Legislature(1995 - 1996)
03/27/1996 01:50 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
MARCH 27, 1996
1:50 P.M.
TAPE HFC 96 - 97, Side 1, #000 - end.
TAPE HFC 96 - 97, Side 2, #000 - end.
TAPE HFC 96 - 98, Side 1, #000 - end.
TAPE HFC 96 - 98, Side 2, #000 - #418.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:50 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
Richard Cross, Deputy Commissioner, Department of Education;
Eddy Jeans, School Foundation, School Finance, Department of
Education; Larry Wiget, Director of Government Relations,
Anchorage School District, Anchorage; Mike Greany, Director,
Division of Legislative Finance; Nanci Jones, Director,
Permanent Fund Division, Department of Revenue; Nancy
Slagle, Director, Division of Budget Review, Office of
Management and Budget; Kenneth E. Bischoff, Director,
Division of Administrative Services, Department of Public
Safety; Virginia Stonkus, Fiscal Analyst, Legislative
Finance Division; John Bitney, Legislative Liaison, Alaska
Housing Finance Corporation (AHFC), Department of Revenue;
Kurt Fredriksson, Acting Deputy Commissioner, Department of
Environmental Conservation; Barbara Frank, Budget Officer,
Division of Administrative Services, Department of
Environmental Conservation.
SUMMARY
HB 412 An Act making appropriations for the operating and
loan program expenses of state government, for
certain programs, 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.
1
HB 412 was HELD in Committee for further
consideration.
HB 413 An Act making appropriations for the operating
expenses of the state's integrated comprehensive
mental health program; and providing for an
effective date.
HB 413 was HELD in Committee for further
consideration.
AGENCIES:
DEPARTMENT OF EDUCATION
DEPARTMENT OF PUBLIC SAFETY
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
LEGISLATURE
OFFICE OF THE GOVERNOR
FRONT SECTION
HB 230 An Act making appropriations to the Department of
Education for support of kindergarten, primary,
and secondary education and for community schools
programs for fiscal year 1996 and fiscal year
1997; making appropriations from the
constitutional budget reserve fund under art. IX,
sec. 17(c), Constitution of the State of Alaska;
and providing for an effective date.
CS HB 230 (FIN) was reported out of Committee with
a "do pass" recommendation.
HOUSE BILL 230
"An Act making appropriations to the Department of
Education for support of kindergarten, primary, and
secondary education and for community schools programs
for fiscal year 1996 and fiscal year 1997; making
appropriations from the constitutional budget reserve
fund under art. IX, sec. 17(c), Constitution of the
State of Alaska; and providing for an effective date."
RICHARD CROSS, DEPUTY COMMISSIONER, DEPARTMENT OF EDUCATION,
voiced support of the committee substitute adopted by the
Committee on 3/26/96, which included the Governor's FY97
request for funding of public education formula programs.
The legislation includes full funding of the foundation, an
increase of $6.5 million dollars from the current year.
Mr. Cross pointed out the changes from the current budget.
The first change would address the federal disparity test,
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changing the REAA federal impact aid deduction from 90% to
95%, and providing supplementary aid to REAA's based on a
flat rate unit adjustment of $500 hundred dollars per unit.
It would increase the unit value in the REAA's so that the
disparity would be just under 20%. The second notable
change would be the move of the single site funding
foundation.
Co-Chair Hanley clarified that the committee substitute does
not make the switches of actually moving the single site
schools. That measure is contained in separate legislation
which currently is moving through the Legislature. He asked
if that bill did not pass, would it require an additional
$1.2 million dollar allocation.
EDDY JEANS, SCHOOL FOUNDATION, SCHOOL FINANCE, DEPARTMENT OF
EDUCATION, stated it would. If the other bill does not
pass, there would be an additional $1.2 million requested to
"fix" the disparity. Co-Chair Hanley inquired if an
allocation amount would need to be indicated for the single
sites. Mr. Jeans replied that the single sites would need
to be itemized as in prior years. Co-Chair Hanley provided
the Committee with a Department handout indicating last
year's breakdown. [Copy on file].
Mr. Jeans responded to Co-Chair Hanley's comment, stating
that if the amounts indicated on the handout were moved, it
would be consistent with past practice.
Co-Chair Foster MOVED the allocation amounts recommended on
the handout. Representative Brown questioned if it would
adjust the dollar amount in the foundation. Co-Chair Hanley
thought those would be allocations under additional district
support. There being NO OBJECTION to including the
allocation, it was adopted.
Representative Brown asked why the Department decided to
short-fund the pupil transportation line which would most
dramatically affect urban districts. Mr. Cross explained
that the pupil transportation request was for $30 million
dollars, which was 92% of the FY96 authorized level. He
continued that in preparation for the Governor's FY97
operating budget and at the same time in an effort to reduce
$35 to $40 million dollars, that reduction was made.
Representative Brown asked the amount needed to fully fund
transportation for FY97. Mr. Cross replied that the full
funding estimate would be $33.2 million dollars, as a result
from increased costs over FY96. He added that pupil
transportation was not the only item selected for reduction;
that program had not been singled out, indicating that many
reductions were made.
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Representative Mulder asked if it was a "fair" assumption of
the Governor that education was "fully funded" given the
proposed reduction. Mr. Cross responded that there is full
funding of the education foundation program in the
Governor's proposed budget. He advised that it was a fair
statement on the part of the Governor. Representative
Mulder disagreed. He stated that pupil transportation
should have been included for full funding status.
Representative Navarre countered that fully funding
education specifically means funding the foundation program
unit value.
Representative Brown inquired where the school debt
retirement would be included. Mr. Jeans replied, in the
past, it was included in the K-12 support funding, although,
sometimes was addressed through another appropriation bill.
Co-Chair Hanley stated that it had been included in the FY97
operating budget; the $94.7 million dollars includes the
general obligation debt as well as the debt reimbursement
amount for schools. It is fully funded at full entitlement.
HOUSE BILL 412
"An Act making appropriations for the operating and
loan program expenses of state government, for certain
programs, 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."
HOUSE BILL 413
"An Act making appropriations for the operating
expenses of the state's integrated comprehensive mental
health program; and providing for an effective date."
DEPARTMENT OF EDUCATION (DOE)
Representative Navarre MOVED to adopt amendment DOE #6 which
would eliminate the Governor's proposed FY97 reduction of
$100 thousand dollars and restore community schools funding
for the FY96 authorized level of $600 thousand dollars. Co-
Chair Hanley OBJECTED.
A roll call was taken on the MOTION to adopt DOE #6.
IN FAVOR: Grussendorf, Navarre, Brown.
OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell,
Therriault, Foster, Hanley.
4
The MOTION FAILED (3-8).
Representative Brown MOVED to adopt amendment DOE #8 which
would fund pupil transportation at the foundation projected
level for FY97. The amendment would add a little more than
$3 million dollars to the budget. Co-Chair Hanley OBJECTED.
LARRY WIGET, DIRECTOR OF GOVERNMENT RELATIONS, ANCHORAGE
SCHOOL DISTRICT, ANCHORAGE, stated that Representative Brown
had accurately reflected the concerns of the Anchorage
school district regarding pupil transportation. The
Governor's proposed budget would force the Anchorage school
district to cut from the budget an additional $1.57 million
dollars. The funding that is currently proposed in the bill
includes an 8% cut without taking into consideration the
opening of new schools, new routes and a cost-of-living
raise.
A roll call was taken on the MOTION to adopt amendment DOE
IN FAVOR: Brown, Grussendorf.
OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell,
Therriault, Hanley, Foster.
Representative Navarre was not present for the vote.
The MOTION FAILED (2-8).
Representative Mulder MOVED to report CS HB 230 (FIN) out of
Committee with individual recommendations. There being NO
OBJECTION, it was so ordered.
CS HB 230 (FIN) was reported out of Committee with a "do
pass" recommendation.
DEPARTMENT OF PUBLIC SAFETY (DPS)
Co-Chair Hanley explained that a program exists which allows
the State to use felon dividends for three different
programs, the Department of Corrections, Violent Crimes
Compensation Commission and the Council on Domestic
Violence. In years past, most of the money in those budgets
had been from Permanent Fund Dividends (PFD). The
Governor's FY97 proposed budget had $3.196 million dollars
of PFD money going to those three divisions. Last year, it
was $2.8 million dollars. Co-Chair Hanley noted that
information was now available indicating that amount
available this year would be closer to $2.4 million dollars.
He asked for further information regarding that
determination.
5
NANCI JONES, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION,
DEPARTMENT OF REVENUE, advised that the model currently used
has been in existence since 1988. The Department of
Corrections provides a tape each year of those felons listed
as incarcerated for that particular qualifying year. For
FY97, the number would be determined by the felons that were
incarcerated in the 1994 calendar year, in the qualifying
year for the 1995 PFD. The tape match is compared with
those persons who would be eligible for a dividend and would
not have any prior denials on the record. The edit
determines if they had applied for a dividend in any year
from 1988 - 1994. Each year, an additional year is added.
If they are eligible, then their dividend is eligible to be
paid for the appropriation. Elimination of new people
occurs if they have never applied for a dividend. A number
is then determined and multiplied by the total of the
dividend. The amount of the 1995 dividends was $990
dollars, which totalled $2.438 million dollars available for
appropriation.
Ms. Jones continued, according to statute, if an amount is
appropriated over and above that number, then the detail of
that appropriation needs to be listed on the dividend stub.
Currently, that amount would roll forward with the amount
remaining in the fund and appears as a prior period
adjustment.
Representative Brown stated that if the over-appropriation
was not corrected, would that money then be taken out of the
current year dividend pool. Ms. Jones noted that would be
correct for the dividends to be paid for 1997.
Representative Brown asked for further information regarding
the drop-in felons for whom the dividends would be coming
into the pool for calendar year 1993 and 1994. Ms. Jones
established that the discrepancy resulted in FY96 when there
were many names provided from the Department of Corrections
as felons who were in fact not yet incarcerated felons.
That number then needs to be adjusted for the amount of
dividends to be paid. The number that year totalled 400
felons who appealed and who the State had to pay a dividend
to. In order for the State not to be required to pay twice,
an adjusted number was provided.
Representative Mulder questioned how that could happen. Ms.
Jones pointed out that there could be a lag in the reporting
time. The prisoner could be arrested, spending over night
in jail, but then not convicted of that crime. Depending on
when the tapes are made available, there could be no way of
knowing until the dividend was not paid. In the last fiscal
year, there were 168 dividends overturned. The 1996 number
is correct. The run is normally done in March of each year.
6
This oversight could result in a $1.10 dollar reduction to
the PFD's this year.
NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, explained
that the calculations were provided to the Governor's Office
recently, after the amendments had been completed. A review
has not been provided to determine how to bring the
discrepancy in line with the amount which is actually
available.
Representative Mulder questioned if the Department of
Corrections had given incorrect information regarding the
status of eligibility. Ms. Jones replied that the
information available at the time, needed to be adjusted in
a manner so that the PFD can make the necessary calculation
changes. At the time that the tape was provided, the
Department submitted their best guess. She noted for the
record that the Department supplied the only information
that was available to them at that time. Numbers need to be
continually adjusted.
(Tape Change, HFC 96-97, Side 2).
Co-Chair Hanley suggested that the Committee work out a
solution to funding the different compensation for victims
and their family programs. He requested that a spread sheet
addressing these concerns by provided. Representative Brown
stressed that the Council on Domestic Violence should not be
shorted as a result of the PFD mis-calculation.
Co-Chair Hanley stated that DPS #5 and DPS #6 would be HELD
until the spread sheet material was available.
Representative Brown MOVED to adopt DPS #4 which would add
program receipt authority of $50 thousand dollars for the
Department of Public Safety for the Division of Motor
Vehicles. Co-Chair Foster OBJECTED. Representative Brown
noted that this was a new program approved by LB&A this year
which allows emissions testing centers to do registration
renewals.
KENNETH BISCHOFF, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF PUBLIC SAFETY, confirmed that the
request would be funded through program receipts although
would be considered general fund money. Currently, the
sign-up rate does not indicate an excess of $50 thousand
dollars. The agency feels that they can "live" with the $50
thousand dollar limit. Representative Brown MOVED TO
WITHDRAW the MOTION to adopt DPS #4. There being NO
OBJECTION, it was withdrawn.
7
DEPARTMENT OF ENVIRONMENTAL CONSERVATION (DEC)
Representative Therriault MOVED to adopt DEC #1.
Representative Brown requested a further explanation.
Representative Therriault explained that due to a delay of
the approval of the switch within the Clean Air Program by
the Environmental Protection Agency (EPA), there would be a
brief period of time that fees will be assessed without
funding. Originally, the Department requested six months
worth of general fund program receipts. The amendment would
provide authorization for three months with anticipation of
the transfer of the program on October 1, 1996 rather than
January 1, 1997.
KURT FREDRIKSSON, ACTING DEPUTY COMMISSIONER, DEPARTMENT OF
ENVIRONMENTAL CONSERVATION, stated that total funding for
the program was for $2.1 million dollars. Representative
Therriault pointed out that the amendment would only change
the source of the funds. The fees will come through the
Clean Air Fund rather than the general fund.
BARBARA FRANK, BUDGET OFFICER, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF ENVIRONMENTAL CONSERVATION,
reiterated that the Governor's proposed budget was $2.1
million dollars for FY97. The initial request was for $2.1
million in the Clean Air Fund. DEC then submitted an
amendment to convert $1 million dollars to general fund
program receipts. There is no change in the level of
funding, only the funding source.
There being NO OBJECTION, DEC #1 was adopted.
Representative Brown MOVED to adopt DEC #2. Representative
Therriault OBJECTED. Representative Brown advised that DEC
Level Waste Radiation Compact. There are three approved
sites in the United States. If participation is not
continued, the users in Alaska will not be able to continue
use of the site located in Washington State for disposal.
Mr. Fredriksson commented that hospitals could privately
contract with that facility. Representative Brown explained
that there would be large implications resulting from the
State not dealing with hazardous waste storage arrangements.
A roll call was taken on the MOTION.
IN FAVOR: Parnell, Brown, Grussendorf.
OPPOSED: Kohring, Martin, Mulder, Therriault,
Kelly, Foster.
Representatives Hanley and Navarre were not present for the
vote.
8
The MOTION FAILED (3-6).
Representative Brown MOVED to adopt DEC #3. Representative
Therriault OBJECTED. Representative Brown noted that DEC #3
would restore the money that the Governor requested for the
vehicle inspection program which passed last session as SB
28. Without funding the request, the software to implement
the program will not be installed. Last year's fiscal note
was not adequately funded to accomplish the task of the
legislation.
A roll call was taken on the MOTION.
IN FAVOR: Brown, Grussendorf.
OPPOSED: Martin, Mulder, Parnell, Therriault,
Kelly, Kohring, Foster.
Representatives Navarre and Hanley were not present for the
vote.
The MOTION FAILED (2-7).
Representative Brown MOVED to adopt DEC #4. Representative
Therriault OBJECTED. Representative Brown advised that if
the reduction in this component continues, it would
eliminate a major portion of sewage management with regard
to subdivision review activities. The action will affect
approximately one thousand subdivisions in the Kenai, Matsu
and Anchorage areas. Property values could be affected.
She stressed that it would be more cost effective to deal
with the issues before the building begins and urged
Committee members not to do away with that function.
Representative Brown continued, it would not be possible to
pass the responsibility to the municipalities until the
program is self sustaining. The funds need to be provided
because they affect public health which is the core function
of the State. Representative Brown asked to change the BRU
from Air and Water to Statewide Public Services. There
being NO OBJECTION, the BRU was changed.
Representative Therriault responded that $1.5 million
dollars had been restored to Statewide Public Services. Mr.
Fredriksson remarked that "sewage on the ground" was the
worst situation. Initially in creating a subdivision,
checks are made regarding the carrying capacity of the land
piece to address a specific load. Representative Navarre
questioned information used in bank financing determinations
for building codes. Mr. Fredriksson replied that the focus
of a financial lending institution would be on the
individual lot and system review. Subdivision reviews can
9
have a large effect on what the individual lot system will
look like.
Representative Therriault stated that the Department would
like to devest itself of this entire function, although, the
municipalities are reluctant to take on those
responsibilities.
A roll call was taken on the MOTION.
IN FAVOR: Brown, Grussendorf.
OPPOSED: Mulder, Navarre, Parnell, Therriault,
Martin, Foster.
Representatives Kelly, Kohring and Hanley were not present
for the vote.
The MOTION FAILED (2-6).
Representative Therriault requested that DEC #5 be HELD for
further consideration.
Representative Navarre requested that DEC #6 be HELD.
(Tape Change, HFC 96-98, Side 1).
Representative Grussendorf MOVED to adopt DEC #7.
Representative Mulder OBJECTED. Representative Grussendorf
stated that the amendment would provide for one additional
seafood inspector. Currently, there is a "glut" of fish and
any problems will reflect seriously on the market.
Representative Navarre maintained that one incident of
contamination would taint the entire fishing industry. Mr.
Fredriksson suggested that fees should be charged for the
service. Representative Martin interjected that government
should not be involved in the process. The seafood industry
should hire inspectors. Representative Therriault pointed
out that component had $2.7 million dollars remaining.
A roll call was taken on the MOTION to adopt DEC #7.
IN FAVOR: Navarre, Grussendorf.
OPPOSED: Parnell, Therriault, Kelly, Kohring,
Martin, Mulder, Foster.
Representatives Hanley and Brown were not present for the
vote.
The MOTION FAILED (2-7).
LEGISLATURE
10
Representative Navarre MOVED to adopt LEG #2.
Representative Mulder OBJECTED. Representative Navarre
advised that the amendment would reduce a per diem increase
for legislators and would allocate that amount to the
University of Alaska budget.
A roll call was taken on the MOTION.
IN FAVOR: Grussendorf, Navarre.
OPPOSED: Parnell, Therriault, Kelly, Kohring,
Martin, Mulder, Hanley.
Representatives Foster and Brown were not present for the
vote.
The MOTION FAILED (2-7).
Representative Navarre MOVED to adopt LEG #3.
Representative Kelly OBJECTED. Representative Navarre
advised that the amendment had been offered in an attempt to
close the budget gap by having the Legislature participate
in "doing its part". Representative Kelly pointed out that
the increase was granted through the 18th Legislature.
A roll call was taken on the MOTION.
IN FAVOR: Grussendorf, Navarre.
OPPOSED: Therriault, Kelly, Kohring, Martin,
Mulder, Parnell, Hanley, Foster.
Representative Brown was not present for the vote.
The MOTION FAILED (2-8).
OFFICE OF THE GOVERNOR
Representative Grussendorf MOVED to adopt GOV #1. The
amendment would partially restore funding to the Governor's
recommendation from below cap underage. Some reduction was
merited as a result of a court decision against the closed
primary election need to produce two separate ballots and
additional training. The Division of Elections has
indicated that the subcommittee's recommended reduction was
too drastic and that it would threaten the Divisions ability
to provide a flawless primary and general election.
Co-Chair Hanley OBJECTED, observing that there a carry
forward exists from the year before last year. During the
last funded election, a two ballot primary existed; the
Governor's Office has requested a $573 thousand dollar
increment to cover the initial costs. The Conference
11
Committee authorized $400 thousand dollars for the dual
primary. In 1996, the Governor left $90 thousand dollars in
the base budget. Co-Chair Hanley indicated that this year,
the Governor has requested the same amount. For the
increased cost request, half has been allocated under the
current budget.
A roll call was taken on the MOTION.
IN FAVOR: Brown, Grussendorf, Navarre.
OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell,
Therriault, Hanley, Foster.
The MOTION FAILED (3-8).
FRONT SECTION
Co-Chair Hanley distributed committee substitute #9-
GH2035\C, Cramer, 3/27/96, to Committee members. He
commented that based on the Mental Health Trust Settlement
and as requested in statute, a separate bill for the mental
health interests has been created. That legislation will
have both an operating and capital aspect for the mental
health trust authority. When the subcommittee reports were
adopted, it included recommendations for mental health
spending.
MIKE GREANY, DIRECTOR, DIVISION OF LEGISLATIVE FINANCE,
added that the capital appropriations associated with the
mental health program would also be included in HB 413.
Co-Chair Foster MOVED to adopt the work draft as discussed
as the front section to HB 413. There being NO OBJECTION,
it was adopted to be incorporated into the Mental Health
Trust bill.
Co-Chair Hanley provided the Committee with a copy of the
Front Section comparison between the Governor and the House
Finance Committee recommendations. [Copy on file].
VIRGINIA STONKUS, FISCAL ANALYSTS, LEGISLATIVE FINANCE
DIVISION, provided a sectional analysis of the comparison
chart.
Section #1 deals with the Alaska Clean Air Protection Fund.
This section provides transition language for the use of
revenues related to the Clean Air Protection Fund (ACAPF).
Once approved by the Environmental Protection Agency (EPA),
receipts collected from air permit fees would be converted
from general fund program receipts to ACAPF receipts.
The Governor's Section #1 for Alaska Clean Water Fund would
12
appropriate general funds and federal funds for the Alaska
Clean Water Fund. Funding from this fund follows a cycle
which begins with the compilation of a funding priority list
for waste water treatment and collection systems. To date,
the Alaska Clean Water Fund has made 23 loans to communities
for a total of $50.5 million dollars. There is currently
$17.0 million dollars available from the fund to be loaned
for sanitation projects.
Ms. Stonkus continued, House Section #3, Governor's Section
transfer a portion of the available unrestricted cash in the
general account of the AHFC revolving fund, by the direction
of the AHFC board, to the general fund. She noted that the
amount transferred in FY96 was $70 million dollars.
Subsection (b) appropriates any earnings related to AHFC,
including loan interest payments, mortgage loan commitment
fees, and income earned on assets of the corporation, to
AHFC to hold as corporate receipts. Those receipts are to
be allocated among the AHFC revolving fund, housing
assistance loan fund and the senior housing revolving loan
fund.
Subsection (c) identifies the amount of corporate receipts
to be appropriated to AHFC for housing loan programs not
subsidized by AHFC and housing loan programs that are
subsidized by AHFC.
Ms. Stonkus pointed out that the House would increase by $20
million dollars the portion of the available unrestricted
cash in the general account of the AHFC revolving fund to be
transferred to the general fund.
NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, stated that
the $20 million dollar shift would not make that amount
available for capital projects from FY96. She summarized
that the AHFC, FY96 capital budget was a little less than
$53 million dollars.
JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
(AHFC), ANCHORAGE, added that the total transfer to the
State was $127 million dollars and that included a $57
million dollar transfer to the capital budget. Those funds
also included a $22 million dollar transfer to the
University. He added that the FY97 budget does not contain
any funding for the University.
Ms. Stonkus continued, House Section #4 was a new section
added by the House to Alaska Industrial Development and
Export Authority (AIDEA) which would transfer $21 million
13
dollars of the available unrestricted cash balance in the
AIDEA revolving fund, through direction by the board to the
general fund.
Representative Brown questioned the effect the transfer
would have on AIDEA's projects. Ms. Slagle noted that the
Governor has resisted any drain on AIDEA in order to
determine the most effective way to address their assets.
Ms. Stonkus noted that House Section #5, Governor's Section
would appropriate from the Permanent Fund Earnings Reserve
Account those funds necessary for the dividend program. The
amount reflected for transfer to the dividend fund in the
Permanent Fund's January report was $621 million dollars.
Subsection (b) appropriates from the Permanent Fund Earnings
Reserve Account for inflation-proofing. The estimated
amount would be $405 million dollars.
Subsection (c) would allow for the deposit of any funds that
are received that fall within the 25% or 50% split on
mineral lease rentals, royalties, royalty sales, etc. to the
Permanent Fund.
Subsection (d) allows interest earned on certain disputed
mineral lease rentals, royalties, sales, etc., and that 25%
or 50% of that recovered goes to the Permanent Fund. Any
interest that accrues to the Permanent Fund portion of those
settlements prior to being recovered by the State, or while
held by the State, shall be deposited to the Fund.
Subsection (e) provides conditional language appropriating
the balance of the Alaska Permanent Fund Earnings Reserve
account unless voters ratify a State Constitutional
amendment specifying a different use at the 1996 general
election.
Co-Chair Hanley noted that originally, the Governor had
provided over a $1 billion dollar deposit to the Permanent
Fund and that Section (e) was the conditional language of
that appropriation based on a vote by the people. Ms.
Slagle added, that section would transfer the balance.
Ms. Stonkus continued, Governor's Section #4 and the House
Section #6 are identical and address the Alaska Public
Utilities Commission (APUC) estimated carry-forward receipts
for the FY97 which range between $150 thousand dollars and
$200 thousand dollars.
Governor's Section #5 and House Section #7 are identical
sections dealing with the Alaska Seafood Marketing Institute
14
(ASMI), an estimated carry-forward of $300 thousand dollars.
Representative Martin suggested that an estimate be
included. Mr. Greany explained that those funds had been
appropriated in a prior year. He agreed that the amount
should be disclosed.
Ms. Stonkus noted that the Governor's Section #6 addresses
the collective bargaining agreement monetary terms. This
section would appropriate funds from the general fund to the
Department of Administration for payment to the Alaska
Public Employees' Association (APEA)/supervisory unit for
training to satisfy the terms of the collective bargaining
agreement for the fiscal year ending June 30, 1997. The
House deleted that section.
Mr. Greany stated that House Section #8, Governor's Section
(a) and (b) would allow the State to cover any shortfall in
unrestricted State revenues available for appropriation in
FY97 from the CBR per Article IX, Section #17. The amount
necessary to balance general fund revenues and
appropriations would be appropriated to the general fund
from the CBR.
Subsection (c) stipulates that appropriations made by (a) &
(b) of that section are made under Article IX, Section
material from the general operations budget.
(Tape Change, HFC 96-98, Side 2).
Ms. Stonkus addressed House Section #9 - disapproval of
monetary terms. The section stipulates that unless the
Legislature adopts a separate appropriation measure to fund
the monetary terms of the collective bargaining units of
ASEA/General Government, APEA/Supervisory Unit, LTC, IBU,
MMP unit, PSEA, Alyeska Centralized School Employees Assn.,
IBEW/Court System, U of A/Classified Employees, and Alaska
Community Colleges Federation of Teachers, the monetary
terms of the above referenced bargaining agreements would be
rejected.
Ms. Stonkus continued, House Section #10, Governor's Section
Fund. Ms. Slagle explained to Representative Martin that $9
million dollars federal funds had been appropriated this
year.
Ms. Stonkus stated that House Section #11 and the Governor's
Section #9 would allocate federal and other program
receipts. Subsection (a) is boiler plate language that
provides for additional funding authority for excess federal
15
and program receipts through the Legislative Budget and
Audit Committee (LBA) process.
Subsections (b) and (c) are boiler plate language which
allows state funds to be reduced if additional federal or
other funds are available and permitted by federal statutes,
and requires that for any shortfall of federal or program
receipts, the appropriation would be reduced accordingly.
That language would prohibit agencies from expending receipt
authority for revenues they would not actually receive.
The House did as it did in FY96 and amended Subsection (d)
to cap the possible general fund offset for TItle XX at
$6.31 million dollars.
Ms. Stonkus pointed out that House Section #12 and
Governor's Section #10 for the Four Dam Pool Transfer Fund
were identical. This would make the necessary appropriation
from the Four Dam Pool Transfer Fund to the Southeast Energy
Fund the Power Cost Equalization, Rural Electric
Capitalization Fund and the Power Project Fund.
The Governor's Section #11, House Section #13 address the
Information Services Fund (ISF). The appropriation would
cover those services provided by the Department of
Administration (DOA) for information and telecommunications.
The House reduced I/A receipts to reflect House action on
salary increases.
Ms. Stonkus continued, the Governor's Section #12 and the
House Section #14 addressed Insurance Claims and Reclamation
of State Land. The House added the Governor's amended
language. Subsection (a) would allow up to $5 million
dollars to be "swept" from otherwise lapsing general fund
appropriations for catastrophic reserve purposes.
House Section #15, Governor's Section #13 addresses the
Marine Highway System Fund (AMHS). Chapter 193 SLA 1990
created the Alaska Marine Highway System Fund. Its purpose
is to provide stability to the marine highway system by
appropriating a consistent amount of general funds each year
to be combined with the marine highway system's revenue.
The House reduced the general fund transfer to reflect House
action on salary adjustments, CIP transfers and subcommittee
action.
House Section #16, Governor's Section #14 addresses highway
and aviation fuel tax. Both recommendations are the same.
The House Section #17 and the Governor's Section #15 are
identical and allows for the general fund program receipts
from occupational licensing fees under AS 08.01.065 to be
carried forward for operating costs in FY97.
16
Ms. Stonkus continued, House Section #18, Governor's Section
Prevention (OHSRP) account which contains funds appropriated
from the general fund to the OHSRPR Fund from the 3%
surcharge collected in the general fund during FY96.
The OHSRP prevention mitigation account is a sub-account of
the general fund. The prevention mitigation account
receives money recovered from parties responsible for
containment and cleanup of oil or other hazardous
substances. The two proposals are the same.
Ms. Stonkus stated that House Section #19, Governor's
Section #17 were the same and would address the Oil and
Hazardous Substance Release Response account. The response
account contains funds appropriated from the general fund to
the OHSRPR Fund from the 2 cent surcharge collected in the
general fund during FY96.
House Section #20 and the Governor's amended section deals
with the retained fees. The language addresses the need to
appropriate vendor compensation/bankcard service fees. The
House amended the Governor's amended language to include all
fund sources for vendor compensation of fishing and hunting
licenses.
Ms. Stonkus advised that House Section #21 and Governor's
Section #18 would appropriate general fund salmon
enhancement tax receipts to the Department of Commerce and
Economic Development for qualified regional associations
operating within a region designated under AS 16.10.375.
The two are identical.
The House Section #23 and Governor's Section #20 are
identical and would appropriate general funds to the
Department of Revenue in the amounts necessary to refund
local governments their share of taxes and fees collected
for payment in FY97.
Ms. Slagle pointed out that the Administration has no
discretion as to what can be done with the funds. It is set
in statute that a certain percentage of the shared taxes
received have to be returned to the communities.
Ms. Stonkus noted that House Section #24 and Governor's
Section #21 address the debt service appropriations. The
Governor's section dealt with the transfers from the general
fund to the debt service and from debt service to the
appropriate sources. The House amended the Governor's to
include individual subsections for transfers from the Alaska
debt retirement fund for leases (d), G.O. debt (e), from the
17
International Airports Revenue Fund for revenue bond debt
(f), and from the Alaska debt retirement fund to the
Department of Education from school debt (g).
House Section #25 and Governor's Section #22 basically are
identical and address the State Training and Employment
Program funded from the Employment and Training Program
Account (ETPA). That account is created through a
contribution of one-half of one percent from each employees'
wage. Unspent balances must be lapsed from this account
into the unemployment compensation fund. This section makes
that appropriation.
House Section #26, Governor's Section #23 addresses the
storage tank registration fees and would allow the
Legislature to appropriate on an annual basis to the storage
tank assistance fund from the general fund any registration
fees collected on underground petroleum storage tanks or
tank systems. Estimate of receipts collected in FY96 for
deposit into the Storage Tank Assistance Fund is $280
million dollars. That figure was determined through work
with the agencies and through the Governor's budget.
The Governor's amended proposed a section for the Exxon
Valdez Spill Settlement Fund. Subsection (b) identifies
inter-agency receipts as the fund source for Trustee Council
projects in the back section of the appropriation bill, and
gives OMB/EVOSS Trustee Council the authority to reallocate
the inter-agency receipts between and among the agencies.
Subsection (c) notes that any excess appropriations or
shortfalls will be addressed by the Legislative Budget and
Audit Committee (LBA). Subsection (d) extends the lapse
date for the funds through 9/30/97. The House deleted that
section. EVOSS projects proposed in the Governor's amended
budget will be funded directly with EVOSS funds in the House
budget. Interim adjustments could be accommodated through
the normal Legislative Budget and Audit Committee process.
Ms. Stonkus commented that House Section #27, Governor's
Section #24 was prompted by the omnibus fee bill dealing
with loan guarantee fees, and appropriating those fees to
offset losses.
Representative Mulder MOVED to adopt the Front Section for
HB 412. There being NO OBJECTION, it was adopted.
HB 412 was HELD in Committee for further consideration.
HB 413 was HELD in Committee for further consideration.
ADJOURNMENT
18
The meeting adjourned at 4:40 P.M.
HOUSE FINANCE COMMITTEE
MARCH 27, 1996
1:50 P.M.
TAPE HFC 96 - 97, Side 1, #000 - end.
TAPE HFC 96 - 97, Side 2, #000 - end.
TAPE HFC 96 - 98, Side 1, #000 - end.
TAPE HFC 96 - 98, Side 2, #000 - #418.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:50 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
Richard Cross, Deputy Commissioner, Department of Education;
Eddy Jeans, School Foundation, School Finance, Department of
Education; Larry Wiget, Director of Government Relations,
Anchorage School District, Anchorage; Mike Greany, Director,
Division of Legislative Finance; Nanci Jones, Director,
Permanent Fund Division, Department of Revenue; Nancy
Slagle, Director, Division of Budget Review, Office of
Management and Budget; Kenneth E. Bischoff, Director,
Division of Administrative Services, Department of Public
Safety; Virginia Stonkus, Fiscal Analyst, Legislative
Finance Division; John Bitney, Legislative Liaison, Alaska
Housing Finance Corporation (AHFC), Department of Revenue;
Kurt Fredriksson, Acting Deputy Commissioner, Department of
Environmental Conservation; Barbara Frank, Budget Officer,
Division of Administrative Services, Department of
Environmental Conservation.
SUMMARY
HB 412 An Act making appropriations for the operating and
loan program expenses of state government, for
certain programs, and to capitalize funds; making
appropriations under art. IX, sec. 17(c),
Constitution of the State of Alaska, from the
19
constitutional budget reserve fund; and providing
for an effective date.
HB 412 was HELD in Committee for further
consideration.
HB 413 An Act making appropriations for the operating
expenses of the state's integrated comprehensive
mental health program; and providing for an
effective date.
HB 413 was HELD in Committee for further
consideration.
AGENCIES:
DEPARTMENT OF EDUCATION
DEPARTMENT OF PUBLIC SAFETY
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
LEGISLATURE
OFFICE OF THE GOVERNOR
FRONT SECTION
HB 230 An Act making appropriations to the Department of
Education for support of kindergarten, primary,
and secondary education and for community schools
programs for fiscal year 1996 and fiscal year
1997; making appropriations from the
constitutional budget reserve fund under art. IX,
sec. 17(c), Constitution of the State of Alaska;
and providing for an effective date.
CS HB 230 (FIN) was reported out of Committee with
a "do pass" recommendation.
HOUSE BILL 230
"An Act making appropriations to the Department of
Education for support of kindergarten, primary, and
secondary education and for community schools programs
for fiscal year 1996 and fiscal year 1997; making
appropriations from the constitutional budget reserve
fund under art. IX, sec. 17(c), Constitution of the
State of Alaska; and providing for an effective date."
RICHARD CROSS, DEPUTY COMMISSIONER, DEPARTMENT OF EDUCATION,
voiced support of the committee substitute adopted by the
Committee on 3/26/96, which included the Governor's FY97
request for funding of public education formula programs.
The legislation includes full funding of the foundation, an
increase of $6.5 million dollars from the current year.
20
Mr. Cross pointed out the changes from the current budget.
The first change would address the federal disparity test,
changing the REAA federal impact aid deduction from 90% to
95%, and providing supplementary aid to REAA's based on a
flat rate unit adjustment of $500 hundred dollars per unit.
It would increase the unit value in the REAA's so that the
disparity would be just under 20%. The second notable
change would be the move of the single site funding
foundation.
Co-Chair Hanley clarified that the committee substitute does
not make the switches of actually moving the single site
schools. That measure is contained in separate legislation
which currently is moving through the Legislature. He asked
if that bill did not pass, would it require an additional
$1.2 million dollar allocation.
EDDY JEANS, SCHOOL FOUNDATION, SCHOOL FINANCE, DEPARTMENT OF
EDUCATION, stated it would. If the other bill does not
pass, there would be an additional $1.2 million requested to
"fix" the disparity. Co-Chair Hanley inquired if an
allocation amount would need to be indicated for the single
sites. Mr. Jeans replied that the single sites would need
to be itemized as in prior years. Co-Chair Hanley provided
the Committee with a Department handout indicating last
year's breakdown. [Copy on file].
Mr. Jeans responded to Co-Chair Hanley's comment, stating
that if the amounts indicated on the handout were moved, it
would be consistent with past practice.
Co-Chair Foster MOVED the allocation amounts recommended on
the handout. Representative Brown questioned if it would
adjust the dollar amount in the foundation. Co-Chair Hanley
thought those would be allocations under additional district
support. There being NO OBJECTION to including the
allocation, it was adopted.
Representative Brown asked why the Department decided to
short-fund the pupil transportation line which would most
dramatically affect urban districts. Mr. Cross explained
that the pupil transportation request was for $30 million
dollars, which was 92% of the FY96 authorized level. He
continued that in preparation for the Governor's FY97
operating budget and at the same time in an effort to reduce
$35 to $40 million dollars, that reduction was made.
Representative Brown asked the amount needed to fully fund
transportation for FY97. Mr. Cross replied that the full
funding estimate would be $33.2 million dollars, as a result
from increased costs over FY96. He added that pupil
transportation was not the only item selected for reduction;
that program had not been singled out, indicating that many
21
reductions were made.
Representative Mulder asked if it was a "fair" assumption of
the Governor that education was "fully funded" given the
proposed reduction. Mr. Cross responded that there is full
funding of the education foundation program in the
Governor's proposed budget. He advised that it was a fair
statement on the part of the Governor. Representative
Mulder disagreed. He stated that pupil transportation
should have been included for full funding status.
Representative Navarre countered that fully funding
education specifically means funding the foundation program
unit value.
Representative Brown inquired where the school debt
retirement would be included. Mr. Jeans replied, in the
past, it was included in the K-12 support funding, although,
sometimes was addressed through another appropriation bill.
Co-Chair Hanley stated that it had been included in the FY97
operating budget; the $94.7 million dollars includes the
general obligation debt as well as the debt reimbursement
amount for schools. It is fully funded at full entitlement.
HOUSE BILL 412
"An Act making appropriations for the operating and
loan program expenses of state government, for certain
programs, 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."
HOUSE BILL 413
"An Act making appropriations for the operating
expenses of the state's integrated comprehensive mental
health program; and providing for an effective date."
DEPARTMENT OF EDUCATION (DOE)
Representative Navarre MOVED to adopt amendment DOE #6 which
would eliminate the Governor's proposed FY97 reduction of
$100 thousand dollars and restore community schools funding
for the FY96 authorized level of $600 thousand dollars. Co-
Chair Hanley OBJECTED.
A roll call was taken on the MOTION to adopt DOE #6.
IN FAVOR: Grussendorf, Navarre, Brown.
OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell,
Therriault, Foster, Hanley.
22
The MOTION FAILED (3-8).
Representative Brown MOVED to adopt amendment DOE #8 which
would fund pupil transportation at the foundation projected
level for FY97. The amendment would add a little more than
$3 million dollars to the budget. Co-Chair Hanley OBJECTED.
LARRY WIGET, DIRECTOR OF GOVERNMENT RELATIONS, ANCHORAGE
SCHOOL DISTRICT, ANCHORAGE, stated that Representative Brown
had accurately reflected the concerns of the Anchorage
school district regarding pupil transportation. The
Governor's proposed budget would force the Anchorage school
district to cut from the budget an additional $1.57 million
dollars. The funding that is currently proposed in the bill
includes an 8% cut without taking into consideration the
opening of new schools, new routes and a cost-of-living
raise.
A roll call was taken on the MOTION to adopt amendment DOE
IN FAVOR: Brown, Grussendorf.
OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell,
Therriault, Hanley, Foster.
Representative Navarre was not present for the vote.
The MOTION FAILED (2-8).
Representative Mulder MOVED to report CS HB 230 (FIN) out of
Committee with individual recommendations. There being NO
OBJECTION, it was so ordered.
CS HB 230 (FIN) was reported out of Committee with a "do
pass" recommendation.
DEPARTMENT OF PUBLIC SAFETY (DPS)
Co-Chair Hanley explained that a program exists which allows
the State to use felon dividends for three different
programs, the Department of Corrections, Violent Crimes
Compensation Commission and the Council on Domestic
Violence. In years past, most of the money in those budgets
had been from Permanent Fund Dividends (PFD). The
Governor's FY97 proposed budget had $3.196 million dollars
of PFD money going to those three divisions. Last year, it
was $2.8 million dollars. Co-Chair Hanley noted that
information was now available indicating that amount
available this year would be closer to $2.4 million dollars.
He asked for further information regarding that
determination.
23
NANCI JONES, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION,
DEPARTMENT OF REVENUE, advised that the model currently used
has been in existence since 1988. The Department of
Corrections provides a tape each year of those felons listed
as incarcerated for that particular qualifying year. For
FY97, the number would be determined by the felons that were
incarcerated in the 1994 calendar year, in the qualifying
year for the 1995 PFD. The tape match is compared with
those persons who would be eligible for a dividend and would
not have any prior denials on the record. The edit
determines if they had applied for a dividend in any year
from 1988 - 1994. Each year, an additional year is added.
If they are eligible, then their dividend is eligible to be
paid for the appropriation. Elimination of new people
occurs if they have never applied for a dividend. A number
is then determined and multiplied by the total of the
dividend. The amount of the 1995 dividends was $990
dollars, which totalled $2.438 million dollars available for
appropriation.
Ms. Jones continued, according to statute, if an amount is
appropriated over and above that number, then the detail of
that appropriation needs to be listed on the dividend stub.
Currently, that amount would roll forward with the amount
remaining in the fund and appears as a prior period
adjustment.
Representative Brown stated that if the over-appropriation
was not corrected, would that money then be taken out of the
current year dividend pool. Ms. Jones noted that would be
correct for the dividends to be paid for 1997.
Representative Brown asked for further information regarding
the drop-in felons for whom the dividends would be coming
into the pool for calendar year 1993 and 1994. Ms. Jones
established that the discrepancy resulted in FY96 when there
were many names provided from the Department of Corrections
as felons who were in fact not yet incarcerated felons.
That number then needs to be adjusted for the amount of
dividends to be paid. The number that year totalled 400
felons who appealed and who the State had to pay a dividend
to. In order for the State not to be required to pay twice,
an adjusted number was provided.
Representative Mulder questioned how that could happen. Ms.
Jones pointed out that there could be a lag in the reporting
time. The prisoner could be arrested, spending over night
in jail, but then not convicted of that crime. Depending on
when the tapes are made available, there could be no way of
knowing until the dividend was not paid. In the last fiscal
year, there were 168 dividends overturned. The 1996 number
24
is correct. The run is normally done in March of each year.
This oversight could result in a $1.10 dollar reduction to
the PFD's this year.
NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, explained
that the calculations were provided to the Governor's Office
recently, after the amendments had been completed. A review
has not been provided to determine how to bring the
discrepancy in line with the amount which is actually
available.
Representative Mulder questioned if the Department of
Corrections had given incorrect information regarding the
status of eligibility. Ms. Jones replied that the
information available at the time, needed to be adjusted in
a manner so that the PFD can make the necessary calculation
changes. At the time that the tape was provided, the
Department submitted their best guess. She noted for the
record that the Department supplied the only information
that was available to them at that time. Numbers need to be
continually adjusted.
(Tape Change, HFC 96-97, Side 2).
Co-Chair Hanley suggested that the Committee work out a
solution to funding the different compensation for victims
and their family programs. He requested that a spread sheet
addressing these concerns by provided. Representative Brown
stressed that the Council on Domestic Violence should not be
shorted as a result of the PFD mis-calculation.
Co-Chair Hanley stated that DPS #5 and DPS #6 would be HELD
until the spread sheet material was available.
Representative Brown MOVED to adopt DPS #4 which would add
program receipt authority of $50 thousand dollars for the
Department of Public Safety for the Division of Motor
Vehicles. Co-Chair Foster OBJECTED. Representative Brown
noted that this was a new program approved by LB&A this year
which allows emissions testing centers to do registration
renewals.
KENNETH BISCHOFF, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF PUBLIC SAFETY, confirmed that the
request would be funded through program receipts although
would be considered general fund money. Currently, the
sign-up rate does not indicate an excess of $50 thousand
dollars. The agency feels that they can "live" with the $50
thousand dollar limit. Representative Brown MOVED TO
WITHDRAW the MOTION to adopt DPS #4. There being NO
OBJECTION, it was withdrawn.
25
DEPARTMENT OF ENVIRONMENTAL CONSERVATION (DEC)
Representative Therriault MOVED to adopt DEC #1.
Representative Brown requested a further explanation.
Representative Therriault explained that due to a delay of
the approval of the switch within the Clean Air Program by
the Environmental Protection Agency (EPA), there would be a
brief period of time that fees will be assessed without
funding. Originally, the Department requested six months
worth of general fund program receipts. The amendment would
provide authorization for three months with anticipation of
the transfer of the program on October 1, 1996 rather than
January 1, 1997.
KURT FREDRIKSSON, ACTING DEPUTY COMMISSIONER, DEPARTMENT OF
ENVIRONMENTAL CONSERVATION, stated that total funding for
the program was for $2.1 million dollars. Representative
Therriault pointed out that the amendment would only change
the source of the funds. The fees will come through the
Clean Air Fund rather than the general fund.
BARBARA FRANK, BUDGET OFFICER, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF ENVIRONMENTAL CONSERVATION,
reiterated that the Governor's proposed budget was $2.1
million dollars for FY97. The initial request was for $2.1
million in the Clean Air Fund. DEC then submitted an
amendment to convert $1 million dollars to general fund
program receipts. There is no change in the level of
funding, only the funding source.
There being NO OBJECTION, DEC #1 was adopted.
Representative Brown MOVED to adopt DEC #2. Representative
Therriault OBJECTED. Representative Brown advised that DEC
Level Waste Radiation Compact. There are three approved
sites in the United States. If participation is not
continued, the users in Alaska will not be able to continue
use of the site located in Washington State for disposal.
Mr. Fredriksson commented that hospitals could privately
contract with that facility. Representative Brown explained
that there would be large implications resulting from the
State not dealing with hazardous waste storage arrangements.
A roll call was taken on the MOTION.
IN FAVOR: Parnell, Brown, Grussendorf.
OPPOSED: Kohring, Martin, Mulder, Therriault,
Kelly, Foster.
Representatives Hanley and Navarre were not present for the
26
vote.
The MOTION FAILED (3-6).
Representative Brown MOVED to adopt DEC #3. Representative
Therriault OBJECTED. Representative Brown noted that DEC #3
would restore the money that the Governor requested for the
vehicle inspection program which passed last session as SB
28. Without funding the request, the software to implement
the program will not be installed. Last year's fiscal note
was not adequately funded to accomplish the task of the
legislation.
A roll call was taken on the MOTION.
IN FAVOR: Brown, Grussendorf.
OPPOSED: Martin, Mulder, Parnell, Therriault,
Kelly, Kohring, Foster.
Representatives Navarre and Hanley were not present for the
vote.
The MOTION FAILED (2-7).
Representative Brown MOVED to adopt DEC #4. Representative
Therriault OBJECTED. Representative Brown advised that if
the reduction in this component continues, it would
eliminate a major portion of sewage management with regard
to subdivision review activities. The action will affect
approximately one thousand subdivisions in the Kenai, Matsu
and Anchorage areas. Property values could be affected.
She stressed that it would be more cost effective to deal
with the issues before the building begins and urged
Committee members not to do away with that function.
Representative Brown continued, it would not be possible to
pass the responsibility to the municipalities until the
program is self sustaining. The funds need to be provided
because they affect public health which is the core function
of the State. Representative Brown asked to change the BRU
from Air and Water to Statewide Public Services. There
being NO OBJECTION, the BRU was changed.
Representative Therriault responded that $1.5 million
dollars had been restored to Statewide Public Services. Mr.
Fredriksson remarked that "sewage on the ground" was the
worst situation. Initially in creating a subdivision,
checks are made regarding the carrying capacity of the land
piece to address a specific load. Representative Navarre
questioned information used in bank financing determinations
for building codes. Mr. Fredriksson replied that the focus
of a financial lending institution would be on the
27
individual lot and system review. Subdivision reviews can
have a large effect on what the individual lot system will
look like.
Representative Therriault stated that the Department would
like to devest itself of this entire function, although, the
municipalities are reluctant to take on those
responsibilities.
A roll call was taken on the MOTION.
IN FAVOR: Brown, Grussendorf.
OPPOSED: Mulder, Navarre, Parnell, Therriault,
Martin, Foster.
Representatives Kelly, Kohring and Hanley were not present
for the vote.
The MOTION FAILED (2-6).
Representative Therriault requested that DEC #5 be HELD for
further consideration.
Representative Navarre requested that DEC #6 be HELD.
(Tape Change, HFC 96-98, Side 1).
Representative Grussendorf MOVED to adopt DEC #7.
Representative Mulder OBJECTED. Representative Grussendorf
stated that the amendment would provide for one additional
seafood inspector. Currently, there is a "glut" of fish and
any problems will reflect seriously on the market.
Representative Navarre maintained that one incident of
contamination would taint the entire fishing industry. Mr.
Fredriksson suggested that fees should be charged for the
service. Representative Martin interjected that government
should not be involved in the process. The seafood industry
should hire inspectors. Representative Therriault pointed
out that component had $2.7 million dollars remaining.
A roll call was taken on the MOTION to adopt DEC #7.
IN FAVOR: Navarre, Grussendorf.
OPPOSED: Parnell, Therriault, Kelly, Kohring,
Martin, Mulder, Foster.
Representatives Hanley and Brown were not present for the
vote.
The MOTION FAILED (2-7).
28
LEGISLATURE
Representative Navarre MOVED to adopt LEG #2.
Representative Mulder OBJECTED. Representative Navarre
advised that the amendment would reduce a per diem increase
for legislators and would allocate that amount to the
University of Alaska budget.
A roll call was taken on the MOTION.
IN FAVOR: Grussendorf, Navarre.
OPPOSED: Parnell, Therriault, Kelly, Kohring,
Martin, Mulder, Hanley.
Representatives Foster and Brown were not present for the
vote.
The MOTION FAILED (2-7).
Representative Navarre MOVED to adopt LEG #3.
Representative Kelly OBJECTED. Representative Navarre
advised that the amendment had been offered in an attempt to
close the budget gap by having the Legislature participate
in "doing its part". Representative Kelly pointed out that
the increase was granted through the 18th Legislature.
A roll call was taken on the MOTION.
IN FAVOR: Grussendorf, Navarre.
OPPOSED: Therriault, Kelly, Kohring, Martin,
Mulder, Parnell, Hanley, Foster.
Representative Brown was not present for the vote.
The MOTION FAILED (2-8).
OFFICE OF THE GOVERNOR
Representative Grussendorf MOVED to adopt GOV #1. The
amendment would partially restore funding to the Governor's
recommendation from below cap underage. Some reduction was
merited as a result of a court decision against the closed
primary election need to produce two separate ballots and
additional training. The Division of Elections has
indicated that the subcommittee's recommended reduction was
too drastic and that it would threaten the Divisions ability
to provide a flawless primary and general election.
Co-Chair Hanley OBJECTED, observing that there a carry
forward exists from the year before last year. During the
last funded election, a two ballot primary existed; the
Governor's Office has requested a $573 thousand dollar
29
increment to cover the initial costs. The Conference
Committee authorized $400 thousand dollars for the dual
primary. In 1996, the Governor left $90 thousand dollars in
the base budget. Co-Chair Hanley indicated that this year,
the Governor has requested the same amount. For the
increased cost request, half has been allocated under the
current budget.
A roll call was taken on the MOTION.
IN FAVOR: Brown, Grussendorf, Navarre.
OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell,
Therriault, Hanley, Foster.
The MOTION FAILED (3-8).
FRONT SECTION
Co-Chair Hanley distributed committee substitute #9-
GH2035\C, Cramer, 3/27/96, to Committee members. He
commented that based on the Mental Health Trust Settlement
and as requested in statute, a separate bill for the mental
health interests has been created. That legislation will
have both an operating and capital aspect for the mental
health trust authority. When the subcommittee reports were
adopted, it included recommendations for mental health
spending.
MIKE GREANY, DIRECTOR, DIVISION OF LEGISLATIVE FINANCE,
added that the capital appropriations associated with the
mental health program would also be included in HB 413.
Co-Chair Foster MOVED to adopt the work draft as discussed
as the front section to HB 413. There being NO OBJECTION,
it was adopted to be incorporated into the Mental Health
Trust bill.
Co-Chair Hanley provided the Committee with a copy of the
Front Section comparison between the Governor and the House
Finance Committee recommendations. [Copy on file].
VIRGINIA STONKUS, FISCAL ANALYSTS, LEGISLATIVE FINANCE
DIVISION, provided a sectional analysis of the comparison
chart.
Section #1 deals with the Alaska Clean Air Protection Fund.
This section provides transition language for the use of
revenues related to the Clean Air Protection Fund (ACAPF).
Once approved by the Environmental Protection Agency (EPA),
receipts collected from air permit fees would be converted
from general fund program receipts to ACAPF receipts.
30
The Governor's Section #1 for Alaska Clean Water Fund would
appropriate general funds and federal funds for the Alaska
Clean Water Fund. Funding from this fund follows a cycle
which begins with the compilation of a funding priority list
for waste water treatment and collection systems. To date,
the Alaska Clean Water Fund has made 23 loans to communities
for a total of $50.5 million dollars. There is currently
$17.0 million dollars available from the fund to be loaned
for sanitation projects.
Ms. Stonkus continued, House Section #3, Governor's Section
transfer a portion of the available unrestricted cash in the
general account of the AHFC revolving fund, by the direction
of the AHFC board, to the general fund. She noted that the
amount transferred in FY96 was $70 million dollars.
Subsection (b) appropriates any earnings related to AHFC,
including loan interest payments, mortgage loan commitment
fees, and income earned on assets of the corporation, to
AHFC to hold as corporate receipts. Those receipts are to
be allocated among the AHFC revolving fund, housing
assistance loan fund and the senior housing revolving loan
fund.
Subsection (c) identifies the amount of corporate receipts
to be appropriated to AHFC for housing loan programs not
subsidized by AHFC and housing loan programs that are
subsidized by AHFC.
Ms. Stonkus pointed out that the House would increase by $20
million dollars the portion of the available unrestricted
cash in the general account of the AHFC revolving fund to be
transferred to the general fund.
NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, stated that
the $20 million dollar shift would not make that amount
available for capital projects from FY96. She summarized
that the AHFC, FY96 capital budget was a little less than
$53 million dollars.
JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
(AHFC), ANCHORAGE, added that the total transfer to the
State was $127 million dollars and that included a $57
million dollar transfer to the capital budget. Those funds
also included a $22 million dollar transfer to the
University. He added that the FY97 budget does not contain
any funding for the University.
Ms. Stonkus continued, House Section #4 was a new section
added by the House to Alaska Industrial Development and
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Export Authority (AIDEA) which would transfer $21 million
dollars of the available unrestricted cash balance in the
AIDEA revolving fund, through direction by the board to the
general fund.
Representative Brown questioned the effect the transfer
would have on AIDEA's projects. Ms. Slagle noted that the
Governor has resisted any drain on AIDEA in order to
determine the most effective way to address their assets.
Ms. Stonkus noted that House Section #5, Governor's Section
would appropriate from the Permanent Fund Earnings Reserve
Account those funds necessary for the dividend program. The
amount reflected for transfer to the dividend fund in the
Permanent Fund's January report was $621 million dollars.
Subsection (b) appropriates from the Permanent Fund Earnings
Reserve Account for inflation-proofing. The estimated
amount would be $405 million dollars.
Subsection (c) would allow for the deposit of any funds that
are received that fall within the 25% or 50% split on
mineral lease rentals, royalties, royalty sales, etc. to the
Permanent Fund.
Subsection (d) allows interest earned on certain disputed
mineral lease rentals, royalties, sales, etc., and that 25%
or 50% of that recovered goes to the Permanent Fund. Any
interest that accrues to the Permanent Fund portion of those
settlements prior to being recovered by the State, or while
held by the State, shall be deposited to the Fund.
Subsection (e) provides conditional language appropriating
the balance of the Alaska Permanent Fund Earnings Reserve
account unless voters ratify a State Constitutional
amendment specifying a different use at the 1996 general
election.
Co-Chair Hanley noted that originally, the Governor had
provided over a $1 billion dollar deposit to the Permanent
Fund and that Section (e) was the conditional language of
that appropriation based on a vote by the people. Ms.
Slagle added, that section would transfer the balance.
Ms. Stonkus continued, Governor's Section #4 and the House
Section #6 are identical and address the Alaska Public
Utilities Commission (APUC) estimated carry-forward receipts
for the FY97 which range between $150 thousand dollars and
$200 thousand dollars.
Governor's Section #5 and House Section #7 are identical
32
sections dealing with the Alaska Seafood Marketing Institute
(ASMI), an estimated carry-forward of $300 thousand dollars.
Representative Martin suggested that an estimate be
included. Mr. Greany explained that those funds had been
appropriated in a prior year. He agreed that the amount
should be disclosed.
Ms. Stonkus noted that the Governor's Section #6 addresses
the collective bargaining agreement monetary terms. This
section would appropriate funds from the general fund to the
Department of Administration for payment to the Alaska
Public Employees' Association (APEA)/supervisory unit for
training to satisfy the terms of the collective bargaining
agreement for the fiscal year ending June 30, 1997. The
House deleted that section.
Mr. Greany stated that House Section #8, Governor's Section
(a) and (b) would allow the State to cover any shortfall in
unrestricted State revenues available for appropriation in
FY97 from the CBR per Article IX, Section #17. The amount
necessary to balance general fund revenues and
appropriations would be appropriated to the general fund
from the CBR.
Subsection (c) stipulates that appropriations made by (a) &
(b) of that section are made under Article IX, Section
material from the general operations budget.
(Tape Change, HFC 96-98, Side 2).
Ms. Stonkus addressed House Section #9 - disapproval of
monetary terms. The section stipulates that unless the
Legislature adopts a separate appropriation measure to fund
the monetary terms of the collective bargaining units of
ASEA/General Government, APEA/Supervisory Unit, LTC, IBU,
MMP unit, PSEA, Alyeska Centralized School Employees Assn.,
IBEW/Court System, U of A/Classified Employees, and Alaska
Community Colleges Federation of Teachers, the monetary
terms of the above referenced bargaining agreements would be
rejected.
Ms. Stonkus continued, House Section #10, Governor's Section
Fund. Ms. Slagle explained to Representative Martin that $9
million dollars federal funds had been appropriated this
year.
Ms. Stonkus stated that House Section #11 and the Governor's
Section #9 would allocate federal and other program
receipts. Subsection (a) is boiler plate language that
33
provides for additional funding authority for excess federal
and program receipts through the Legislative Budget and
Audit Committee (LBA) process.
Subsections (b) and (c) are boiler plate language which
allows state funds to be reduced if additional federal or
other funds are available and permitted by federal statutes,
and requires that for any shortfall of federal or program
receipts, the appropriation would be reduced accordingly.
That language would prohibit agencies from expending receipt
authority for revenues they would not actually receive.
The House did as it did in FY96 and amended Subsection (d)
to cap the possible general fund offset for TItle XX at
$6.31 million dollars.
Ms. Stonkus pointed out that House Section #12 and
Governor's Section #10 for the Four Dam Pool Transfer Fund
were identical. This would make the necessary appropriation
from the Four Dam Pool Transfer Fund to the Southeast Energy
Fund the Power Cost Equalization, Rural Electric
Capitalization Fund and the Power Project Fund.
The Governor's Section #11, House Section #13 address the
Information Services Fund (ISF). The appropriation would
cover those services provided by the Department of
Administration (DOA) for information and telecommunications.
The House reduced I/A receipts to reflect House action on
salary increases.
Ms. Stonkus continued, the Governor's Section #12 and the
House Section #14 addressed Insurance Claims and Reclamation
of State Land. The House added the Governor's amended
language. Subsection (a) would allow up to $5 million
dollars to be "swept" from otherwise lapsing general fund
appropriations for catastrophic reserve purposes.
House Section #15, Governor's Section #13 addresses the
Marine Highway System Fund (AMHS). Chapter 193 SLA 1990
created the Alaska Marine Highway System Fund. Its purpose
is to provide stability to the marine highway system by
appropriating a consistent amount of general funds each year
to be combined with the marine highway system's revenue.
The House reduced the general fund transfer to reflect House
action on salary adjustments, CIP transfers and subcommittee
action.
House Section #16, Governor's Section #14 addresses highway
and aviation fuel tax. Both recommendations are the same.
The House Section #17 and the Governor's Section #15 are
identical and allows for the general fund program receipts
from occupational licensing fees under AS 08.01.065 to be
34
carried forward for operating costs in FY97.
Ms. Stonkus continued, House Section #18, Governor's Section
Prevention (OHSRP) account which contains funds appropriated
from the general fund to the OHSRPR Fund from the 3%
surcharge collected in the general fund during FY96.
The OHSRP prevention mitigation account is a sub-account of
the general fund. The prevention mitigation account
receives money recovered from parties responsible for
containment and cleanup of oil or other hazardous
substances. The two proposals are the same.
Ms. Stonkus stated that House Section #19, Governor's
Section #17 were the same and would address the Oil and
Hazardous Substance Release Response account. The response
account contains funds appropriated from the general fund to
the OHSRPR Fund from the 2 cent surcharge collected in the
general fund during FY96.
House Section #20 and the Governor's amended section deals
with the retained fees. The language addresses the need to
appropriate vendor compensation/bankcard service fees. The
House amended the Governor's amended language to include all
fund sources for vendor compensation of fishing and hunting
licenses.
Ms. Stonkus advised that House Section #21 and Governor's
Section #18 would appropriate general fund salmon
enhancement tax receipts to the Department of Commerce and
Economic Development for qualified regional associations
operating within a region designated under AS 16.10.375.
The two are identical.
The House Section #23 and Governor's Section #20 are
identical and would appropriate general funds to the
Department of Revenue in the amounts necessary to refund
local governments their share of taxes and fees collected
for payment in FY97.
Ms. Slagle pointed out that the Administration has no
discretion as to what can be done with the funds. It is set
in statute that a certain percentage of the shared taxes
received have to be returned to the communities.
Ms. Stonkus noted that House Section #24 and Governor's
Section #21 address the debt service appropriations. The
Governor's section dealt with the transfers from the general
fund to the debt service and from debt service to the
appropriate sources. The House amended the Governor's to
include individual subsections for transfers from the Alaska
35
debt retirement fund for leases (d), G.O. debt (e), from the
International Airports Revenue Fund for revenue bond debt
(f), and from the Alaska debt retirement fund to the
Department of Education from school debt (g).
House Section #25 and Governor's Section #22 basically are
identical and address the State Training and Employment
Program funded from the Employment and Training Program
Account (ETPA). That account is created through a
contribution of one-half of one percent from each employees'
wage. Unspent balances must be lapsed from this account
into the unemployment compensation fund. This section makes
that appropriation.
House Section #26, Governor's Section #23 addresses the
storage tank registration fees and would allow the
Legislature to appropriate on an annual basis to the storage
tank assistance fund from the general fund any registration
fees collected on underground petroleum storage tanks or
tank systems. Estimate of receipts collected in FY96 for
deposit into the Storage Tank Assistance Fund is $280
million dollars. That figure was determined through work
with the agencies and through the Governor's budget.
The Governor's amended proposed a section for the Exxon
Valdez Spill Settlement Fund. Subsection (b) identifies
inter-agency receipts as the fund source for Trustee Council
projects in the back section of the appropriation bill, and
gives OMB/EVOSS Trustee Council the authority to reallocate
the inter-agency receipts between and among the agencies.
Subsection (c) notes that any excess appropriations or
shortfalls will be addressed by the Legislative Budget and
Audit Committee (LBA). Subsection (d) extends the lapse
date for the funds through 9/30/97. The House deleted that
section. EVOSS projects proposed in the Governor's amended
budget will be funded directly with EVOSS funds in the House
budget. Interim adjustments could be accommodated through
the normal Legislative Budget and Audit Committee process.
Ms. Stonkus commented that House Section #27, Governor's
Section #24 was prompted by the omnibus fee bill dealing
with loan guarantee fees, and appropriating those fees to
offset losses.
Representative Mulder MOVED to adopt the Front Section for
HB 412. There being NO OBJECTION, it was adopted.
HB 412 was HELD in Committee for further consideration.
HB 413 was HELD in Committee for further consideration.
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ADJOURNMENT
The meeting adjourned at 4:40 P.M.
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