Legislature(1999 - 2000)
04/08/1999 01:55 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
April 8, 1999
1:55 P.M.
TAPE HFC 99 - 69, Side 1
TAPE HFC 99 - 69, Side 2
TAPE HFC 99 - 70, Side 1
CALL TO ORDER
Co-Chair Mulder called the House Finance Committee meeting
to order at 1:55 p.m.
PRESENT
Co-Chair Therriault Representative Foster
Co-Chair Mulder Representative Grussendorf
Vice-Chair Bunde Representative Kohring
Representative Austerman Representative Moses
Representative J. Davies Representative Williams
Representative G. Davis
ALSO PRESENT
David Teal, Director, Division of Legislative Finance;
Denny Dewitt, Staff, Representative Mulder; Tom Lawson,
Director, Division of Administrative Services, Department of
Commerce and Economic Development; Jeff Bush, Deputy
Commissioner, Department of Community and Regional Affairs;
Pat Poland, Director, Division of Municipal Assistance and
Regional Assistance; Wendy Redman, Vice President, Statewide
Programs, University of Alaska.
SUMMARY
HB 50 "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."
HB 50 was HELD in Committee for further
consideration. Amendments for the following
budgets were discussed:
Department of Commerce and Economic Development
Department of Community and Regional Affairs
University of Alaska
HB 51 "An Act making appropriations for the operating
and capital expenses of the state's integrated
comprehensive mental health program; and providing
for an effective date."
HB 51 was HELD in Committee for further
consideration.
HOUSE BILL NO. 50
"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."
Co-Chair Therriault MOVED to ADOPT Amendment CED-1.
Representative J. Davies OBJECTED for the purpose of
discussion.
Delete:
Department of Commerce and Economic Development
Tourism
Alaska Tourism Marketing Council
Department of Commerce and Economic Development
Tourism
Tourism Development 3235.3 General Funds 1299.9 Other
Funds
2050.7 General Funds
127.2 Other Funds
Co-Chair Therriault explained that the amendment removes all
funding for the Alaska Tourism Marketing Council.
Legislation is pending to restructure the Alaska Tourism
Marketing Council marketing effort. A fiscal note would be
attached to legislation (HB 136/SB 107) affecting these
functions. The fiscal note would address the budgetary needs
of both components.
Representative J. Davies stated that he would be more
comfortable if the Division of Tourism remained funded.
Representative J. Davies MOVED to AMEND Amendment CED-1 by
retaining $286 thousand dollars in Tourism Development
component.
Co-Chair Therriault OBJECTED. He stressed that restructuring
should be looked at as a whole package. He stated that he
had considered restoration of the Division of Tourism
director's position, but stated that he would prefer to
address the issue through other legislation.
Representative J. Davies stressed that the intent is not to
eliminate the Division of Tourism.
Co-Chair Mulder spoke against the amendment to Amendment
CED-1.
A roll call vote was taken on the motion to amend.
IN FAVOR: Davies, Grussendorf, Moses
OPPOSED: Bunde, Austerman, G. Davis, Foster, Kohring,
Williams, Therriault, Mulder
The MOTION to amend FAILED (3-8).
There being NO OBJECTION, Amendment CED-1 was adopted.
Representative J. Davies expressed concern that the pending
legislation regarding the Division of Tourism might not be
enacted. Co-Chair Therriault reassured him that the intent
is to address the issue. He acknowledged that there is a
function that needs to be performed. He noted that the
contract with a private trade organization would need to be
overseen and administered.
Vice-Chair Bunde Withdrew Amendment CED-2 (copy on file.)
Representative J. Davies Withdrew Amendment CED-3 (copy on
file.)
Representative J. Davies Held Amendment CED-4 (copy on
file.)
Representative Grussendorf Withdrew Amendment CED-5 (copy on
file.)
Representative Grussendorf MOVED to ADOPT Amendment CED-6.
Co-Chair Therriault OBJECTED.
Department of Commerce and Economic Development
BRU: Banking, Securities and Corporations Component:
Banking, Securities and Corporations
$114.0 GF/PR
I PFF Position
Purpose: This restores the increments requested in the
Governor's amended budget for the Securities Examiner
position and funding (1 PFT, $74.0), and additional
hearing examiner contractual services ($40.0).
Discussion
Representative Grussendorf spoke in support of the
amendment. He emphasized that the examiner is only able to
respond to complaints and violations. Additional funding
could prevent problems.
Co-Chair Therriault noted that the department's request for
data processing positions was prioritized. He recommended
that a fee be reviewed for work that the department does
regarding ANSCA proxies.
Representative J. Davies pointed out that the program
currently generates $7 million dollars.
A roll call vote was taken on the motion.
IN FAVOR: Davies, Grussendorf, Moses, Foster
OPPOSED: Bunde, Austerman, G. Davis, Kohring, Williams,
Therriault, Mulder
The MOTION FAILED (4-7).
Representative Grussendorf or Representative J. Davies MOVED
to ADOPT Amendment CED-7:
ADD:
Department of Commerce and Economic Development
BRU: Occupational Licensing
Component: Occupational Licensing
$86.3 GF/PR
Purpose: Restore funding and position for the Nurse
Aide Investigator. Position and funding were included
in a Fiscal Note for SB 152 last session, and
inadvertently omitted from the appropriation bill.
Representative J. Davies spoke in support of the amendment.
He observed that the funding was included in a fiscal note
attached to SB 152, which was enacted in 1998. He maintained
that the funding was inadvertently omitted from the budget.
Program receipts from nurse aides would cover the cost.
Co-Chair Therriault agreed that the funding was
inadvertently removed, but noted that it would be a general
fund increase.
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION agreed
that funding was allocated in a fiscal note that was not
brought forward. Co-Chair Mulder stated that he did not
object to the amendment.
Co-Chair Therriault observed that the item should have been
included in the FY99 base for the Department of Commerce and
Economic Development.
DENNY DEWITT, STAFF, REPRESENTATIVE MULDER clarified that
the Department of Commerce and Economic Development's FY99
base was not adjusted to include the item.
Mr. Teal stated that it should have been included as a
fiscal note. The position was hired out of program receipts
that were rolled forwarded.
TOM LAWSON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT stated that
the nurse aide investigator position was included in the
calculations of department personnel.
There being NO OBJECTION, Amendment CED-7 was adopted.
Representative Grussendorf MOVED to ADOPT Amendment CED-8.
Co-Chair Therriault OBJECTED.
BRU: Tourism
Component: Alaska Tourism Marketing Council
Purpose: This restores the Executive Director position
and funding.
I PT Position
$102.3 GF
Representative Grussendorf noted that the effective date of
HB 136 (tourism reorganization) is not until July 1, 2000.
He suggested that the executive director position be
retained to assist in the transition period. Co-Chair
Therriault responded that the bill could be structured to
take care of the timing issue. He preferred that the entire
switch be reviewed together.
A roll call vote was taken on the motion.
IN FAVOR: Davies, Grussendorf, Moses
OPPOSED: Bunde, Austerman, G. Davis, Foster, Kohring,
Williams, Therriault, Mulder
The MOTION FAILED (3-8).
Representative J. Davies MOVED to ADOPT Amendment CED-9
(copy on file). Co-Chair Therriault OBJECTED. Amendment CED-
9 would:
Delete:
World Trade Council Grant $135 thousand dollars
Northern Forum Grant $60 thousand dollars
Add
Trade and Development $195 thousand dollars
Representative J. Davies explained that the amendment would
restore funding for two of three positions that were deleted
from the Division of Trade and Development. The department
would identify which positions would be funded.
Co-Chair Therriault spoke against the amendment.
JEFF BUSH, DEPUTY COMMISSIONER, DEPARTMENT OF COMMUNITY AND
REGIONAL AFFAIRS clarified that the budget as presented
eliminates the northern issue coordinator position. He added
that the amendment also eliminates the only timber
specialist position. He noted that one person is currently
acting in both positions. The timber specialist position was
not hired due to budget discussions regarding the
elimination of the position.
Co-Chair Therriault pointed out that the department
indicated that the data processing positions were of a
higher priority.
Representative J. Davies emphasized that it does not make
sense to have a Northern Forum grant if the northern issues
coordinator position is not funded. He maintained that $135
thousand dollars is a small amount of the World Trade
Council's funding. The Council is primarily funded through
program receipts. He stressed that the Council could operate
completely from receipts and noted that the timber industry
needs assistance.
Co-Chair Therriault spoke against the amendment. He spoke
against the use of World Trade Council grant funding.
A roll call vote was taken on the motion.
IN FAVOR: Davies, Grussendorf, Moses
OPPOSED: Bunde, Austerman, G. Davis, Foster, Kohring,
Williams, Therriault, Mulder
The MOTION FAILED (3-8).
Representative J. Davies MOVED to ADOPT Amendment CED-4 as
amended by the sponsor:
Add:
Division of Trade and Development
Forest Products Specialist $59.0
Delete:
Northern Forum grants $60.0
Co-Chair Therriault questioned what level of funding is
needed for state participation in the Northern Forum.
Mr. Bush explained that the $60 thousand dollars pays the
state's membership fee. He anticipated that the state would
drop out of the Forum without the $60 thousand dollars
contained in the amendment. He pointed out that the
department was reduced by $350 thousand dollars in previous
action. He observed that the Northern Forum would not be
priority for international trade activities that would be
continued in the face of reductions.
Co-Chair Mulder asked if other Alaskans participate in the
Forum. Mr. Bush noted that the last meeting was held in
Alaska and that other Alaskans were present, but emphasized
that (outside of a brief visit by the Governor) that he was
the only state representative at the table.
Co-Chair Mulder asked if the state would cease its
participation if there were not a dedicated position to work
with the Forum. Mr. Bush did not anticipate that the state
would send anyone to the next meeting, which is in Finland,
if there is not a dedicated position.
Representative Williams asked for more information regarding
the function of the forest specialist position. Mr. Bush
explained that the position works with the timber industry
to produce more value for the product.
Representative Williams maintained that there is no longer a
timber industry in Southeast Alaska. He observed that
environmental interests are blocking timber sales in court.
He spoke against funding the position.
Representative Grussendorf observed that the position would
assist smaller operators.
(Tape Change, HFC 99 - 69, Side 2)
Representative Williams noted that two small operators in
Saxmon went broke. He agreed that there needs to be
assistance for the small operators. He maintained that the
amendment would only throw good money after bad.
Representative J. Davies observed that there is a growing
timber industry in other areas of the state.
Representative Austerman clarified that the position is not
new. The position had been held vacant.
A roll call vote was taken on the motion.
IN FAVOR: Davies, Grussendorf, Moses
OPPOSED: Bunde, Austerman, Foster, Kohring, Williams,
Therriault, Mulder
Representative Davis was absent from the vote.
The MOTION FAILED (3-7).
DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS
Representative Austerman MOVED to ADOPT Amendment CRA-1A
(copy on file). Amendment Department of CRA-1A would rename
the Training and Development component to the Local
Government Management component. He noted that the
department requested the amendment.
There being NO OBJECTION, it was so ordered.
Representative Austerman MOVED to ADOPT Amendment CRA-1
(copy on file). Amendment CRA-1 would add $200 thousand
general fund dollars to the (newly titled) Local Government
Management component.
PAT POLAND, DIRECTOR, DIVISION OF MUNICIPAL ASSISTANCE AND
REGIONAL ASSISTANCE spoke in support of the amendment. He
noted that the amendment is a partial restoration of a $400
thousand dollar reduction. Without the amendment the
reduction would result in the loss of six positions that
provide assistance as consultant managers to rural
municipalities. He noted that rural communities are also
facing reductions in municipal assistance and revenue
sharing.
Representative Austerman WITHDREW Amendment CRA-1 in favor
of Amendment CRA-2.
Representative Austerman MOVED to ADOPT Amendment CRA-2
(copy on file). Co-Chair Mulder OBJECTED. Amendment CRA-2
would restore $400 thousand dollars in general funds to the
Training and Development component.
Mr. Poland noted that the reduction would result in a 20
percent loss in staff if the amendment were not funded. He
stressed that the reduction would limit the ability of the
department to provide services to rural communities.
Representative Grussendorf pointed out that many of the
communities are very small with limited staff. He stated
that it is important for the state to continue to assist
local governments.
Mr. Poland stressed that in addition to helping local
communities improve their economies that the state assists
communities in administrative functions such as the payment
of employee taxes. The state has assisted communities with
management of their debts to the Internal Revenue Service
and has attempted to avoid similar problems. The focus of
the Department is helping to manage the financial affairs of
communities and helping communities to provide basic
services. For example, the department helps communities to
assure that utility bills are collected and fuel is
delivered on time.
Co-Chair Mulder explained that the department is above their
budget objective with the addition of childcare adjustments.
A roll call vote was taken on the motion.
IN FAVOR: Austerman, J.Davies, Foster, Grussendorf, Moses
OPPOSED: Williams, Bunde, G. Davis, Kohring, Mulder,
Therriault
The MOTION FAILED (5-6).
Amendment CRA-3 was a duplicate of Amendment CRA-2.
Representative J. Davies MOVED to ADOPT Amendment CRA-4
(copy on file). Co-Chair Mulder OBJECTED. Amendment CRA-4
would add $300 thousand general fund dollars to the Renters'
Equivalency Rebate program. He explained that the program
assists seniors, disabled and veteran renters. He spoke in
support of the amendment.
Co-Chair Mulder stressed that although it is difficult to
reduce programs that support veterans and seniors that it is
a necessary budgetary decision. Representative Austerman
agreed with remarks by Co-Chair Mulder and pointed out that
the longevity bonus program helps to offset the reduction.
Representative Grussendorf spoke in support of the
amendment. He noted that seniors that own their homes are
given a break on the first $150 thousand dollars of value on
their home. He stressed that the renters' rebate program was
an attempt to equalize municipal property taxes.
Vice-Chair Bunde pointed out that the program is not based
on need. He observed that the legislature has attempted to
make the program needs based.
Representative J. Davies stressed that most people that are
wealthy own their home. He noted that it is a small subsidy
that would mean a lot to those on a fixed income. He
indicated that he would support a needs based program.
Representative J. Davies MOVED to AMEND Amendment CRA-4 to
change the funding source to the Permanent Fund Earnings
Reserve Account. He noted that the cost to Alaskans in terms
of their permanent fund dividend check would be .50 cents.
Representative Austerman OBJECTED. He spoke against the
funding source.
Co-Chair Mulder stated that the Permanent Fund Earnings
Reserve Account could be used in place of general funds.
Representative J. Davies and Co-Chair Mulder debated the use
of the Permanent Fund Earnings Reserve Account and the
fiscal crisis.
A roll call vote was taken on the motion to amend.
IN FAVOR: Davies, Grussendorf, Moses, Therriault
OPPOSED: Bunde, Austerman, G. Davis, Foster, Kohring,
Williams, Mulder
The MOTION FAILED(4-7).
A roll call vote was taken on the motion.
IN FAVOR: Davies, Grussendorf, Moses, Williams
OPPOSED: Bunde, Austerman, G. Davis, Foster, Kohring,
Therriault, Mulder
The MOTION FAILED(4-7).
Representative J. Davies MOVED to AMEND Amendment CRA-5,
delete $26,256.3 million and insert $18,379.410 million
dollars. There being NO OBJECTION, it was so ordered.
Representative J. Davies MOVED to ADOPT Amendment CRA-5.
Amendment CRA-5 adds $18,379.410 million dollars in general
funds to municipal assistance. This would fund municipal
assistance at 70 percent. He spoke in support of the
amendment. He stressed that other reductions would also
affect municipal budgets.
Co-Chair Mulder stressed the affect of local community
actions on state expenditures.
Representative Austerman stated that the intent is to find
reductions that do not downgrade departments to the point
where they are worthless. He stressed the difficulty of
finding an additional $18 million dollar reduction within
the departments.
Vice-Chair Bunde observed that one of the most frequent
complaints for the expense of state government is municipal
assistance.
Representative G. Davis maintained that the reduction would
get the public's attention. He acknowledged the difficulty
of the reduction and emphasized that the budget process is
not over yet.
(Tape ended)
Co-Chair Therriault observed that every reduction is met by
comments. He expressed a willingness to discuss the issue
with the mayors. He noted that to generate the same amount
through a sales tax, the tax would have to be 17 percent on
top of what is already charged by the local communities.
Municipal governments can help to bring an understanding of
the seriousness of the issue.
Co-Chair Mulder add that the intent is to be fair. He
pointed out that rural Alaska has borne the brunt of small
reductions. A reduction to municipal assistance affects all
of the state.
Representative J. Davies pointed out that the elimination of
municipal assistance would result in a reduction of 7
percent to Anchorage's budget, while it would be a 50
percent reduction to rural areas.
A roll call vote was taken on the motion.
IN FAVOR: Foster, Grussendorf, Moses, Davies
OPPOSED: Davies, Kohring, Williams, Austerman, Bunde,
Therriault, Mulder
The MOTION FAILED (4-7).
Representative Grussendorf MOVED to ADOPT Amendment CRA-6
(copy on file). Amendment CRA-6 would add $21,583.8 million
general fund dollars for state revenue sharing. Co-Chair
Mulder OBJECTED.
Representative Grussendorf spoke in support of Amendment
CRA-6.
Representative J. Davies observed that many small villages
have already instituted the maximum sales tax of 5 percent.
He pointed out that the two largest towns in the state,
Anchorage and Fairbanks, have the ability to raise their
sales tax. He maintained that the reduction is inequitable.
Vice-Chair Bunde expressed frustration that there are
approximately 30 rural communities that spend in excess of
$1 million dollars a year on gambling. He suggested that
there is money in local areas to support local government.
Co-Chair Mulder pointed out that any reduction to education,
transportation, or public safety would affect local
communities. He emphasized that revenue sharing is not a
mandated program.
Representative J. Davies disagreed that there is a major
fiscal problem. He observed that a statewide income tax is a
possibility and maintained that it would be more equitable.
He pointed out that a portion of the proceeds from gambling
go to local assistance.
Representative G. Davis stated that he is concerned about
the reductions to municipal assistance and revenue sharing.
He noted that other measures are being discussed.
Representative Grussendorf noted that the decline in revenue
is based on the decline of oil. He pointed out that there
are other sources of revenue. He stressed that the reduction
to revenue sharing could worsen the problem. He observed
that many municipalities are up to their tax cap. He noted
that some of these tax caps are self-imposed. He maintained
that elimination of the program would hurt rural areas. He
stressed that there needs to be transitional funding.
Representative Kohring stated that it would be difficult for
him to vote against the amendment. He noted that revenue
sharing affects road maintenance. He expressed support for
an endowment to support road maintenance.
Representative J. Davies emphasized that a state that has
$30 billion dollars does not need to be burning the
furniture.
Representative Austerman stressed that the state is not as
rich as it once was. He pointed out that the state is not
going to dip into the corpus of the Permanent Fund. He noted
that the population of the state has grown 50 percent, while
state government has grown 200 percent. He maintained that
the corpus of the fund would be spent unless income is
stabilized.
Representative Moses stated that revenue sharing should be
increased. He maintained that the people should decide how
their money should be spent. He asserted that the
Legislature "made their own bed" by promising that they
would cut the budget without capping permanent fund
dividends or instituting taxes. He stated that the day of
reckoning is here.
Vice-Chair Bunde observed that his district would agree that
you can't get something for nothing. He observed that the
Legislature does not have $30 billion dollars, the people of
Alaska have $30 billion dollars. He stressed that the people
of Alaska need to decide how the money should be spent. The
Legislature's task is to get the best value for the money
that is spent.
Co-Chair Therriault expressed frustration that
municipalities do not want to provide programs that support
local services. He pointed to sanitation services.
Representative Moses maintained that there are large numbers
of people that come to Alaska in order to earn money and
then return to their own state. He felt that large permanent
fund dividends would encourage more transients.
Representative Grussendorf spoke in support of the
amendment.
Representative Kohring maintained that prosperity is getting
government off the back of the private sector.
(Tape Change, HFC 99 -70, Side 1)
A roll call vote was taken on the motion to adopt Amendment
CRA-6.
IN FAVOR: Davies, Grussendorf, Moses, Foster
OPPOSED: Bunde, Austerman, G. Davis, Kohring, Williams,
Therriault, Mulder
The MOTION FAILED(4-7).
UNIVERSITY OF ALASKA
Representative J. Davies WITHDREW Amendment UA-1.
Representative J. Davies MOVED to adopt UA-2. Co-Chair
Mulder OBJECCTED. Representative J. Davies stated that
Amendment UA-2 would add $10.689 million general fund
dollars to the University of Alaska. He explained that this
amount would bring the University of Alaska to a one-percent
growth rate based on the FY96 budget. This was the year that
the University of Alaska "basically ran into the wall." It
was the year of diminishing returns. Prior to FY96 the
university was able to help itself.
Representative J. Davies observed that other states have
increased their university budgets by about 6-8% while the
University of Alaska's budget has only increased by 2%.
There is a high demand to meet fixed cost increases. Fixed
costs for FY00 total $8.9 million dollars. He stressed the
benefits of full support to the university and maintained
that the university would not be competitively equal to
major schools throughout the United States without support.
There is a tremendous need for vocational training. The
state needs to increase the university's budget for rural
parts of the state. The economy of the 21st Century will be
based on the ability to use information systems. He asserted
that most Alaskans would put education at the top of the
list. He stressed that the university is provided for in the
State Constitution. The university needs stable funding and
a strong commitment from the Legislature.
Vice-Chair Bunde asked the number of laid off employees.
WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY
OF ALASKA clarified that there were 250 employees that were
laid off. The majority of these took advantage of early
retirement opportunities. There were approximately 20
positions laid off in conjunction with a program reduction.
She stated that there has been enrollment decline since
1996.
Representative Austerman voiced support of full funding for
the university. It is an intricate link for the state of
Alaska's growth.
Co-Chair Mulder voiced support for the university system,
but emphasized that it would be imprudent to increase
spending while there is a $1 billion dollar deficit.
Representative Grussendorf spoke in support of the
amendment. He questioned the funding source. He noted that
amendments 2 - 4 use different funding sources. He spoke in
support of using general fund dollars.
Vice-Chair Bunde agreed that the university does provide a
vital role in the state. He acknowledged that the
university's budget has absorbed inflation. He pointed out
that HB 115 would provide a 2% increase a year for the
university's budget over future years.
Representative J. Davies spoke in support of the amendment.
He emphasized that part of the solution to Alaska's fiscal
problems is to fully fund the university.
A roll call vote was taken on the motion.
IN FAVOR: Austerman, Davies, Moses, Grussendorf, Therriault
OPPOSED: Kohring, Williams, Bunde, Davis, Foster, Mulder
The MOTION FAILED (5-6).
Representative J. Davies WITHDREW Amendments UA-3 & UA-4.
He spoke to the amendment. Amendment UA-3 would add $10.689
million dollars from the permanent fund earnings reserve to
the University of Alaska.
HB 50 and HB 51 were HELD in Committee for further
consideration.
ADJOURNMENT
The meeting adjourned at 5:05 p.m.
House Finance Committee 14 4/08/99 p.m.
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