Legislature(1999 - 2000)
03/04/1999 01:40 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 4, 1999
1:40 P.M.
TAPE HFC 99 - 34, Side 1.
TAPE HFC 99 - 34, Side 2.
TAPE HFC 99 - 35, Side 1.
TAPE HFC 99 - 35, Side 2.
TAPE HFC 99 - 36, Side 1.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:40 P.M.
PRESENT
Co-Chair Therriault Representative Foster
Co-Chair Mulder Representative Grussendorf
Vice Chair Bunde Representative Kohring
Representative Austerman Representative G. Davis
Representative J. Davies Representative Williams
Representative Moses was not present for the meeting.
ALSO PRESENT
Dan Spencer, Chief Budget Analyst, Office of Management and
Budget; Annalee McConnell, Director, Office of Management
and Budget; David Teal, Director, Legislative Finance
Division; Representative Lisa Murkowski; Representative
Ethan Berkowitz; Janet Seitz, Staff, Representative Norman
Rokeberg; Catherine Reardon, Director, Division of
Occupational Licensing, Department of Commerce and Economic
Development; Alison Elgee, Deputy Commissioner, Department
of Administration; Sharon Barton, Director, Division of
Administrative Services, Department of Administration; Janet
Clarke, Director, Division of Administrative Services,
Department of Health and Social Services; Dwayne Peeples,
Director, Division of Administrative Services, Department of
Corrections; Percy Frisby, Director, Division of Energy,
Department of Community and Regional Affairs; Theresa
Tanoury, Administrator, Division of Family and Youth
Services, Department of Health and Social Services; Bob
Labbe, Director, Division of Medical Assistance, Department
of Health and Social Services; Barbara Miklos, Director,
Child Support Enforcement Services, Department of Revenue;
Ken Bischoff, Director, Division of Administrative Services,
Department of Public Safety; Nancy Slagle, Director,
Division of Administrative Services, Department of
Transportation and Public Facilities; Karen Rehfeld,
Director, Division of Administrative Services, Department of
Education; Nico Bus, Director, Division of Administrative
Services, Department of Natural Resources; Kathryn
Daughetee, Director, Division of Administrative Services,
Department of Law; Denny DeWitt, Staff, Representative Eldon
Mulder; Mary Marchburn, Acting Director, Division of
Administrative Services, Department of Commerce and Economic
Development.
SUMMARY
HB 68 An Act extending the termination date of the Board
of Pharmacy to June 30, 2005; and providing for an
effective date.
HB 68 reported out of Committee with a "do pass"
recommendation and with a zero fiscal note by the
Department of Commerce and Economic Development
dated 2/26/99.
HB 77 An Act relating to the Joint Armed Services
Committee, a permanent interim committee of the
Alaska State Legislature; and providing for an
effective date.
CS HB 77 (FIN) was reported out of Committee with
a "do pass" recommendation and with a zero fiscal
note by the House Finance Committee.
HB 100 An Act making and amending capital, supplemental,
and other appropriations, and appropriations to
capitalize funds; ratifying certain expenditures;
and providing for an effective date.
HB 100 was HELD in Committee for further
consideration.
HOUSE BILL NO. 77
"An Act relating to the Joint Armed Services Committee,
a permanent interim committee of the Alaska State
Legislature; and providing for an effective date."
Co-Chair Therriault requested Representative Murkowski to
refresh members on changes made to the draft committee
substitute. He pointed out that the in House Finance
Committee fiscal note, expenses of the Commission would be
covered through the Legislative Council's budget.
REPRESENTATIVE LISA MURKOWSKI noted that the proposed
Commission would be started with newly appointed members in
order that the Speaker of the House could appoint them.
Additionally, the committee substitute has added a section
with a 10-year sunset clause.
Representative Bunde MOVED to adopt work draft 1-LS0413\D,
Cook, 2/24/99, as the version before the Committee. There
being NO OBJECTION, it was adopted.
Representative Foster MOVED to report CS HB 77 (FIN) out of
Committee with individual recommendations and with the
accompanying zero fiscal note. There being NO OBJECTION, it
was so ordered.
CS HB 77 (FIN) was reported out of Committee with a "do
pass" recommendation and with the House Finance Committee
zero fiscal note.
HOUSE BILL NO. 68
"An Act extending the termination date of the Board of
Pharmacy to June 30, 2005; and providing for an
effective date."
JANET SEITZ, STAFF, REPRESENTATIVE NORMAN ROKEBERG, stated
that the proposed legislation would extend the termination
date of the Board of Pharmacy to June 30, 2005.
CATHERINE REARDON, DIRECTOR, DIVISION OF OCCUPATIONAL
LISCENSING, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT,
noted that the Department of Commerce and Economic
Development strongly supports extending the license of the
Board of Pharmacy. A follow-up audit scrutinized results
and recommendations of the previous audit. In doing so,
they found that the initial audit had recommended
eliminating photographs from the applications in order that
discrimination would not be involved. The Board, however,
did not endorse that requirement. They believe it is
important to know who is being licensed in a pharmacy
profession.
Representative Foster MOVED to report HB 68 out of Committee
with individual recommendations and with the accompanying
zero fiscal note. There being NO OBJECTION, it was so
ordered.
HB 68 was reported out of Committee with a "do pass"
recommendation and with a zero fiscal note by the Department
of Commerce and Economic Development dated 2/26/99.
HOUSE BILL NO. 100
"An Act making and amending capital, supplemental, and
other appropriations, and appropriations to capitalize
funds; ratifying certain expenditures; and providing
for an effective date."
DEPARTMENT OF ADMINISTRATION
SECTION 6
Section (g & h)
ALISON ELGEE, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, noted that these two sections were designed
to provide funding to the Department for replacement of the
boiler in the Fairbanks Pioneer Home. The total cost of the
boiler would be approximately $1.3 million dollars. Section
(g) will generate $700 thousand dollars from Pioneer Home
receipts and Section (h) will generate approximately $500
thousand dollars, with a reallocation of existing capital
appropriations for maintenance to provide the difference.
Representative J. Davies asked if there was a back up system
if the boiler system should fail. Ms. Elgee replied that
there is an evacuation plan, which would include some
residents being returned to family members for a short-term
basis; those in convalescent would be transferred to Denali
and there is an arrangement with a local hotel to relocate
other residents in the home. At this time, there are 100
residents in that center.
In response to a query of Co-Chair Therriault regarding the
scope of the project, Ms. Elgee explained that the boiler
would be replaced with a new design that would be capable to
use either oil or gas.
Representative Austerman asked how old the facility was.
Ms. Elgee replied that Fairbanks Pioneer Home was built in
1967.
SECTION 20 - MISCELLANEOUS CLAIMS
SHARON BARTON, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF ADMINISTRATION, noted that Section
20 included miscellaneous claims for the Department in the
amount of $15,640 thousand dollars. She explained that
these claims resulted from stale dated warrants presented
for payment after the year-end books were closed. The
State's liability for paying these warrants extends
indefinitely.
SECTION 22 - RADIFICATIONS
Sections 22(a, b, & c)
Ms. Barton continued, Section 22(a) is a request for
telecommunication services in the amount of $32,269 dollars.
She noted that sufficient authorization existed for the
expenditure, although, insufficient revenues exist.
Ms. Barton pointed out that Section 22(b) would provide for
an adjustment associated with a computerization project for
the Office of Public Advocacy in the amount of $19.02
dollars.
Ms. Barton spoke to Section 22c request in the amount of
$193,562 thousand dollars for central duplicating. The
facility was closed because revenues were falling short of
keeping the operation open.
She advised that Sections (a) & (b) would be funded by the
Information Services fund (ISF) and Section (c) would be
included as a general fund expenditure. Ms. Barton advised
that ISF is funded each year in the front section of the
budget.
In response to Representative Bunde, Ms. Elgee explained
that the central duplicating office was closed because the
State was not meeting the expenses of operation. The net
request reflects the cost after incorporating all revenues
received. In order to continue the operation, the prices
would have had to been raised to something that was well
beyond what would have been charged in the public sector.
Representative G. Davis asked if the ISF had been calculated
in the formula. Ms. Barton replied that funds are available
in the ISF. When sufficient revenues are collected, it is
rolled into the rate for the upcoming years.
Co-Chair Therriault questioned why the front section of the
budget was being used for program receipts. Ms. Barton
replied that the source of those receipts were generated
from municipalities and sources other than state agencies.
In response to Representative Austerman, Ms. Barton spoke in
more detail of the closure of the Central Duplicating
Office. There had been a decline in the print shop business
over the last three years due to increased use of Internet,
the Legislative interest in reducing the kinds of documents
issued, and the availability of high-speed copiers. For
each month the operations were open, there were multiple
fixed costs.
Ms. Elgee added that agencies were not requesting enough
jobs to recoup the fixed costs. The Court ordered that
employees be rehired at salaries that they were paid at
central duplicating. At which point, the remaining 1/3
unhired employees were then rehired and their salaries have
been made whole. The arbitrators ruling will be in effect
until June 30, 1999.
DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS
SECTION 7 - Power Cost Equalization
Co-Chair Therriault asked if there had been discussion to
pro rate the subsidy down in order that the Department could
finish the year with the amount budgeted.
PERCY FRISBY, DIRECTOR, DIVISION OF ENERGY, DEPARTMENT OF
COMMUNITY AND REGIONAL AFFAIRS, replied that the Division
was funded at 85%. He added that if the supplemental was
not approved, there would be 43% of the 100% demand
available.
Representative Austerman asked if at this time, the request
had reached $1.7 million dollars. Mr. Frisby advised that
the $1.7 million dollar request had been reduced to $1.4
million dollars due to reduced fuel costs in rural Alaska.
DEPARTMENT OF HEALTH AND SOCIAL SERVICES
SECTION 11
JANET CLARKE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, pointed out that
the Department had a couple of large supplemental requests
this year and that the Department had worked diligently to
provide reductions to off set the supplemental requests.
Sections 11(a, b, c, & d)
Ms. Clarke noted that these sections were included in the
capital appropriations authorized for in FY99. Program
managers were requested to find areas which would not impact
the program progress.
11(a) - Emergency Medical Service equipment
Ms. Clarke noted that this section would defer some
equipment purchases for the next 18 months. Representative
J. Davies asked what services would not happen with movement
of these funds. Ms. Clarke replied that some radios and
small equipment that would not impact the Division would not
be purchased until a later date.
In response to Representative Austerman, Ms. Clarke noted
that in the FY2000 budget, there would not be a request for
equipment replacement.
11(b) - Reduce Vital Statistics Archive Imaging
Ms. Clarke explained this subsection would provide a $20
thousand dollar reduction for some vital statistics imaging
replacement. Last year, the Legislature authorized $340
thousand dollars for Phase I of this project. Phase II was
to be requested in the FY2000 budget, however, it has not
been authorized in the Governor's Capital Budget. Some of
the Phase I money had been set aside to purchase a server
for Phase II. The purchase of the server will be delayed.
She explained that the Phase I portion of the project
continues to be useable.
11c - Reduced Welfare Reform Information System
Ms. Clarke noted that over the last several years, the
Legislature has authorized the Department funding to upgrade
the Welfare Reform system. At this time, the Department is
spending more time on the Y2K concerns to be able to address
eligibility problems. The Department lost the contractor.
At this time, there is $200 thousand dollars to be spent in
the next 18 months, and has been categorized as a spending
reduction.
Representative J. Davies asked about the 18 months welfare
reform upgrades. Ms. Clarke emphasized that no information
would be delayed. Representative J. Davies asked if this
would impact the State's ability to stay in compliance with
federal law. Ms. Clarke assured Representative Davies that
this would not affect any federal law requirements.
11(d) - Reduce Client Data Integration
Ms. Clarke stated that this project would establish a data
warehouse within the Department. The data warehouse allows
the Department to match data between systems so duplication
of clients can be caught. The $25 thousand dollars, which
has been, set-aside for contractors work will not be used.
11(e) - Formerly General Relief Medical
Ms. Clarke explained that Section 11(e) was a request for
$120 million dollars for the catastrophic acute medical
assistance (CAMA) program. This is the program that the
Legislature authorized last year to replace the General
Relief Medical (GRM) Program. The difference between the
programs is that in CAMA, State funded abortions are not
paid for. Funds for this program expired two weeks ago.
She referenced the back up material included in member's
packets. Ms. Clarke pointed out that pharmacy services are
a significant portion of service rendered. Many pharmacies
have discontinued funding prescriptions because the program
is out of money.
(Tape Change HFC 99 - 34, Side 2).
BOB LABBE, DIRECTOR, DIVISION OF FAMILY AND YOUTH SERVICES,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, reiterated that
the funds for that service have been exhausted. The
Division has had discussions with various hospitals, doctors
and pharmacy groups about continued services. The primary
area of concern is the pharmacies because of the retail
nature of that business. He admitted that the request was
large and that the Department has hopes to be able to adjust
it to a lower amount.
Co-Chair Therriault acknowledged that this supplemental
request was justified, although, hoped that the amount could
be adjusted down.
In response to Representative Austerman, Ms. Clarke
explained that the original appropriation was $1.9 million
dollars and that the supplemental request was for $1.2
million dollars. She pointed out that the GRM program which
replaced CAMA, last year spent about $4.2 million dollars,
including abortion services in the amount of about $1
million dollars. She emphasized that this program is the
"payer of last resort" and that a straight money projection
would be impossible. Each line needs to be addressed
separately.
Sections 11(f,g,& h) - Mental Health Grants
Ms. Clarke spoke to departmental reductions in the grant
programs with intent to use them to offset proposed
supplemental costs. In a normal year, the Department would
redistribute any grant funds not spent.
Section 11(f) - Rural Services Grants
Ms. Clarke continued, Section 11(f) would be a reduction of
$84 thousand dollars to an alcohol and drug abuse program in
the rural service areas.
Section 11(g)
Ms. Clarke stated that Section 11(g) would provide a series
of reductions to various components in the mental health
grant areas.
Section 11(h)
Ms. Clarke continued that Section (h) indicates the total of
Section (g) - $55 thousand dollars (psychiatric emergency
services), $100 thousand dollars (chronically mentally ill)
and $69.6 thousand dollars (seriously emotionally disturbed
youth) from the reduction to community mental health grants.
Section 11(i)
Ms. Clarke noted that Section (I) would provide for a $10
thousand dollar reduction in public health nursing.
Section 11(j)
Ms. Clarke continued, Section 11(j) would be a $20 thousand
dollar reduction to the Bethel Healthy Families program.
Section 11(k)
Ms. Clarke commented that Section 11(k) was a $20 thousand
dollar reduction to an anticipated grant award to St.
George.
Section 11(l)
Ms. Clarke pointed out that the Department through Public
Assistance awards grants for food banks and teen parent
programs. At the time of this review, there exist $30
thousand dollars remaining in that account balance.
Section 11(m)
Ms. Clarke spoke to the increase request of $656.9 thousand
general fund dollars and $164.3 federal fund dollars
contributing to the request of Section 11(m) for the
subsidized adoption and the guardianship program. The
program provides subsidy to parents who enter into adoption.
The program serves mostly children who have been in foster
care and who have high special needs. The requested funding
will off set the care in their permanent homes. This
funding allows for the child to get out of the foster care
system and into permanent homes. She noted that back up
information included in the packet explains how in the
subsidized adoption program, the State pays less than in
foster care.
In response to Co-Chair Therriault, Ms. Clarke explained
that care continues in the adoptive home until the child
reaches the age of 18.
Section 11(n)
Ms. Clarke spoke to Section 11(n) which would reduce the
community developmental disabilities grants by $387 thousand
dollars. Co-Chair Therriault noted that he understood that
recipients of that grant were "unsettled" with the proposed
reduction. Ms. Clarke reiterated that if this had been a
normal budget year, the Department would have directed those
funds out to the grantees. Those funds are available
because in the past, the Department has used some of that
money to match federal Medicaid dollars which allows more
developmentally disabled (DD) persons to qualify for the
Medicare waiver program. This year that was not required,
as Medicaid had more money which allowed the State to serve
an additional 60 people this year.
Representative J. Davies spoke to Section 11(m) reminding
members that the "qualified" children represented have at
least four or more special needs. He inquired the types of
services needed for these children to help the prospective
parents.
THERESA TANOURY, ADMINISTRATOR, DIVISION OF FAMILY AND YOUTH
SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, stated
that adoptive parents rely on this funding to help with the
daily care of these children. The services for the programs
vary greatly and include services from respite care to
therapy and counseling.
Section 11(o)
Ms. Clarke advised that Section 11(o) would be withdrawn.
Co-Chair Therriault asked if at the end of the fiscal year,
if there were excess Medicaid funds, would they be carried
forward into the child care function. Ms. Clarke explained
that Medicaid is a cash system, based on when the bill is
received, not when the service was performed. If there are
excess funds, they are lapsed at the end of the year. If
the State is short, the claims are paid and the claims are
"pushed" to the next fiscal year.
SECTION 20 - Miscellaneous Claims
Ms. Clarke stated that Department of Health and Social
Services request for miscellaneous claims was in the amount
of $16,612 dollars to be used for six different claims.
These are late bills received by the Department. Three of
the bills were for foster children who had medical needs.
The largest items are to cover one of the reports performed
under contract relating to DFYS and the problems in their
offices. There was money encumbered to pay those charges,
but based on accounting rules, the Division of Finance would
not allow carrying that encumbrance forward.
DEPARTMENT OF EDUCATION
SECTION 10
Section 10(a) - Marine Vessel Simulator receipts
KAREN REHFELD, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF EDUCATION, stated that Section 10(a)
request was in the amount of $2.5 million federal dollar
receipts to be used for replacing the marine vessel
simulator at the Alaska Vocational Technical Center (AVTC)
in Seward. The Department is seeking authorization for
these funds.
Section 10(b) - Foundation formula reduction
Ms. Rehfeld noted that Section 10(b) would be a reduction of
$1.5 million dollars to the above program. She referenced
the memo from Deputy Commissioner Cross to Annalee
McConnell, Director, Office of Management and Budget. [Copy
on File]. The number was revised to $4 million dollars.
She explained that this was a transitional year to the new
funding formula, and after review, an additional $2.5
million reduction was found.
Representative Grussendorf asked if it was anticipated that
additional monies would need to be placed into the summer
school tutoring programs as a result of the new graduation
requirements. Ms. Rehfeld advised that the correspondence
program is currently looking at restructuring their summer
program to provide tutoring help to those kids that need
additional assistance.
Section 10c - Funding Change Source
Ms. Rehfeld stated that this would be a funding source
change for the Vocational Rehabilitation Business enterprise
program which serves Alaskans who are blind or severly
disabled. In the FY99 budget, the Department requested a
funding source change to statutory designated receipts
because of the contractual nature of the program. Statutory
designated program receipts would only allow them to access
funds generated in the current year. There are two revenue
funds in the accounting system, federal and state receipts.
This change would allow the business enterprise system to
access those funds.
SECTION 20 - Miscellaneous Claims
Ms. Rehfeld noted that the Department requests $2,976
dollars in miscellaneous claims to cover invoices which are
over two years old.
SECTION 22 - Ratifications
Ms. Rehfeld stated that Section 22 would ratify the
expenditures by the Department from Adak School District
assets for legal services related to that closure.
Co-Chair Mulder voiced concern with the issue of
ratification's. He suggested that it would appear that the
State was spending money which was not authorized.
Representative Grussendorf responded that issue must be
determined on a case by case basis.
Ms. Rehfeld emphasized that was money had already been
spent. The Department used Adak School district funds on
behalf of that district and did not have resources to pay
the legal costs at that time.
DEPARTMENT OF CORRECTIONS
SECTION 5
Section 5(a) - Cook Inlet
DWAYNE PEEPLES, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF CORRECTIONS, explained that the
Department had submitted a supplemental request for the Cook
Inlet facility for staffing vacancies needed to assist and
address overcrowding at that institution. Due to the
declining trend, the request has been modified. He
referenced a memo dated 3/03/99. [Copy on File]. The
request was reduced to $170 thousand general fund dollars.
Section 5(b) - Inmate Health Care
Mr. Peeples spoke to the Department's request in the amount
of $500 thousand general fund dollars to address the
"drastic" increase in cost for contract medical services and
pharmaceutical supplies in FY99. Pharmaceutical costs for
HIV prescriptions have increased by 190% over the FY98
budget. Without this supplemental funding, the Department
can not provide required minimal medical care necessary to
support existing prisoner levels.
(Tape Change HFC 99 - 35, Side 1).
Section 5c - Alternative housing for May & June
Mr. Peeples continued, last year, the Department placed
tents around the State to handle the high prison population.
Due to declining populations and trends in the institution,
the Department is requesting a modification of that request.
The total requested amount would be $100 thousand general
fund dollars. The request would provide funding for two
tents in Fairbanks, each of which would hold 20 inmates.
Co-Chair Mulder asked why tents would be located in
Fairbanks. Mr. Peeples replied that the Fairbanks area has
a history of peak prisoner population during the summer
months.
Section 5(d) - Out-of-State contracts
Mr. Peeples stated that the Department is requesting $3,130
thousand general fund dollars to cover transportation and
per diem costs for contract prison services in Arizona.
Last year's budget was determined, based upon an assumption
of $45 dollars per day per bed; the cost of beds came in at
$53.50 dollars for the first 853 inmates, with additional
beds at $52.50 dollars. The Legislature appropriated the
lower rate as the Department was in the process of a
competitive solicitation.
Mr. Peeples pointed out that last year, the Department
requested two probation officers and that the Legislature
provided funding for one officer. Co-Chair Mulder asked
where the Administrative Clerk position came from. Mr.
Peeples replied that a vacant PCN was hired to address the
volume load in the Anchorage office. All inmates going to
Arizona are sent to the Anchorage central office, which
tracks all packages for each inmate. He emphasized that
there are approximately 30 prisoners per month that are
being moved in and out of Arizona. Arizona is currently the
State's largest facility. He emphasized that sentence
lengths are getting shorter, and that some inmates are place
at Arizona for only six to eight months. He offered to
provide further information regarding that number.
Section 5(e) - Transportation and Classification
Mr. Peeples commented that Section 5(e) was a general fund
request in the amount of $365 thousand dollars, a
combination of two requests. The Department transports
offenders among state facilities under delegation from the
Department of Public Safety. The request would provide
funding to both departments under one umbrella. The
increased prisoner population levels have required that
significant transports be accomplished, both in State and
out-of-state by five Prisoner Transportation Officers.
Section 5(f, g & h) - Existing CRC's
Section 5(f)
Mr. Peeples advised that the Department originally had not
incorporated the unanticipated delays in the building of the
Nome Culturally Relevant Community Residential Center (CRC).
Due to the delays, more beds have been procured in the
Anchorage area. The new cost is $50 thousand dollars.
Section 5(g)
The Department issued an RFP to secure 30-40 new CRC beds at
Nome with an emphasis toward culturally relevant services
being provided. An award was made, however, another bidder
tied up the building permit issued by the City of Nome and
then filed a protest. The protest was lifted after the
protester purchased the business of the successful bidder.
The new beds will not be available before June 1, 1999. The
delay has increased the original delete to $480 thousand
dollars.
Section 5(h)
Mr. Peeples continued, the Department had delays in
implementing culturally relevant program services at the
existing Bethel Tundra Community Center and has a one time
general fund delete of $50 thousand dollars to help offset
supplemental requests.
Mr. Peeples added that CRC contracts have been issued for
services and due to the contract start date, a one-time
delete of $35 thousand dollars is available to offset the
supplemental request. Mr. Peeples reiterated that savings
were due to delays in opening.
Co-Chair Mulder noted that a new program the Village
Probation Safety Officer (VPSO) program had been added for
parole and probation concerns. Mr. Peeples replied that the
location had not yet been defined, although, was brought
into the Bristol Bay area. At this time, there exists a
draft contract, needing final negotiations.
Co-Chair Mulder asked the consequences if the program did
not go forward. Mr. Peeples stressed that probation
officers are currently managing greater workloads and that
enhanced supervision in the small villages would be lost.
Section 5(I)
Mr. Peeples spoke to the CRC offender supervision. He noted
that contracts had been issued for these services and due to
the contract start dates, a one-time delete of $35 thousand
dollars had been made available to offset the supplemental
request.
Section 5(j)
Mr. Peeples stated that the Department is requesting $750
thousand dollars in correctional industry funds, separate
from the general fund. Under a work-training program, the
prisoners develop products with money from the sales going
into that account. Money is withdrawn from the account to
purchase materials to develop the products. Previously, the
Department made requests for funding through the Legislative
Budget and Audit Committee (LBA). Now requested funding
must be received as an appropriation. The account currently
has $85 thousand dollars in it, although, the amount varies
from day to day.
Representative J. Davies voiced support of LBA's continued
authority to handle this account.
DEPARTMENT OF NATURAL RESOURCES
SECTION 12 - Insert Performance Bond Language
NICO BUS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF NATURAL RESOURCES, stated that Section #12
would allow all the departments to utilize performing bonds
to claim land left by the land use permitees. He pointed
out that this section would be revenue neutral.
SECTION 14 - Recorder's Office
Mr. Bus informed members that the recorder's office
generates revenue. The office has been busy with
refinancing mining claims and as a result, $5 million
dollars revenue will be generated. The requested amount is
$92 thousand dollars to be used for increased workload. The
funding source is general fund program receipts.
In response to a question by Representative Bunde, Mr. Bus
clarified that $35 thousand dollars of the request would be
used for new film for mortgage companies, $30 thousand for
personal services, and the remainder for miscellaneous
costs. He noted that member's files contained a detailed
graph of this expenditure. [Copy on File].
Representative Bunde asked if the volume was similar to that
in FY94. Mr. Bus replied that documentation has exceeded
the FY94 level with three less staff working. In FY94,
additional part time staff was hired.
Representative Bunde addressed copying expenses. He pointed
out that the average size of copied documents slightly went
up. Mr. Bus replied that the number of pages increased by
nearly 90,000 copies, which would account for raised supply
costs. He emphasized that the average number of pages has
increased.
In response to comments by Representative Bunde,
Representative J. Davies stressed that this was a request
for supplemental, indicating temporary positions. Mr. Bus
commented in the proposed FY2000 budget, the Department has
requested seven new positions because of workload
requirements. He recommended indicating an agreed maximum
number of documents per employee; if that number is
exceeded, then hiring a seasonal person. If the workload
increased, then staff would be hired and if the workload
decreased, staff would be reduced.
Co-Chair Mulder commented that an alternative would be to
privatize the endeavor. Mr. Bus replied that the Department
has investigated that possibility. He recommended further
discussion should be addressed regarding concerns that the
title companies have.
Representative Kohring supported the idea of privatization
of the recorder's office. Following comments by
Representative Kohring, Mr. Bus indicated that the
recorder's office generates more money than it costs the
State to maintain.
Representative Austerman asked how far the Legislature had
gone in the discussion to privatize these functions.
Representative Kohring asked if the addition of the
requested funds would increase the BRU beyond $90 thousand
dollars. Co-Chair Mulder believed it would not. Mr. Bus
replied that supplemental funding does not automatically add
to the base. He reiterated that it was frustrating for the
Department not have this number connected to the workload.
He reiterated that this issue should be a stand-alone
allocation. Representative Kohring suggested that such a
proposal creates the pretense of a "yo yo" game of the
budget. He recommended just removing the requested amount
from the $535 thousand dollar operating budget request.
Co-Chair Mulder noted that the $535 thousand dollars was a
straight general fund request and that the request before
the Committee was general fund program receipts.
Representative Bunde pointed out that the recorder's office
is not only a profit generator for the State but it is also
a "hidden tax" vehicle. It keeps the State in the business
of making a profit off of someone who is refinancing their
home. The State is charging more than it costs. He
suggested that it would do a better service to the public to
privatize the service.
Representative Bunde asked why there was an increase in
charge-back fees. Mr. Bus explained that the memo
referenced addresses network costs. The Department is
attempting to work with Department of Administration. The
data processing charge back was computed on a number of
terminals for the mainframe network. Each department has
been asked to contribute to those charges according to the
number of employees using terminals. The total cost in FY99
was $23 thousand dollars.
(Tape Change HFC 99 - 35, Side 2).
SECTION 22 - Ratifications
Mr. Bus spoke to the Department's fire suppression
expenditure request the amount of $5.391 million dollars.
He reiterated that the supplemental approved for 1998 was
not sufficient to address the fire damage. The proposed
number is the final accounting for the Department.
Co-Chair Mulder questioned the State's agreement with the
feds. Mr. Bus explained that the ultimate cost of the fire
is born by the owner of the land.
DEBT SERVICE
SECTION 9 - Debt Retirement Fund
DAN SPENCER, CHIEF BUDGET ANALYST, OFFICE OF MANAGEMENT AND
BUDGET, noted that Alaska Housing Finance Corporation's
(AHFC) original projection was about $9 million dollars to
pay debt service for bonds being issued. The current
projection is an approximate $1.2 million dollar decrease in
debt service for FY99. For that reason, the general fund
amount can be reduced.
He continued, in Section 1 of the operating budget, there is
a retro section for AHFC. It is bringing the unused AHFC
money for FY99 into the Debt Retirement Fund, which
originally was appropriated to be used. The operating
budget must make sure that the AHFC dividend is taken into
account. The proposed supplemental request rests on that.
Co-Chair Mulder suggested that if it was not used in the
proposed allocation, then that amount would be used to help
close the gap. He questioned where in the budget the
remaining balance of the dividend was located. Mr. Spencer
pointed out that in the front section of the operating
budget, the AHFC dividend had been placed into retirement.
Last year, the dividend was used for debt retirement. He
added that if the funding had not been used there, it would
have required a general fund reduction.
ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, replied that the $33 million dollars which was going
to initially go for debt service, and it appeared that would
be the full payment needed. If the general fund
appropriation is not reduced for FY99, the remainder of debt
service will go into the general fund. The supplemental
wording makes it clear that the actual spending for FY99
will drop by $1.143 million dollars, so that the expenditure
level is brought down to meet the actual need of the debt
service.
Co-Chair Mulder asked if this was denied, with an intent to
reduce the overall supplemental by $5.2 million dollars,
would it then have to be reduced by an additional $1.1
million dollars. He believed that the net result would be
that the gap would be closed by $1 million additional
dollars. Ms. McConnell replied that if debt service is not
brought down, an advantage would be missed of recognizing
that the spending level was $1 million dollars less than
that indicated on the books.
DEPARTMENT OF ADMINISTRATION
SECTION 22 - Ratifications
Co-Chair Mulder referenced the Department of
Administration's request for $193,563 dollar for the closure
of the central duplicating station. Mr. Spencer explained
that those costs resulted from the shut down of that office.
The shut down expenses were greater than the revenue that
had been generated. Mr. Spencer advised that settlement
monies were not represented in this figure. Ms. McConnell
noted that the expenditures had been reduced from what was
authorized.
Co-Chair Mulder asked at what level of requested funding
would reciprocate a letter to the presiding officer. Ms.
McConnell replied that historically, this process addressed
would be through the supplemental. She acknowledged that
the books to date are not fully closed out. The intent is
that the Legislature ratify this in order that the State
does not end up with audit exceptions.
DEPARTMENT OF LAW
SECTOIN 13 - Oil and Gas Litigation
KATHRYN DAUGHETEE, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF LAW, advised that Section 13
indicates moving $100 thousand dollars back into the budget
as a result from case work not materializing from outside
counsel. She emphasized that there was not an off setting
request for the Department's operating budget.
SECTION 20 - Miscellaneous Claims
Ms. Daughetee stated that the Department has a $300 dollar
request amount for an accounts payable received after the
allocated payment time.
DEPARTMENT OF PUBLIC SAFETY
SECTION 15
Section (a & b) - Alaska State Troopers
KEN BISCHOFF, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF PUBLIC SAFETY, noted that Section 15 speaks to
the Division of Alaska State Troopers. Subsections (a & b)
resulted from a change of budget structure which the
Legislature implemented last year. There is now a separate
appropriation level set up for trooper detachments. The
request would reduce "other" components within the State
Troopers by $200 thousand dollars and increase trooper
detachments by that amount.
Section c - AST Detachments
Mr. Bishchoff commented that Section c was a straightforward
general fund request in the amount of $312.7 thousand
dollars for completion this year.
Representative Austerman requested an itemization of the
request. Mr. Bischoff replied that the amount was comprised
of $103 thousand dollars for academy costs, $112 thousand
dollars for helicopter repair in Fairbanks, communication
costs from combining the dispatch with the Department of
Military and Veterans Affairs and an additional $63.1
thousand dollars from trooper turnover.
SECTION 16 - Fish & Wildlife Protection
Mr. Bishchoff stated that Section 16 provided a technical
amendment. The Legislature has worked with the Department's
Fish and Wildlife Division, to sell surplus vessels and
planes, using the proceeds to purchase replacements. Last
year, it was allowed but was not classified as a capital
project and therefore, it has a lapse date. Section 16
would retroactively designate it as a capital project. Co-
Chair Mulder noted that capital projects have a lapse date
of five years. He questioned why that amount of time would
be needed. Mr. Bischoff replied that selling used vessels
is difficult and requires much energy.
Co-Chair Mulder asked which vessels were being replaced.
Mr. Bishchoff replied that to date one boat had been sold
which realized $130 thousand dollars and that there are
three 38' boats still need to be sold. The capital budget
plan contains a vessel replace schedule. Co-Chair Mulder
inquired if five years was needed. Mr. Bischoff suggested
that two years would be a reasonable time.
SECTION 20 - Miscellaneous Claims & Warrants
Mr. Bishcoff stated that the Department also was requesting
$793 dollars for a miscellaneous claim.
Co-Chair Mulder requested more back up for Section 15c.
DEPARTMENT OF REVENUE
SECTION 17 - Child Support Enforcement
MARY MARSHBURN, ACTING DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF REVENUE, discussed that more than
80% of the Child Support Enforcement Division (CSED) budget
comes from the federal government. A portion of that
federal money came from incentive payments. The amount of
those payments, which the division receives, is based upon
the amount of money which the division collects on behalf of
the obligor parent in public assistance cases. The recent
success of the Welfare Reform program has meant that there
are fewer families receiving public assistance. She
emphasized that means less Alaska Temporary Assistance
Program (ATAP) money collected by CSED for government.
In the fall of 1998, CSED found that their projected ATAP
collections would be less than projected. That meant a
decrease in federal incentive payments of $900 thousand
dollars. Ms. Marshburn translated that as CSED facing a
$2.7 million dollar shortfall in the FY99 budget. When that
was discovered, the CSED Director, Barbara Miklos, cut all
line items and maintained a 10% vacancy factor in CSED
positions in an attempt to save money. Ms. Marshburn
suggested that action has become a double-edged sword. FY99
expenditures were reduced for FY99. The shortfall currently
facing that division is $2.4 million dollars.
Ms. Marshburn continued, CSED will collect on behalf for the
State for FY99 some $8.6 million dollars. Of that $7.3 goes
to Department of Health and Social Services, and the
remainder goes into the general fund. CSED is requesting
supplemental funding in the amount of $880 thousand dollars.
That money is eligible for a 2 for 1 federal match.
Co-Chair Mulder asked if additional authority was needed to
expend federal funds.
BARBARA MIKLOS, DIRECTOR, CHILD SUPPORT ENFORCEMENT
DIVISION, DEPARTMENT OF REVENUE, replied no, because in the
original budget the Division had projected $3.5 million in
incentives and had already added on the match.
Ms. Miklos spoke to the advantages and disadvantages of the
new computer system. The new computer can do electronic
transfers, which helps to get monies in and out quickly.
Eventually, it will help automate systems not capable in the
old system. At this time, there is still much work to do.
She projected that it would take two years before the system
will run smoothly.
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES
SECTION 18
Section 18(a & b)
NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVCIES,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES,
commented that these two sections are basically the same, a
fund source switch for the Anchorage International Airport
capital project, terminal upgrade approved in the FY97
Capital Budget. Those funds were originally appropriated
from the International Airport revenue fund and would be
used to upgrade the terminal's electrical system. Since
that time, it has been determined that the system is old and
non-Y2K compliant. The federal government has indicated
that they will assist in funding the project. It is
anticipated that there will be additional monies forthcoming
in the FY2000 budget. The switch would be in the amount of
$1.051 million dollars from the International Airport
revenue funds to federal receipts.
In response to Representative Austerman, Ms. Slagle
commented that costs would not be covered in rate
development.
Section 18c - Scope Change
Ms. Slagle continued, Section 18c would be a scope change.
The appropriation was originally for the Anchorage
International Airport south terminal ramp program. It was
determined that project could actually be included in the
redevelopment project currently underway at the airport.
The Department is requesting a name change to allow them to
expand and do work on the north terminal.
Representative Williams commented that last year, the small
airline companies asked to have a vote in what was occurring
at the airport. He asked if they were now in agreement.
Ms. Slagle acknowledged that the capital budget items need
to be presented to the Air Carriers Association for their
approval. She noted that this was on the agenda for the
Executive Committee meeting scheduled on March 8th.
Co-Chair Mulder asked if it would be sufficient to include
the item request in the reappropriation bill. Ms. Slagle
doubted that would be a problem. Funding needs to be
available by the end of session.
Section 18(d) - Design & Engineering
Ms. Slagle noted that Section 18(d) would provide an
increase of $100 thousand dollars general fund program
receipts for the Division of Design and Engineering
services. The funding would be used to assist in the area
of utility inspections and administrative costs related to
utility permits. Over the past few years, the area has
continued to increase in demand because of all the activity
in communications technology.
In previous years, the Department was able to deal with the
problem by transferring numbers within, which can no longer
be done because of the way the budget structure was
provided. She emphasized that flexibility for moving money
internally no longer exists.
(Tape Change HFC 99 - 36, Side 1).
Section 18(e & f) - Harborview Development Center
Ms. Slagle noted that these subsections are both related to
the Harborview Development Center. One is the allocation
level and the other is the appropriation level. The
Department is requesting $235 thousand dollars in general
funds for maintenance. The Department of Health and Social
Services maintained that area. Over the last several years,
they have been in the process of closing it down. When the
FY99 budget was submitted, the Department had eliminated all
the money that supported the center.
Ms. Slagle continued, last session, the Department of
Corrections offered a bill which allowed them to use
Harborview for an alcohol and drug therapy center. That
bill did not pass. Consequently, there was not money in
either the Department of Corrections or the Department of
Health and Social Services budget to maintain the facility.
The Department of Transportation and Public Facilities was
handed the facility to maintain, although, had no money to
do that either. There was an agreement made between the
City of Valdez and the State, that the State maintains the
facility for the year, because it now houses the City
Hospital. The agreement outlined that the State would
provide up to $265 thousand dollars to maintain the
facility. The Department was able to reduce that amount to
$235 thousand dollars from the original amount.
Ms. Slagle noted that it is a State owned facility and that
the City of Valdez is using a portion of it as their
hospital. The City of Valdez is providing for costs over
the $265 thousand dollars as agreed upon. She emphasized
that Department of Transportation and Public Facilities can
not absorb these costs. The agreement between that City and
the State runs through the end of June 1999.
Co-Chair Mulder asked if there was an ongoing agreement with
the City of Valdez. Ms. Slagle replied that the agreement
will lapse this year. Discussion continues between the
State and the City. Co-Chair Mulder observed that the
Valdez had intended to build a hospital and then decided to
put it in the Harborview facility. The cost is greater now
than it would have been if it were a separate facility. Ms.
Slagle noted that the $235 thousand dollars would cover
maintenance and fuel costs, snow removal, electrical costs
and contract repairs for the building.
Section 18(g)
Ms. Slagle stated that Section 18(g) was a reduction to
measurement and standards in the amount of $364 thousand
dollars. She explained, during last session, HB 404 passed,
which gave the Department authority to collect out-of-state
vehicle permits on trucks. The Department has found that a
large number of the truckers were registering their vehicles
with the Division of Motor Vehicles (DMV) rather than
purchasing a permit from Department of Transportation and
Public Facilities and consequently, less revenue was
collected than expected. She suggested that this could
offset other requests.
Representative Bunde asked if the recreational vehicle (RV)
rentals were considered commercial rentals. Ms. Slagle
thought they were not.
Section 18 (h & i) - Receipt Shortfalls
Ms. Slagle pointed out that Sections (h & i) were reductions
to the highways and aviation budget and program receipts
specific to the Title 17 regulations which have not yet been
formulated.
Co-Chair Mulder mentioned the Taylor Highway. Ms. Slagle
noted that the Department of Transportation and Public
Facilities was not plowing those roads. An agreement has
been made with some mining companies to open a portion of
the highway in order to bring in fuel needed by the miners.
Co-Chair Mulder asked how much would it cost to open the
highway. Ms. Slagle replied that just to open the Taylor
Highway would cost $145 thousand dollars.
UNIVERSITY OF ALASKA
Representative Grussendorf noted that the University of
Alaska was requesting $7 million dollars for the Arctic
Research Center. He asked if they were planning to reduce
student services.
DENNY DEWITT, HOUSE FINANCE COMMITTEE STAFF, REPRESENTATIVE
ELDON MULDER, read a memo from the Statewide Office of
Budget and Institutional Research regarding that concern.
[Copy on File].
Representative Grussendorf commented that the University is
claiming a net zero by taking $3.5 million dollars from
student tuition. He noted that he would support research
but recommended that it not be taken from student tuitions.
Co-Chair Mulder understood that the University was
projecting $3.5 million dollars less receipts from student
tuition. Mr. DeWitt understood that the net zero figure was
achieved by taking from two unrelated accounts, neither
which have received anticipated receipts. They have
projects from another area which appear to be about the same
amount, so they have distributed a net zero. Mr. DeWitt
pointed out that these are all non-general fund issues. He
concluded that the net zero was a mystery.
Representative Austerman commented that $7 million dollars
would be coming from grants. Co-Chair Mulder pointed out
that the total spending requested from the University of
Alaska has increased but the general funds have been
reduced.
HB 100 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 5:25 P.M.
H.F.C. 25 3/04/99
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