Legislature(2009 - 2010)HOUSE FINANCE 519

01/29/2009 01:30 PM House FINANCE


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01:32:51 PM Start
01:34:28 PM Budget Overviews: Department of Administration
04:04:18 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Budget Overviews: TELECONFERENCED
Dept. of Administration
Dept. of Revenue
Alaska Court System
Dept. of Law - Civil
                  HOUSE FINANCE COMMITTEE                                                                                       
                      January 29, 2009                                                                                          
                         1:32 p.m.                                                                                              
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Hawker  called the  House Finance Committee  meeting                                                                   
to order at 1:32:51 PM.                                                                                                       
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Co-Chair                                                                                            
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Vice-Chair                                                                                      
Representative Allan Austerman                                                                                                  
Representative Harry Crawford                                                                                                   
Representative Anna Fairclough                                                                                                  
Representative Richard Foster                                                                                                   
Representative Les Gara                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Annette     Kreitzer,     Commissioner,     Department     of                                                                   
Administration;   Eric   Swanson,   Director,   Division   of                                                                   
Administrative Services, Department  of Administration; Kevin                                                                   
Brooks,  Deputy Commissioner,  Department of  Administration;                                                                   
Pat  Galvin,  Commissioner,  Department  of  Revenue;  Ginger                                                                   
Blaisdell,  Director,  Division of  Administrative  Services,                                                                   
Department  of Revenue; Jerry  Burnett, Deputy  Commissioner,                                                                   
Division   of   Treasury,  Department   of   Revenue;   Chris                                                                   
Christensen, Staff Counsel, Alaska  Court System; Larry Cohn,                                                                   
Executive  Director, Alaska  Judicial  Council, Alaska  Court                                                                   
System;   Marla  Greenstein,   Executive   Director,   Alaska                                                                   
Commission on  Judicial Conduct,  Alaska Court System;  Talis                                                                   
Colberg,   Attorney   General,   Department  of   Law;   Dave                                                                   
Blaisdell,  Director,  Division of  Administrative  Services,                                                                   
Department of  Law; Craig  Tillery, Deputy Attorney  General,                                                                   
Department  of Law;  Mr.  Richard Svobodny,  Deputy  Attorney                                                                   
General, Criminal Division, Department of Law                                                                                   
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Larry  Cohn,  Executive Director,  Alaska  Judicial  Council,                                                                   
Alaska Court  System; Marla  Greenstein, Executive  Director,                                                                   
Alaska Court System                                                                                                             
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
^Budget Overviews: Department of Administration                                                                                 
                    Department of Revenue                                                                                       
                    Alaska Court System                                                                                         
                    Department of Law - Civil                                                                                   
                                                                                                                                
1:34:28 PM                                                                                                                    
                                                                                                                                
ANNETTE KREITZER, COMMISSIONER,  DEPARTMENT OF ADMINISTRATION                                                                   
introduced the Department of Administration staff.                                                                              
                                                                                                                                
Co-Chair  Stoltze  asked if  Mr.  Jones was  the  Procurement                                                                   
Officer for the state.  Ms. Kreitzer said he was.                                                                               
                                                                                                                                
Ms. Kreitzer drew attention to  a brochure that gives a short                                                                   
description of  the various divisions within  the Department.                                                                   
She pointed  out that  the Department  has three main  parts:                                                                   
divisions  that maintain  an arm's  length relationship  with                                                                   
the state, divisions  that provide centralized  services, and                                                                   
public  facing  agencies.    The one  main  function  of  the                                                                   
Department  is  to  save  the  state  money  by  centralizing                                                                   
services so  that payroll, mailroom, personnel,  and computer                                                                   
services are not replicated across every department.                                                                            
                                                                                                                                
Ms. Kreitzer listed the boards  and commissions with an arm's                                                                   
length relationship  to the Department.   The purpose  of the                                                                   
boards  and commissions  is to  provide  services related  to                                                                   
personnel.                                                                                                                      
                                                                                                                                
Ms. Kreitzer  explained the Department's role  in centralized                                                                   
services.                                                                                                                       
                                                                                                                                
1:39:45 PM                                                                                                                    
                                                                                                                                
Representative Joule asked about  APOC reporting requirements                                                                   
for the  Violent Crimes Compensation  Board.  He  wondered if                                                                   
too much information  is being required from  potential board                                                                   
applicants.   Ms. Kreitzer related  that work was  being done                                                                   
on how reporting requirements were being handled.                                                                               
                                                                                                                                
Ms. Kreitzer  talked further  about centralized services  and                                                                   
its involvement with labor relations.   She referred to a web                                                                   
site  relating  to recruitment  and  retention.   She  listed                                                                   
services provided  by the Office of Administrative  Hearings,                                                                   
and  Risk  Management.  She  referred   to  the  Department's                                                                   
brochure about  state contracts and outreach  by the Division                                                                   
of General  Services.  She  spoke highly of the  Department's                                                                   
outreach programs.                                                                                                              
                                                                                                                                
1:42:59 PM                                                                                                                    
                                                                                                                                
Ms. Kreitzer highlighted the Department's public agencies.                                                                      
                                                                                                                                
Co-Chair Stoltze commented on  a problem with too many public                                                                   
defenders in  Bethel.   Ms. Kreitzer said  she had  not heard                                                                   
that comment.                                                                                                                   
                                                                                                                                
1:44:48 PM                                                                                                                    
                                                                                                                                
Ms.  Kreitzer commented  on FY09  goals and  accomplishments.                                                                   
She reported that Phase 3 of the  VOIP phone installation has                                                                   
been completed,  decommissioning the  PBX's that  were struck                                                                   
by  lightning.   The Online  Checkbook  is now  online.   The                                                                   
Active Directory has begun rolling  out, the next step in the                                                                   
Microsoft Exchange  roll-out that began  in 2007.   The Linny                                                                   
Pacillo Parking Garage has been  completed.  The Palmer State                                                                   
Office Building  will be  ready for  occupancy on October  1,                                                                   
2009.   Computer security initiatives,  including HB  65, are                                                                   
in  process.   Recruitment  and  retention issues  are  being                                                                   
addressed  through labor  contracts, service  steps, and  the                                                                   
Working Group Report.                                                                                                           
                                                                                                                                
Co-Chair  Hawker  observed  that  the state  has  made  great                                                                   
improvements  in  technology the  last  several  years.   Ms.                                                                   
Kreitzer commented on the progress  of technology.  She noted                                                                   
the load related to the PFD filings.                                                                                            
                                                                                                                                
1:47:19 PM                                                                                                                    
                                                                                                                                
Representative  Austerman  requested more  information  about                                                                   
the FY09  budget.   Ms. Kreitzer  offered to provide  written                                                                   
information.  She added that information  on the Department's                                                                   
large projects can be found on their web page.                                                                                  
                                                                                                                                
Co-Chair Hawker asked for information  about the FY10 budget.                                                                   
                                                                                                                                
ERIC SWANSON, DIRECTOR, DIVISION  OF ADMINISTRATIVE SERVICES,                                                                   
DEPARTMENT  OF ADMINISTRATION,  pointed  out  that there  are                                                                   
significantly fewer increments in the FY10 budget.                                                                              
                                                                                                                                
1:49:21 PM                                                                                                                    
                                                                                                                                
Mr. Swanson reported on an increase  in the Leases budget, in                                                                   
interagency receipts, for $1,745,000.                                                                                           
                                                                                                                                
Mr.  Swanson   explained  an   increase  in  the   Facilities                                                                   
component of $2.2 million.                                                                                                      
                                                                                                                                
Mr.  Swanson  highlighted  one  decrement  in  the  Satellite                                                                   
Infrastructure component.                                                                                                       
                                                                                                                                
Co-Chair Hawker  summarized that  the Department  is removing                                                                   
excess authority  and it is not  a $900,000 reduction  in the                                                                   
Public Broadcasting budget.  Mr. Swanson agreed.                                                                                
                                                                                                                                
1:51:28 PM                                                                                                                    
                                                                                                                                
Mr. Swanson talked about an increment  of $652,600 in the DMV                                                                   
component.                                                                                                                      
                                                                                                                                
Mr.  Swanson pointed  out that  he has  not mentioned  salary                                                                   
adjustments, which occur throughout the budget.                                                                                 
                                                                                                                                
Co-Chair  Hawker  asked  about  the  Group  Health  Insurance                                                                   
increment.    Mr.  Swanson  reported  that  there  were  $5.1                                                                   
million  in   benefit  systems  receipts.     The  Department                                                                   
anticipates a  new third-party administrator contract  at the                                                                   
start of FY10 which would incur new costs.                                                                                      
                                                                                                                                
Co-Chair Hawker  asked if  it is a  statewide contract.   Mr.                                                                   
Swanson replied that it was, with  the exception of the Union                                                                   
Health Trust.                                                                                                                   
                                                                                                                                
1:53:31 PM                                                                                                                    
                                                                                                                                
Representative Gara  asked how the hiring freeze  impacts the                                                                   
Public Defender Agency request  for additional support staff.                                                                   
                                                                                                                                
Ms. Kreitzer replied that every  division seeking to hire new                                                                   
employees will have to request  a waiver, each of which would                                                                   
be  looked  at individually.    She  said she  has  supported                                                                   
support  staff in  the Public  Defender Agency  in the  past.                                                                   
Representative  Gara  wondered   if  more  support  staff  is                                                                   
needed.   Ms. Kreitzer  pointed out  that more support  staff                                                                   
has been added as requested.                                                                                                    
                                                                                                                                
1:57:08 PM                                                                                                                    
                                                                                                                                
Representative  Gara asked  what proposals  are in place  for                                                                   
support  staff  this  year.   Ms.  Kreitzer  maintained  that                                                                   
adequate  support  staff  have  been  included  in  the  FY10                                                                   
budget.    She  offered to  discuss  specific  concerns  with                                                                   
Representative Gara.                                                                                                            
                                                                                                                                
Representative  Gara pointed  out a lack  of adequate  Public                                                                   
Defender  Agency office  space.  Ms.  Kreitzer reported  that                                                                   
the Department has been working on this problem.                                                                                
                                                                                                                                
1:59:30 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  asked if  Mr.  Steiner  was online.    Ms.                                                                   
Kreitzer said he  was not.  Co-Chair Stoltze  spoke highly of                                                                   
Mr.  Steiner and  praised the  Public Defender  Agency.   Ms.                                                                   
Kreitzer agreed.                                                                                                                
                                                                                                                                
2:01:17 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  asked  about  the  methodology  behind  the                                                                   
Department's approach to HB 125.                                                                                                
                                                                                                                                
Mr. Swanson  addressed the 10-Year  Plan.  He spoke  of areas                                                                   
with expensive  capital items, the Office of  Public Advocacy                                                                   
(OPA), the  Public Defender Agency  (PDA) and  the Enterprise                                                                   
Technology Services  (ETS) agency.  He described  those areas                                                                   
as being more difficult to control  regarding spending due to                                                                   
growth  rate being  dependent  on the  level  of case  loads.                                                                   
Other  departments show  modest  growth.   He  projected a  6                                                                   
percent annual  increase for OPA  and PDA.  He  discussed how                                                                   
new technology  impacts ETS's budget and projected  an annual                                                                   
increase of 7 percent in its operating budget.                                                                                  
                                                                                                                                
2:05:13 PM                                                                                                                    
                                                                                                                                
Ms. Swanson shared  his experience of working  on the 10-Year                                                                   
Plan and  the recent  changes  in the economy.   He  expected                                                                   
that the plan will need to be  frequently revisited.  It is a                                                                   
snapshot and a work in progress  requiring periodic updating.                                                                   
                                                                                                                                
Co-Chair  Hawker  asked  how the  collaboration  between  the                                                                   
Department and the  Office of Management and  Budget has been                                                                   
going.  Mr. Swanson said OMB has been very helpful.                                                                             
                                                                                                                                
Co-Chair  Hawker noted  the difficulty  of understanding  the                                                                   
acronyms within  the Department.  Mr. Swanson  explained that                                                                   
Non-PBF refers  to non-public building fund facilities.   Co-                                                                   
Chair  Hawker  asked  that  the   acronyms  be  explained  in                                                                   
documents in the future.                                                                                                        
                                                                                                                                
2:09:25 PM                                                                                                                    
                                                                                                                                
Representative  Gara asked  about the  salary review  process                                                                   
timeframe.     Ms.   Kreitzer   said  that   the   geographic                                                                   
differential study  is the first step.  It  will be completed                                                                   
by the end of January.                                                                                                          
                                                                                                                                
KEVIN    BROOKS,   DEPUTY    COMMISSIONER,   DEPARTMENT    OF                                                                   
ADMINISTRATION,  reported  on  the  salary  surveys  and  the                                                                   
timeline.                                                                                                                       
                                                                                                                                
Representative  Gara pointed  out that  some of the  salaries                                                                   
were low and wondered  if they could be paid out  at a higher                                                                   
level.  Ms. Kreitzer shared the work done in this area.                                                                         
                                                                                                                                
2:12:12 PM                                                                                                                    
                                                                                                                                
Representative  Gara pointed  out that  Mr. Steiner  reported                                                                   
that he could use more support  staff.  Ms. Kreitzer said she                                                                   
may not have  authorized more staff as quickly  as some would                                                                   
like.                                                                                                                           
                                                                                                                                
Representative  Gara agreed  with Mr.  Stoltz's statement  on                                                                   
the good  job Mr. Steiner  has done, as  well as the  job his                                                                   
predecessor did.                                                                                                                
                                                                                                                                
Co-Chair  Hawker reminded  the  Department  that the  revenue                                                                   
forecast  should be  taken into  consideration when  revising                                                                   
the plan.  Ms. Kreitzer said that is being considered.                                                                          
                                                                                                                                
2:15:17 PM                                                                                                                    
                                                                                                                                
PAT  GALVIN, COMMISSIONER,  DEPARTMENT OF  REVENUE, spoke  of                                                                   
FY09  budget expectations  being  low, based  on the  revenue                                                                   
forecast.     He  described   the  Department  of   Revenue's                                                                   
structure.  He concluded that,  in the short term, the budget                                                                   
is fairly  stable and  flat.   There are  a few budget  items                                                                   
that  merit  attention.   He  pointed  out  that in  the  Tax                                                                   
Division,  the current  information  system needs  upgrading.                                                                   
He  described  the impact  of  the  oil  tax on  the  current                                                                   
system.  There is a capital budget item for that.                                                                               
                                                                                                                                
Co-Chair  Hawker recalled  last year's  discussion about  the                                                                   
lack  of need  for a  new information  system.   Commissioner                                                                   
Galvin explained  that it became  a matter of  sustainability                                                                   
of the system.                                                                                                                  
                                                                                                                                
2:22:55 PM                                                                                                                    
                                                                                                                                
GINGER  BLAISDELL,   DIRECTOR,  DIVISION  OF   ADMINISTRATIVE                                                                   
SERVICES,  DEPARTMENT  OF  REVENUE,  reported  that  in  last                                                                   
year's  budget a capital  appropriation  of $3.9 million  was                                                                   
authorized  to begin the  new tax  management system.   Three                                                                   
new master auditor  positions were funded and  filled.  There                                                                   
is a request for a fourth auditor  in the FY10 budget.  There                                                                   
were  two  contract  auditors  funded  to  train  the  master                                                                   
auditors in oil and gas tax issues.                                                                                             
                                                                                                                                
2:24:37 PM                                                                                                                    
                                                                                                                                
Ms.   Blaisdell   reported   that   the   Treasury   Division                                                                   
implemented  a  new federal  cost  allocation  plan.   A  few                                                                   
adjustments  in the  FY10 budget  will  reflect this  change.                                                                   
Commissioner  Galvin   spoke  of   an  audit  which   led  to                                                                   
improvements  and is  reflected  in the  FY10  budget as  net                                                                   
zero.                                                                                                                           
                                                                                                                                
Ms. Blaisdell reported  that the PFD Division  has moved into                                                                   
their  new location  in  Anchorage.   More  than 612,000  PFD                                                                   
applications  have  been  submitted  to  date,  with  another                                                                   
10,000 in  process.  She  mentioned the charitable  check off                                                                   
program in the PFD.                                                                                                             
                                                                                                                                
2:27:17 PM                                                                                                                    
                                                                                                                                
Ms.  Blaisdell   reported  on  the  Child   Support  Services                                                                   
Division  budget.     Co-Chair  Hawker  commented   that  the                                                                   
Division  has   the  single  largest  growth   factor.    Ms.                                                                   
Blaisdell explained that it is  actually not a growth factor,                                                                   
but  the use  of  general  fund  dollars instead  of  receipt                                                                   
supported services  funds.  There  are currently not  as many                                                                   
people  on the public  assistance rolls;  however, there  are                                                                   
child support cases that need attention.                                                                                        
                                                                                                                                
Co-Chair Hawker asked what funds were used for that.                                                                            
                                                                                                                                
JERRY  BURNETT, DEPUTY  COMMISSIONER,  DIVISION OF  TREASURY,                                                                   
DEPARTMENT   OF   REVENUE,  explained   how   child   support                                                                   
collection  works.     When  a  person  is   on  a  Temporary                                                                   
Assistance  to  Needy Families  (TANF)  program,  and is  due                                                                   
child  support,  the  state  gets  the  child  support  funds                                                                   
instead of the person.  About  47 percent of that, on a state                                                                   
managed TANF case, stays with  the state and the rest goes to                                                                   
the federal government as Title  4A funds.  Receipt supported                                                                   
services  are the  state portion  of those  collections.   In                                                                   
addition to a dramatic decrease  of TANF child support cases,                                                                   
several  years  ago the  state  went to  more  tribal-managed                                                                   
TANF, which are 100 percent federal funds.                                                                                      
                                                                                                                                
Co-Chair  Hawker  called  it  a  supplanting  problem.    Mr.                                                                   
Burnett agreed.                                                                                                                 
                                                                                                                                
2:29:40 PM                                                                                                                    
                                                                                                                                
Ms. Blaisdell pointed out that  the Federal Economic Stimulus                                                                   
Package might also have an impact  on Child Support Services.                                                                   
                                                                                                                                
Co-Chair Hawker asked about the  resource rebate program with                                                                   
zero funding in  it.  Commissioner Galvin emphasized  that it                                                                   
was a one-year program.                                                                                                         
                                                                                                                                
Ms.  Blaisdell  explained an  attempt  to put  carry  forward                                                                   
language into  the supplemental  bill for appeals  related to                                                                   
the resource  rebate program.   Co-Chair  Hawker pointed  out                                                                   
that the  mechanics would be  consistent with the  PFD, which                                                                   
the rebate was tagged onto.                                                                                                     
                                                                                                                                
2:31:23 PM                                                                                                                    
                                                                                                                                
Representative  Joule  inquired   about  the  effect  of  the                                                                   
resource rebate program on rural, versus urban, recipients.                                                                     
                                                                                                                                
Vice-Chair Thomas  asked how much of the rebate  went back to                                                                   
child support.  Mr. Burnett offered to provide the numbers.                                                                     
                                                                                                                                
Representative Crawford  said that last year  the wording was                                                                   
changed  so that  children of  incarcerated  adults would  be                                                                   
eligible  for  child  support.    Mr.  Burnett  informed  the                                                                   
Committee that it  has not happened yet, but  it was included                                                                   
in the budget and should begin this year.                                                                                       
                                                                                                                                
Representative Gara asked how  out-of-state foster care deals                                                                   
with   the  PFD.     Mr.   Burnett  offered   to  find   out.                                                                   
Representative Gara requested  more information about the PFD                                                                   
and out-of-state placement.                                                                                                     
                                                                                                                                
2:35:22 PM                                                                                                                    
                                                                                                                                
Ms. Blaisdell  reported on Administration and  Support, which                                                                   
also  has  a  flat  budget  for  FY09  and  FY10.    The  Gas                                                                   
Development Authority  is moving  along with many  contracts.                                                                   
It has  a $5 million capital  project request to  fund right-                                                                   
of-way  and beginning  engineering  and design.   The  Mental                                                                   
Health  Trust   Authority  falls  under  the   Department  of                                                                   
Administration, and  has recently done a  presentation before                                                                   
the  Committee.   Co-Chair  Hawker  noted  upcoming  meetings                                                                   
involving  the  Alaska  Housing  Finance  Authority  and  the                                                                   
Alaska Permanent Fund Corporation.                                                                                              
                                                                                                                                
2:36:23 PM                                                                                                                    
                                                                                                                                
Representative Austerman  asked if the new  technology system                                                                   
would allow  for a timely  CORE Report.  Commissioner  Galvin                                                                   
offered to find out.                                                                                                            
                                                                                                                                
Co-Chair Hawker asked about the  Treasury Division's response                                                                   
to  the recent  problem  with accessing  liquid  assets.   He                                                                   
asked if there  had been any changes in the  market recently.                                                                   
Mr. Burnett reviewed the changes  in how securities are sold.                                                                   
They were once called inexpensive  capital.  Currently, it is                                                                   
not certain  that the  student loan  corporation could  go to                                                                   
the market and  borrow money and make student  loans for next                                                                   
year.    It  may  be  that  the  state  will  need  to  offer                                                                   
assistance.                                                                                                                     
                                                                                                                                
Mr. Burnett reported  that Alaska Housing also  had a problem                                                                   
with their  variable rate last  summer.  They can  now access                                                                   
that market.  The  cost of borrowing money has  gone up.  The                                                                   
interest  rate for  a  recent  sale of  bonds  by the  Mat-Su                                                                   
Borough was close to 6 percent on tax exempt debt.                                                                              
                                                                                                                                
2:41:01 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough  asked  if  the  Retirement  Board                                                                   
would be  before the  Committee at a  future date.   Co-Chair                                                                   
Hawker  said they were  not scheduled.   Commissioner  Galvin                                                                   
said that could be arranged.                                                                                                    
                                                                                                                                
Representative   Fairclough  asked   about  retiree   pension                                                                   
obligation  shortfall numbers  in  the current  market.   She                                                                   
wondered if the current shortfall  was between $6 billion and                                                                   
$10 billion and if the buy down plan was still working.                                                                         
                                                                                                                                
Mr. Burnett reported that recently  the retirement funds have                                                                   
lost  value and  the unfunded  liability  has grown.   It  is                                                                   
possible  that   there  could  be  an  opportunity   to  take                                                                   
advantage of the lower cost to borrow money.                                                                                    
                                                                                                                                
Co-Chair  Hawker reported  that  there is  a retirement  fund                                                                   
update coming up next week.                                                                                                     
                                                                                                                                
Representative Fairclough  wondered how far the  state should                                                                   
go  into debt  to  pay  down a  future  potential  liability.                                                                   
Commissioner  Galvin  assured  that the  situation  would  be                                                                   
looked  at  carefully.    He  described  the  current  market                                                                   
situation and the need to proceed slowly.                                                                                       
                                                                                                                                
Co-Chair Hawker  opined that the  GO Bonds were in  a similar                                                                   
holding  pattern.   Commissioner  Galvin  reported  that  the                                                                   
market is opening up for those.   Co-Chair Hawker pointed out                                                                   
that the  bonds authorized  last year  have not been  issued.                                                                   
Mr. Burnett  suggested it  was possible  that the full  value                                                                   
would not be issued.                                                                                                            
                                                                                                                                
2:47:02 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  summarized that the Department  had not been                                                                   
compromised in its ability to  meet state obligations and the                                                                   
state credit rating  has remained solid.  Mr.  Burnett agreed                                                                   
that the  credit rating had  not been compromised,  there was                                                                   
very  good liquidity,  there were  no cash  flow issues,  and                                                                   
Alaska still has a great deal of money in the bank.                                                                             
                                                                                                                                
Co-Chair  Hawker  asked if  the  Department was  planning  to                                                                   
forego  all   wage  increases   over  the  next   ten  years.                                                                   
Commissioner  Galvin replied  that was  no need  to grow  the                                                                   
Department and some services would  maintain at a flat level.                                                                   
                                                                                                                                
Commissioner Galvin  continued that there is a  single pot of                                                                   
federal  money  that all  states  draw  from.   Which  states                                                                   
receive money cannot  be predicted.  He hoped  there would be                                                                   
gains in efficiency within the Department.                                                                                      
                                                                                                                                
2:50:07 PM                                                                                                                    
                                                                                                                                
Commissioner Galvin  said he did  not see any  additional tax                                                                   
or revenue growth in the budget.                                                                                                
                                                                                                                                
Co-Chair Hawker  pointed out  that the  model shows  that the                                                                   
state never  runs into a liquidity  problem.  He  wondered if                                                                   
the  projections   would  change  if  withdrawals   from  the                                                                   
reserves were made.                                                                                                             
                                                                                                                                
Commissioner Galvin  thought the  Department was going  to be                                                                   
dependent on the nature of fiscal  choices made.  Use of more                                                                   
of the Permanent Fund or implementing  a new tax system would                                                                   
have an affect  on the budget.  The budget  forecast does not                                                                   
try to anticipate new policy calls.   He stated that the core                                                                   
issue is  "what is  the fiscal response  that we're  going to                                                                   
implement".                                                                                                                     
                                                                                                                                
Co-Chair Hawker looked forward to having that discussion.                                                                       
                                                                                                                                
2:52:37 PM                                                                                                                    
                                                                                                                                
CHRIS  CHRISTENSEN,  STAFF  COUNSEL,   ALASKA  COURT  SYSTEM,                                                                   
introduced his staff.   He commented that this  was the first                                                                   
department  overview before  the House  Finance Committee  in                                                                   
over  five  years.   He  pointed  out  that even  though  the                                                                   
Judicial Branch of the government  is only 1.5 percent of the                                                                   
state's general fund operating  budget, more private citizens                                                                   
move  through   the  Alaska  Court  System  than   any  other                                                                   
government  entity.    There  are  718  permanent,  full-time                                                                   
employees.  He  described the different aspects  of the Court                                                                   
System.                                                                                                                         
                                                                                                                                
Mr. Christensen  explained that  Alaska's judicial  structure                                                                   
is unique in that there is a unified  judiciary; there are no                                                                   
county  or  municipal courts.    It  is  a cheaper  and  more                                                                   
efficient way to provide a justice system.                                                                                      
                                                                                                                                
2:55:17 PM                                                                                                                    
                                                                                                                                
Mr. Christensen  related  that funding  for the Courts  comes                                                                   
exclusively from the legislature.   The director of the Court                                                                   
System  is a  constitutional  officer.   The  Court  System's                                                                   
budget differs from the executive  branch in that it contains                                                                   
no discretionary functions; everything  is mandated by law or                                                                   
by the Constitution.  The Court  System's work is reactive in                                                                   
nature; it does  not initiate work.  The Court  System has no                                                                   
discretion to refuse work and must, by law, meet deadlines.                                                                     
                                                                                                                                
Mr. Christensen said  that there are timeframes  in place for                                                                   
civil cases that can cause conflicts  in a court with a heavy                                                                   
caseload.    Last  fiscal  year  the  Court  System  received                                                                   
155,000  new cases  and resolved  almost as  many old  cases.                                                                   
The case  load in FY09 increased  by 1.6 percent.   He stated                                                                   
that felony  filings in  FY04-FY08 increased  by 30  percent.                                                                   
In Anchorage during that same  time period, the felony filing                                                                   
rate increased  by 75 percent.   This is because  more crimes                                                                   
committed are resulting  in arrests.  Anchorage  plans to add                                                                   
33 police officers by April 2009.   Many people convicted are                                                                   
repeat offenders.   As long as  the state grows,  the Court's                                                                   
caseload  will  grow.    Personnel costs  make  of  about  79                                                                   
percent of the  Court System's budget.  Attempts  to unionize                                                                   
all employees  are being made  and Mr. Christensen  felt that                                                                   
would be more expensive overall.                                                                                                
                                                                                                                                
3:01:16 PM                                                                                                                    
                                                                                                                                
Mr.  Christensen continued  to describe  problems within  the                                                                   
Court System in  Anchorage.  It is possible that  next year a                                                                   
new Superior Court judge may be requested.                                                                                      
                                                                                                                                
Mr. Christensen brought attention  to the fact that the Court                                                                   
System  may have  a  supplemental  request for  $390,000  for                                                                   
increased costs relating to utilities  and service contracts.                                                                   
Energy  cost increases  this year  have put  a strain on  the                                                                   
Court System.  He said  they are always  looking for  ways to                                                                   
save money.                                                                                                                     
                                                                                                                                
Mr. Christensen  reported  that there  is currently a  30-day                                                                   
hiring freeze for  all employees, which is a  problem for the                                                                   
Court System.    He said clerical jobs must be  filled at all                                                                   
times in order for the work to be accomplished.                                                                                 
                                                                                                                                
Co-Chair  Hawker asked  if the  hiring freeze  was the  Court                                                                   
System's idea.  Mr. Christensen said it was.                                                                                    
                                                                                                                                
Mr. Christensen shared  that the Court System  has 44 courts.                                                                   
A small  court cannot  afford to leave  one or two  positions                                                                   
vacant.                                                                                                                         
                                                                                                                                
Mr. Christensen discussed highlights  of FY09.  The Anchorage                                                                   
jury system has been revamped  in order to be more efficient.                                                                   
A  private   sector  contractor   is  being  used   for  jury                                                                   
notification, saving money in jury costs.                                                                                       
                                                                                                                                
3:04:03 PM                                                                                                                    
                                                                                                                                
Mr.  Christensen  mentioned  the  use  of  calling  cards  in                                                                   
offices  as an  effort  to save  money.   He  listed  several                                                                   
small, but effective, ways to save money.                                                                                       
                                                                                                                                
Mr.  Christensen discussed  significant,  on-going  projects.                                                                   
"No Dark Courtrooms" is an effort  to get more staff into the                                                                   
courtrooms.   He felt there  should be  an extra body  in the                                                                   
courtroom  in order  to  be sure  that  court procedures  are                                                                   
covered.   Co-Chair Hawker asked  which budget  that appeared                                                                   
in.  Mr. Christensen said it was in the operating budget.                                                                       
                                                                                                                                
3:07:41 PM                                                                                                                    
                                                                                                                                
Mr. Christensen  reported on the  judicial vacancy rate.   As                                                                   
the crime  rate has  increased,  more of an  effort is  being                                                                   
made  to fill  these  vacant judge  positions.    There is  a                                                                   
request for  funding of $639,000  to reduce the  vacancy rate                                                                   
to zero.                                                                                                                        
                                                                                                                                
Mr. Christensen spoke  of a request for a judge  in Anchorage                                                                   
and in Juneau in the future.                                                                                                    
                                                                                                                                
Co-Chair Hawker asked for information  about the past request                                                                   
for four court facilities.                                                                                                      
                                                                                                                                
3:10:09 PM                                                                                                                    
                                                                                                                                
Representative  Salmon asked  about HB  9 implications.   Mr.                                                                   
Christensen reported that there  is a large body of data from                                                                   
other states  regarding death  penalty expenses.   There will                                                                   
be a Court System fiscal note when the bill is heard.                                                                           
                                                                                                                                
Mr. Christensen  reported on expanded court facilities.   Six                                                                   
new judges  were added  during the Murkowski  administration.                                                                   
Capital  money  was  provided  to  expand  the  size  of  the                                                                   
courthouses in  Kenai and in Palmer,  which should be  up and                                                                   
running soon.   Co-Chair  Hawker asked  if the financing  was                                                                   
adequate.  Mr. Christensen said some corners were cut.                                                                          
                                                                                                                                
3:12:22 PM                                                                                                                    
                                                                                                                                
Mr.  Christensen  addressed the  Judiciary  branch's  10-Year                                                                   
Plan.   He noted how  difficult it was  to develop  the Plan.                                                                   
Many  factors can  affect case  load: state  of the  economy,                                                                   
laws  enacted  by  the  legislature,  federal  mandates,  and                                                                   
municipal policies.                                                                                                             
                                                                                                                                
3:15:13 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker summarized the  process used to establish the                                                                   
10-Year Plan; status quo, with  cost-of-living and population                                                                   
factored in.  Mr. Christensen  reported that for FY11, the No                                                                   
Dark Courtrooms  initiative was factored  in, as well  as the                                                                   
possible addition  of two Superior Court judges,  plus a 2.75                                                                   
percent inflation factor recommended by OMB.                                                                                    
                                                                                                                                
LARRY  COHN,  EXECUTIVE DIRECTOR,  ALASKA  JUDICIAL  COUNCIL,                                                                   
ALASKA  COURT  SYSTEM,  described  the three  main  areas  of                                                                   
responsibility  of the  Judicial Council.   He mentioned  the                                                                   
Criminal  Justice  Working Group,  which  was  funded by  the                                                                   
legislature  to  improve the  criminal  justice  system.   He                                                                   
spoke  of a  goal  to implement  a system  to  electronically                                                                   
share  discovery  materials.   Another  goal  is to  identify                                                                   
cost-effective ways to reduce criminal recidivism.                                                                              
                                                                                                                                
Mr.  Cohn  focused on  one  area  of  the budget  -  judicial                                                                   
selection.   It is cost effective  to do the work in  a time-                                                                   
efficient  way.   There  have  been many  judicial  vacancies                                                                   
recently and  more are  expected in the  future.   There have                                                                   
been  more  applications  for   those  vacancies  due  to  an                                                                   
increase in  salary.  The budget  has remained the  same over                                                                   
the  past 20  years, with  the exception  of adjustments  for                                                                   
inflation and  a request for six  new judgeships.  In  FY08 a                                                                   
supplemental budget was requested  for the first time in more                                                                   
than 20 years.  The Judicial Council  is seeking an increment                                                                   
to process  seven judicial  vacancies a year.   There  are no                                                                   
requests for personal services funds.                                                                                           
                                                                                                                                
3:22:37 PM                                                                                                                    
                                                                                                                                
MARLA GREENSTEIN,  EXECUTIVE DIRECTOR,  ALASKA COURT  SYSTEM,                                                                   
reported on  judicial conduct  and ethics  complaints.    She                                                                   
spoke of a disciplinary hearing  concerning a judge in Bethel                                                                   
resulting in a  need for a supplemental request  for FY09 for                                                                   
$33,200.   She  reported  that an  operating  budget line  of                                                                   
$36,000  is kept  to  allow hiring  of  special counsel  when                                                                   
needed.   That amount was  exceeding due  to the cost  of the                                                                   
disciplinary hearing.                                                                                                           
                                                                                                                                
Ms.  Greenstein  spoke  of  a   minor  increment  request  in                                                                   
personal  services for  $3,600.  Co-Chair  Hawker offered  to                                                                   
consider that request.                                                                                                          
                                                                                                                                
3:27:40 PM                                                                                                                    
                                                                                                                                
Representative Gara  asked about Judge Cummings'  suspension.                                                                   
Ms. Greenstein  explained that  the term "suspension"  refers                                                                   
to a six-month suspension, not  removal.  Representative Gara                                                                   
asked  if  the  agency  had  the   power  of  removal.    Ms.                                                                   
Greenstein  said they  did.   Representative  Gara thought  a                                                                   
permanent suspension  was warranted.  Ms.  Greenstein pointed                                                                   
out that the  ruling was public record and  she explained how                                                                   
to access it.                                                                                                                   
                                                                                                                                
Co-Chair Stoltze spoke of the  model system for the selection                                                                   
and retention of judges.  He wondered  why the suspension was                                                                   
not upheld.   Ms. Greenstein  corrected that their  agency is                                                                   
not  the bar  association.   She  clarified  how  a judge  is                                                                   
evaluated.                                                                                                                      
                                                                                                                                
3:31:10 PM                                                                                                                    
                                                                                                                                
TALIS   COLBERG,  ATTORNEY   GENERAL,   DEPARTMENT  OF   LAW,                                                                   
introduced  members of  the Department  of Law and  described                                                                   
its  organization.    He  explained   the  breakdown  of  the                                                                   
Criminal Division  and the Civil  Division.  The  13 sections                                                                   
of the  Civil Division  are for addressing  the needs  of the                                                                   
citizens in Alaska.                                                                                                             
                                                                                                                                
Co-Chair Hawker  thanked Attorney General Colberg  for making                                                                   
Mr. Sniffen,  an Assistant  Attorney General, available  last                                                                   
summer for the investigation of gasoline prices.                                                                                
                                                                                                                                
3:37:22 PM                                                                                                                    
                                                                                                                                
Mr. Colberg related the responsibilities  of various sections                                                                   
in the Department.  Co-Chair Hawker  said that the Department                                                                   
of Law is Alaska's largest law  firm.  Mr. Colberg emphasized                                                                   
that when the agency is broken  down into individual cases it                                                                   
can be  overwhelmed  by large  entities in  court cases.   He                                                                   
opined that when one of the agencies  - Public Safety, Public                                                                   
Defenders, Court System - get  out of balance, the others are                                                                   
affected.  Any  incremental change in one  department affects                                                                   
the other departments.  He gave an example in Dillingham.                                                                       
                                                                                                                                
3:41:52 PM                                                                                                                    
                                                                                                                                
Mr.  Colberg  continued  to  highlight  sections  within  the                                                                   
Department.   He mentioned the  role of the Natural  Resource                                                                   
Section  and  termed  the  Oil  and  Gas  Section  a  revenue                                                                   
generator  within  the  Department.   Opinions,  Ethics,  and                                                                   
Appeals  are  combined  and  work on  projects  such  as  the                                                                   
Kensington Mine appeal.  Regulatory  and Public Affairs deals                                                                   
with utilities.                                                                                                                 
                                                                                                                                
Mr. Colberg pointed  out in the Criminal Section,  the Office                                                                   
of Special  Prosecution and Appeals,  which has a  small, but                                                                   
incredibly successful Cold Case office in Juneau.                                                                               
                                                                                                                                
Mr. Colberg  voiced appreciation for last  year's legislation                                                                   
that  increased  salaries.   He  described  quality  of  life                                                                   
adjustments  such  as  a  new  flex  time  schedule,  parking                                                                   
improvements in Anchorage, and a new badge system.                                                                              
                                                                                                                                
3:45:39 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker noted  the small request in  the FY10 budget.                                                                   
Mr. Colberg  thought it was  realistic.   He did not  want to                                                                   
see decreases in the budgets of  agencies that the Department                                                                   
interacts with.                                                                                                                 
                                                                                                                                
3:47:26 PM                                                                                                                    
                                                                                                                                
Co-Chair   Hawker  asked   Mr.   Colberg   to  describe   the                                                                   
Department's  10-Year  Plan.    Mr.  Colberg  said  the  Plan                                                                   
assumed a parallel  level playing field with  other agencies.                                                                   
He  discussed the  impact of  the  gasline and  how it  could                                                                   
relate to the Department's budget.   For example, there is an                                                                   
expectation  of  increased  crime   similar  to  the  pattern                                                                   
related  to  the  pipeline  era.    There  might  be  a  drop                                                                   
initially  in requests  regarding  oil and  gas.   Unexpected                                                                   
events may cause a large fiscal  impact.  The gasline impacts                                                                   
can be projected.                                                                                                               
                                                                                                                                
DAVE   BLAISDELL,   DIRECTOR,  DIVISION   OF   ADMINISTRATIVE                                                                   
SERVICES, DEPARTMENT OF LAW, spoke  of potential increases in                                                                   
the 10-Year  Plan.  There  is a population growth  assumption                                                                   
of  10  percent.   Growth  is  generally  found  in  personal                                                                   
services.   There is not  currently an inflation  factor, but                                                                   
it will be added.   There is an overhead projection  for each                                                                   
PCN of approximately $7,200.                                                                                                    
                                                                                                                                
Mr. Blaisdell  noted that  the capital  budget was  harder to                                                                   
project.  There  are increasing security issues  and changing                                                                   
IT needs.                                                                                                                       
                                                                                                                                
Co-Chair  Hawker  asked  about  physical space  needs.    Mr.                                                                   
Colberg  said that  in  Palmer the  Valley  Hospital will  be                                                                   
finished and the  Department of Law can move  in.  Dillingham                                                                   
has  no interview  facility.   Larger offices  are in  pretty                                                                   
good shape.                                                                                                                     
                                                                                                                                
Co-Chair Hawker asked about the  parking issues in Anchorage.                                                                   
Mr.  Colberg replied  that  most of  the  problems have  been                                                                   
resolved.   Co-Chair Hawker thought  there might  be physical                                                                   
facility issues to consider.                                                                                                    
                                                                                                                                
3:54:43 PM                                                                                                                    
                                                                                                                                
CRAIG TILLERY,  DEPUTY ATTORNEY  GENERAL, DEPARTMENT  OF LAW,                                                                   
spoke  of added  space  in Anchorage  offices.   Mr.  Colberg                                                                   
highlighted problems  in Sitka.   Mr. Tillery said  Kenai has                                                                   
problems.                                                                                                                       
                                                                                                                                
MR.  RICHARD  SVOBODNY,  DEPUTY  ATTORNEY  GENERAL,  CRIMINAL                                                                   
DIVISION,  DEPARTMENT  OF  LAW,  said that  Bethel  also  has                                                                   
facility issues.                                                                                                                
                                                                                                                                
Mr. Colberg  commented that  there is not  much room  to make                                                                   
cuts because  "cuts means  staff" in  the Department  of Law.                                                                   
He pointed out  that the long-range plan presumes  an absence                                                                   
of federal funds which will be  problematic in the future for                                                                   
the  Criminal   Division,  which  is  dependent   on  federal                                                                   
funding.                                                                                                                        
                                                                                                                                
3:58:24 PM                                                                                                                    
                                                                                                                                
Mr.  Blaisdell said  there was  about $3  million of  federal                                                                   
funding in  the FY10 budget.   Co-Chair Hawker asked  if more                                                                   
federal  money was available  if the  Department applied  for                                                                   
it.                                                                                                                             
                                                                                                                                
Mr. Svobodny  explained that  some of  the federal  money was                                                                   
one-time,  earmarked   money.    Other  funds   were  through                                                                   
Violence Against  Women statutes,  which look like  they will                                                                   
continue to  be funded.  In  the pending stimulus  bill there                                                                   
are funds for law enforcement and prosecution.                                                                                  
                                                                                                                                
Co-Chair Hawker asked for an explanation  of the Byrne Grant.                                                                   
Mr.  Svobodny  replied that  the  Byrne  Grant is  a  formula                                                                   
funded grant program  for all states.  The  year before last,                                                                   
Alaska received $600,000  from the grant.  Some  of the money                                                                   
went to the Department of Law  to fund a unit that dealt with                                                                   
alcohol  addiction programs.   The  legislature approves  the                                                                   
funds  and then a  committee decides  how it  will be  spent.                                                                   
Two years ago it was $600,000  and last year there wasn't any                                                                   
money.  There could be $15 million in the stimulus package.                                                                     
                                                                                                                                
Co-Chair  Hawker asked  what the  parameters surrounding  the                                                                   
funds  are.  Mr.  Svobodney said  they are  for policing  and                                                                   
prosecuting.                                                                                                                    
                                                                                                                                
4:01:53 PM                                                                                                                    
                                                                                                                                
Co-Chair   Stoltze   explained  how   Byrne-funded   programs                                                                   
affected the  Mat-Su area.  He  welcomed a discussion  of any                                                                   
of the Department's issues.                                                                                                     
                                                                                                                                
Co-Chair Hawker  noted that  he has his  eye on the  stimulus                                                                   
packet.   He  requested specific  information  as it  becomes                                                                   
available.                                                                                                                      
                                                                                                                                
Mr. Colberg offered to do so.                                                                                                   
                                                                                                                                
4:04:18 PM                                                                                                                    
                                                                                                                                
Representative  Gara questioned  the number  of staff  needed                                                                   
in-house and how many should be  contracted out.  He wondered                                                                   
if hiring in-house would result in savings.                                                                                     
                                                                                                                                
Mr. Colberg  replied that there  were past discussions  as to                                                                   
how many lawyers could be hired  at Alaskan rates for Oil and                                                                   
Gas  litigation.   One  problem is  that  costs could  change                                                                   
considerably.  Another  problem is that the  Alaska pay scale                                                                   
does not  attract the specialists  required.  On  the surface                                                                   
there could be  several in-house lawyers at  a cheaper price,                                                                   
but  the pay  scale  may not  attract  the expertise  needed.                                                                   
Also, there  are different pay  scales for different  classes                                                                   
of lawyers.                                                                                                                     
                                                                                                                                
Mr. Colberg summarized  that it is a  complicated discussion.                                                                   
Representative  Gara appreciated  how difficult  it was,  but                                                                   
requested hearing about any recommended cost savings.                                                                           
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:08 PM.                                                                                           

Document Name Date/Time Subjects
AJC selection expenses.pdf HFIN 1/29/2009 1:30:00 PM
Commission on Judical Conduct.doc HFIN 1/29/2009 1:30:00 PM
COURTS.pdf HFIN 1/29/2009 1:30:00 PM
DOA.pdf HFIN 1/29/2009 1:30:00 PM
Overview Law - 10 yr plan.pdf HFIN 1/29/2009 1:30:00 PM
DOA Chart.PDF HFIN 1/29/2009 1:30:00 PM
REVENUE 10 year plan with Corporations.pdf HFIN 1/29/2009 1:30:00 PM
Ltr to HseFin 2-11-09.pdf HFIN 1/29/2009 1:30:00 PM