Section 35 reflects the Salmon
Enhancement Tax.
Mr. Greany pointed out that Section 36 is a new section.
Section 36 rejects the monetary terms of different
collective bargaining agreements. He added that the
Governor has suggested another section relating to salary
adjustments for public safety employees in the amount of
$250.0 thousand dollars, $203.6 thousand dollars would be
appropriated from the general fund and $46.4 thousand
dollars would be appropriated from international airport
revenue receipts.
Co-Chair Hanley expressed a preference for consideration of
the collective bargaining agreements in separate
legislation. Representative Navarre noted that if
collective bargaining legislation introduced by the House
Finance Committee is not acted on then the monetary terms
will not be accepted. Co-Chair Hanley stated that it is his
intent to hold hearings on the collective bargaining
agreements.
Representative Brown questioned the need for inclusion of
Section 36. Co-Chair Hanley explained that if language
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contained Section 36 is not included in the operating budget
that the collective bargaining agreements would be
considered to be approved. Approval of the agreements with
out the accompanying funding would require agencies to pay
for increases out of their budgets. He observed that this
would amount to a $8.0 million dollar unallocated reduction.
If the contracts are not approved then negotiations will
resume. There was no objections from the committee for
introducing separate legislation regarding the collective
bargaining agreements.
Mr. Greany observed that Section 37 is designed to address
the sweep provisions of the Constitutional Budget Reserve.
Any funds that were swept into the Constitutional Budget
Reserve would be reappropriated and restored to the funds
from which they were swept. He noted that Section 37 will
preserve the status quo.
Representative Brown expressed concern that Section 37 would
circumvent the intent of the Constitution. Mr. Greany
stated that a constitutional amendment may be needed to
allow the State to function.
Representative Grussendorf questioned the use of the
Earnings Reserve Account of the Permanent Fund. Mr. Greany
emphasized that although the Court has indicated the status
of the Earnings Reserve Account the status of other accounts
such as the Information Services Fund in the Department of
Administration is uncertain. Discussion pursued regarding
problems associated with the sweep of funds into the
Constitutional Budget Reserve Fund.
Mr. Greany discussed Sections 38 and 39. He noted that
Section 38 would use any money available in the Statutory
Budget Reserve Fund. Section 39 clarifies that any
additional shortfall would come from the Constitutional
Budget Reserve Fund.
Mr. Greany noted that Section 40 cites sections which do not
lapse. He added that a new section will be added to reflect
the Committee's action regarding the Alaska Revolving Loan
Fund. Any money appropriated from the Alaska Revolving Loan
Fund would first be appropriated to the unrestricted general
fund.
In response to a question by Representative Martin, Mr.
Greany explained that the pass through of shared taxes has
been contained in the front section of the operating budget.
The appropriation language states that the amount owed for
shared taxes is appropriated for that purpose. In addition,
specific dollar amounts were estimated in the base of HB
100. Co-Chair Hanley noted that shared taxes will not be
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included in the base of either FY 95 or FY 96 operating
budgets.
Representative Mulder MOVED to adopt committee substitute
for HB 100, work draft #9-GH0022\C. There being NO
OBJECTION, it was so ordered.
ANNALEE MCCONNEL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR discussed concerns of the Governor in
regards to the FY 96 operating budget. She acknowledged the
need for reductions.
(Tape Change, HFC 95-75, Side 2)
Ms. McConnel indicated that funding should be restored to
some areas of the FY 96 operating budget. She stated that
approximately $10 million dollars should be added. She
noted that funding for education has not been considered.
She addressed areas of concern within the Department of Law
and Department of Health & Social Services. She emphasized
that reductions to the Office of Public Advocacy are
counterproductive. She stressed that the decision to not
cover dental care under Medicaid may result in more
expensive medical bills. She observed that the failure to
address labor concerns can result in more cost to the State
in the future. She stated that it does not make sense to
take troopers off patrol to transport prisoners in
communities were community jails have been closed. She
summarized that cutting for numbers sake is not a smart way
of cutting. She stressed that short term expenditures now
may save significant dollars in succeeding fiscal years.
She emphasized that the Administration needs to have tools
to manage sizable cuts. She noted that the reduction of key
staff to commissioners inhibit the Administration's ability
to figure out ways to make significant changes in the
delivery of cost effective service for the future and to
respond to the Legislature.
BRUCE BOTHELO, ATTORNEY GENERAL, DEPARTMENT OF LAW observed
that the Department has received mixed signals from the
Legislature. He stressed that at the proposed funding level
the Department of Law will have to reduce:
* 28% of the Civil Division general fund positions;
* 31 positions will be eliminated;
Attorney General Bothelo noted that 16 attorney positions
will be eliminated as follows:
* 2 existing attorney positions from Human Services,
resulting in a decrease in services in rural
Alaska;
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* 4 positions from Natural Resources, resulting in
an increase in response delay for permitting
defense;
* 1 commercial attorney position which will result
in a reduction to occupational licensing
enforcement;
* The entire Consumer Protection Section will be
eliminated; and
* 2 Environmental Section attorneys will be
eliminated, resulting in the reduction of
enforcement and defense of environmental law
suits.
Representative Parnell questioned how many attorney
positions are being eliminated from FY 95. Attorney General
Bothelo stated that 13 positions are being reduced from the
FY 95 positions. He noted that the Fairbanks's Human
Service attorney will be eliminated. He clarified that the
attorney represents Children in Need of Aid and juvenile
delinquent cases in the Northern Region. He emphasized that
the reductions must be distributed through the Department.
KAREN PERDUE, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES addressed the area of optional services for
Medicaid. She acknowledged that there is a 11 percent
growth rate in the Medicaid budget. She emphasized that the
growth rate is exceptionally low. She noted there has been
no price increase for physicians and dentists for the three
years. She expressed concern that the lack of an increase
would inhibit access for Medicaid clients. She noted that
Medicaid is the insurance program for 85,000 Alaskans.
Blind and disabled persons account for half of those
receiving Medicaid. She stressed that the denial of adult
dental services and optometry services will result in a
significant hardship on these individuals.
Representative Martin expressed the concern that the
Medicaid budget has accelerated. Commissioner Perdue
stressed that the State's benefit program is modest. She
noted that entitlements have grown as a result of an
increased growth rate and the cost of doing business. She
pointed out that the program has slowed its growth rate from
20 percent in previous years.
Representative Mulder noted that 14 to 15 percent of the
State's population is on Medicaid. Commissioner Perdue
stressed that the state of Alaska is able to redeem a
portion of it's Medicaid costs through the federal Indian
Health Services Program.
Representative Navarre noted that the State's program is
driven by federal changes in eligibility. Commissioner
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Perdue agreed that federal changes have increased
eligibility. Two parent families on AFDC were added to the
Medicaid program. Poor persons eligible for Medicare were
also added to the program. Alaska also added pregnant women
and children up to 133 percent of poverty. She pointed out
that only 16 states have not expended service beyond 133
percent toward the 180 percent cap. She noted that there is
a 50/50 percent match of state/federal funding. She
observed that the State is trying to increase the match.
Representative Navarre noted that the federal match used to
be 90 percent. He questioned if the Administration has a
recommendation to allow for flexibility in covering optional
preventive services that would reduce the cost of medical
services. Commissioner Perdue stated that the
Administration would look at developing a proposal.
Representative Navarre suggested that the Administration be
given flexibility to address the needs of optional services.
Co-Chair Hanley noted that all the needs cannot be served.
He questioned if the Commissioner would like the flexibility
to discern which options would be prioritized. Commissioner
Perdue stated that she would like to discuss prioritizing
options.
Commissioner Perdue stressed that it is the Governor's
philosophy that money can be saved in welfare by increasing
child support enforcement and providing jobs through job
programs.
Commissioner Perdue discussed the Alaska Psychiatric
Hospital (APH). She noted that the Alaska Psychiatric
Hospital is over staffed for the number of patients and is
currently downsizing. She stressed that as state funding is
reduced federal funding is reduced by twice the level. She
acknowledged that money can be saved but expressed concern
that reductions may be too deep. She discussed the effect
of reductions to the Alaska Psychiatric Hospital on other
local hospitals.
In response to a question by Representative Brown,
Commissioner Perdue noted the immediate impacts on short-
funding APH. She observed that 24 staff positions will be
eliminated. This will result in a reorganization of the
units. She stressed that patients may have to be diverted.
She estimated that the cuts may have to be reduced by $200.0
thousand dollars.
DEPARTMENT OF EDUCATION
Representative Navarre MOVED to adopt Amendment DOE-10 (copy
on file). Representative Mulder OBJECTED. Representative
Navarre explained that the amendment would fully fund
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education. He noted that education funding has not
increased to keep up with inflation. He stressed that
education is a constitutional priority.
A roll call vote was taken on the MOTION.
IN FAVOR: Brown, Grussendorf, Navarre
OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Foster,
Hanley
The MOTION FAILED (3-7).
DEPARTMENT OF REVENUE
Representative Grussendorf referred to comments by
Commissioner Perdue. He noted that his an amendment to
increase child enforcement funding by $90.0 thousand dollars
failed.
ADJOURNMENT
The meeting adjourned at 3:25 p.m.
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