Legislature(2013 - 2014)HOUSE FINANCE 519
03/18/2013 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB71 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 71 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 18, 2013
1:31 p.m.
1:31:24 PM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 1:31 p.m.
MEMBERS PRESENT
Representative Alan Austerman, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Mark Neuman, Vice-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative Lindsey Holmes
Representative Scott Kawasaki, Alternate
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
MEMBERS ABSENT
Representative David Guttenberg
ALSO PRESENT
Representative Shelly Hughes, Sponsor; Daniel George,
Staff, Representative Bill Stoltze; Shelly Wright,
Director, Southeast Conference ARDOR; Lorene Palmer,
Director, Division of Economic Development, Department of
Commerce, Community and Economic Development; Nicole Grewe,
ARDOR Program Coordinator, Department of Commerce,
Community and Economic Development.
PRESENT VIA TELECONFERENCE
Jason Hoke, ARDOR, Copper Valley Development Corporation;
Carl Berger, Executive Director, Lower Kuskokwim Economic
Development Council; Bryant Hammond, Director, Bering
Strait Development Council; Andy Varner, Executive
Director, Southwest Alaska Municipal Conference.
SUMMARY
HB 71 AK REGIONAL ECONOMIC ASSISTANCE PROGRAM
CSHB 71(FIN) was REPORTED out of committee with a
"do pass" recommendation and with one new fiscal
impact note from the Department of Commerce,
Community and Economic Development.
HOUSE BILL NO. 71
"An Act extending the termination date of the Alaska
regional economic assistance program; and providing
for an effective date."
1:31:52 PM
Co-Chair Stoltze discussed another bill.
1:32:20 PM
REPRESENTATIVE SHELLY HUGHES, SPONSOR, discussed the ARDORS
legislation. The bill would extend the program for an
additional three years. She shared that there were 12
ardors in Alaska with the purpose of providing local input
and she stressed that the program was formed 25 years
earlier. She communicated that the program had been a
lifeline for some of the state's villages. She discussed
the annual cost per ARDOR. She noted there were different
accomplishments across the state. She stated that an audit
had not been conducted during the program's lifetime. She
pointed to an ARDORS Annual Report (copy on file). She
explained that Anchorage had worked with their ARDOR to
reach out on an international level. She shared that the
Anchorage ARDOR had recently hosted a supplier conference
related to the Kodiak based aerospace program. She stressed
that the ARDORS had a positive impact on Alaska's economic
development.
Representative Costello MOVED to ADOPT the proposed
committee substitute for HB 71, Work Draft 28-LS0288\N
(Martin, 3/18/13).
Co-Chair Stoltze OBJECTED for discussion.
DANIEL GEORGE, STAFF, REPRESENTATIVE BILL STOLTZE,
explained the CS. He read the summary of changes. The title
was changed to read, "An Act extending the termination date
of the Alaska regional economic assistance program; and
providing for an effective date." Other changes included
the requirement of an annual report to be submitted to the
legislature. The bill also spelled out requirements in the
report, and outlined assistance provided by departments for
federal funding, sponsorships and sources, meeting dates,
locations, agenda description. He explained that much of
the information was currently available, but the bill
spelled out how the items should be described. He concluded
that there were some technical changes, including section
numbering.
1:39:20 PM
Representative Costello shared that there had been
questions in a subcommittee related to the value of the
ARDORS program. The subcommittee felt there was a need to
keep the legislature more informed on the program, and a
development plan had been added.
Representative Holmes expressed support for the committee
substitute. She assumed the intent of the CS was that the
annual report should not be expensive, and the importance
was the communication of the information to the
legislature.
Co-Chair Stoltze noted that there were testifiers that
could express that the ARDORS could provide more
information, and could benefit those who were focused on
the public purpose
Representative Holmes believed it was the intent of the CS
to save Alaska money.
Vice-Chair Neuman asked for an explanation of the
relationship between the ARDOR and the State of Alaska.
Representative Hughes deferred the question to a division
director. She explained that it was a grant program, and
the Department of Commerce, Community and Economic
Development (DCCED) administered the grant. She pointed out
that there was communication with the program manager, and
stressed the importance of communication between the
regions.
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, Work Draft 28-LS0288\N was ADOPTED.
Representative Edgmon spoke in support of the legislation.
He asked for more information regarding the three year
authorization. Representative Hughes replied that after
looking at the program it had been unclear what
accomplishments some of the state's ARDORS had been making.
She discussed that there had not been an audit in the 25
year history of the program; an audit would take 2 to 3
years; as a result she had suggested the three year time
frame instead of five years.
Representative Hughes noted that the audit would sunset
prior to the time period.
1:46:09 PM
JASON HOKE, ARDOR, COPPER VALLEY DEVELOPMENT CORPORATION
(via teleconference), shared the responsibilities of
ARDORS, including networking with other ARDORS throughout
the state. He discussed the importance of communication
between the ARDORS. He pointed to a food distribution
network between different regions of the state. He
discussed ADA regional energy plans, agriculture
development had been working with Nome, and developing
environmental agriculture units for food sustainability
throughout the state. He mentioned a cardboard waste plant
for the cardboard waste disposed of in Mat-Su. He stated
that they were the only ones conducting economic
development in Copper Valley. The program was funded with
$62,000, and about one-third of the funds were used on rent
and other. He understood there had been concerns that the
private funds were low coming into the program.
1:51:36 PM
CARL BERGER, EXECUTIVE DIRECTOR, LOWER KUSKOKWIM ECONOMIC
DEVELOPMENT COUNCIL (via teleconference), testified in
support of HB 71 had been in the position for over 21
years. He shared that the region was primarily dependent on
the fishing industry. The commercial fishery ebbed and
flowed, and remarked that community had worked hard to
improve the salmon cache to take better care of harvested
fish to receive a higher price. He felt that the ARDORS
helped in promoting tourism in the area.
1:55:01 PM
Mr. Berger continued that his local ARDOR had provided
$2,000 to $4,000 to several individuals each year, and that
small amount of money was able to serve the community. He
stressed that it was a grassroots operation, and pointed
out that the ARDOR was able to provide access to a
government organization. He stressed that the operating
costs were increasing annually.
Co-Chair Stoltze remarked that the Special Education
Service Agency (SESA) had discussed funding for their
program, and the legislature was still attempting to pass a
bill for SESA.
Mr. Berger concluded his remarks.
Representative Gara thanked Mr. Berger for his explanation
of the program, and he expressed the support for the
program.
Vice-Chair Neuman asked about grants in the amount of
$2,000 to $4,000 per year. He pointed to the ARDORS bylaws
of up to $10,000 per year, and $5,000 without revision. He
asked if grants to individuals were one-time grants. Mr.
Berger replied that the grants were provided using money
from other organizations in the community. He stressed that
the awarded money was not state money. He explained that
approximately 12 people had been served over the course of
three years. He remarked that it was a small effort in his
region.
1:59:21 PM
BRYANT HAMMOND, DIRECTOR, BERING STRAIT DEVELOPMENT COUNCIL
(via teleconference), testified in support of the
legislation. He shared that the program had a staff of six
people and a board of seven people. He stated that the
board represented regional business, sub regions of the
regional tribes, and higher education. The staff assisted
in research and planning specifically related to energy;
and served as a liaison between the community, tribes, and
outside experts. The staff also provided grant writing
support to the tribes, to assist the communities in
developing their capacity to plan and gain funding for
priority projects. The staff provided support for e-
commerce marketing to gain a wider market for the region's
artist. He stated that the ARDOR funds helped to support a
single position that traveled to each community in the
region to facilitate economic development planning. He
explained that the plans helped to develop community
priorities, in order to determine five-year development
strategies. He stressed that the ARDOR funding was
essential, but provided valuable coordinated assistance.
Representative Kawasaki pointed to the revenue portfolios
of the ARDORs under the annual plan. He noticed that Bering
Strait's revenue portfolio had 10 percent from the state,
11 percent from the federal government, and 79 percent from
other funds. He wondered what the "other funds" included.
Mr. Hammond replied that "other funds" referred to all
tribal compact funds.
Co-Chair Stoltze surmised that the "other funds" sounded
like federal funds.
ANDY VARNER, EXECUTIVE DIRECTOR, SOUTHWEST ALASKA MUNICIPAL
CONFERENCE (via teleconference), shared that the Southwest
ARDOR was one of the longest serving ARDORs, and remarked
that one of the things that the program had done well was
that it acted as a good sounding board and central area for
a diverse region.
Mr. Varner stated that the ARDOR grant represented
approximately 25 percent the funding portfolio. The office
had two full-time staff, and shared that if the ARDOR money
went away the office would need to cut one staff. He
understood the importance of eliminating duplicate state
services, but remarked that the Municipal Conference worked
to ensure that certain state operations functioned well. He
emphasized the importance of working together.
2:12:18 PM
Representative Wilson asked how much the state and private
funds were. Mr. Varner answered that the office received
$62,000 per year in state funds and approximately $100,000
in private funds.
SHELLY WRIGHT, DIRECTOR, SOUTHEAST CONFERENCE ARDOR, stated
that all ARDORS throughout the state had different missions
to focus on the diverse needs in the state. She shared that
the effort was to help with a collaborated approach for
Southeast communities. The areas became a network of supply
and services; and she pointed to timber recovery, and a
threshold analysis related to a timber industry in
Southeast. She stressed that the office did not have the
bureaucracy to weed through the different projects, but
when the projects were completed the staff would be
dismissed. She noted that the program was a membership
organization.
2:17:08 PM
Co-Chair Stoltze wondered if the Southeast Conference
engaged in political activities. Ms. Wright responded in
the negative.
Co-Chair Stoltze asked if she considered a redistricting
lawsuit a political activity or joining a political party.
Ms. Wright did not know, and asked if the Southeast
Conference had done that.
Co-Chair Stoltze stressed that he had a reason to ask the
question, and restated his question. Ms. Wright replied
that she did not know the answer.
Co-Chair Stoltze wondered if she did not know the answer
because of moral ambiguity or legal ambiguity. Ms. Wright
responded that she was not familiar with that particular
incident.
Co-Chair Stoltze wondered if endorsing a candidate would be
a political activity. Ms. Wright replied in the
affirmative.
Co-Chair Stoltze asked if hosting a political party's
conference be considered political activity. Ms. Wright
replied in the affirmative.
Co-Chair Stoltze did not believe that she had the history
to answer. He stated that he was merely curious.
Representative Edgmon wondered if the five cycle proposal
would have any impact on the program. Ms. Wright replied in
the negative. She noted that having the five year stability
was good, but it would not be a deterrent for the program
if it sunset in three years.
Representative Munoz acknowledged the terrific work of the
Southeast Conference. She discussed that the Southeast
Conference had been established to start the ferry system.
2:20:18 PM
Representative Gara asked about the three and five year
extension under the bill. He wondered if the change would
have a negative impact on the ability to hire staff or
enter into contracts. Ms. Wright replied in the negative.
She stated that staff was considered on a year-to-year
basis.
Co-Chair Stoltze CLOSED public testimony.
Co-Chair Stoltze asked if Department of Commerce, Community
and Economic Development (DCCED) whether it had a position
on the bill.
LORENE PALMER, DIRECTOR, DIVISION OF ECONOMIC DEVELOPMENT,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
replied that the department was available for questions.
She pointed to the significant comments provided by ARDORS.
She believed the original premise of the program was still
valid.
Co-Chair Stoltze asked if the administration supported the
program. Ms. Palmer replied in the affirmative.
Co-Chair Stoltze guessed that the administration wanted the
program to continue.
Representative Wilson asked how it was determined whether
the money was being used in the best interest of the
program. Ms. Palmer understood that there were expectations
in the application process that determined the eligibility
for the grants. She did not believe the department had
taken a role in determining the value of the work done in
the different areas the program existed.
2:25:21 PM
NICOLE GREWE, ARDOR PROGRAM COORDINATOR, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, noted that
there was a board of directors for the ARDORS by design.
She noted that there were three core deliverables
associated with the grant: 1) An economic development plan,
that was updated every two years and was submitted to
DCCED; 2) The ARDOR was to execute economic development
activities that were in line with the plan; and 3) The
ARDOR have a board of directors that reflected the economic
diversity and leadership of that region, and convened on a
regular basis.
Representative Wilson wondered if the review process
determined a reissuing for a period of time. Ms. Palmer
replied that there were requirements that needed to be
fulfilled, if the requirements were not fulfilled the
ARDORS were no longer eligible for the grant.
Co-Chair Austerman noted that the annual report did not
tell him anything other than the numbers. He explained that
the report was vague. He did not believe there was any way
to tell if there was a value to the program based on the
report. He pointed to the CS that laid out some structure
that would allow the department to do what it should have
been doing all along. He asked about the department's view
of the CS. Ms. Palmer replied the report could go into more
depth and detail. She understood there was room for
improvement, and felt the CS would help in detailing more
reporting requirements.
2:29:58 PM
Co-Chair Austerman pointed to funding listed in the annual
report. He asked what made up the remainder of funds
outside of state funds. Ms. Grewe asked for verification of
the page number (four). Co-Chair Austerman replied in the
affirmative.
Co-Chair Austerman wondered why there was a $252,000 in
funding. Ms. Grewe replied that some of the ARDORs brought
in additional state funds, competed for grants from other
state agencies that the department was not involved in. She
elaborated that there were various grants from the
legislature, like Southeast Conference grants.
Co-Chair Austerman requested a list of the grants. Ms.
Grewe agreed to provide that information.
Co-Chair Austerman surmised that DCCED did not track the
grants. He felt that DCCED needed more oversight regarding
funding for the ARDORS.
2:33:16 PM
Representative Kawasaki wondered how DCCED planned to track
the finances of a specific ARDOR, if the grant was added to
the remainder of their funding. Ms. Grewe responded that
DCCED had a budget table in the grant agreement with the
ARDORS. She stated that the state funding must be reported
on by the ARDOR, based on its use.
Vice-Chair Neuman asked if the department approved of the
grants administered. Ms. Grewe responded that DCCED must
approve all spending over $5000.
Vice-Chair Neuman referred to page 28 and the promotion of
the Valdez Port Promotion. He noted that the strategic
report for the natural gas export. He wondered if DCCED
approved of that funding. Ms. Grewe replied that the
funding may have been used for staff time, but was not used
as a sub-contact outside the entity. She remarked that she
did not know the details of the activities.
Vice-Chair Neuman wondered if there was a standard policy
for salaries and benefits. Ms. Grewe replied that there
were no standards, and the revenue was considered
unrestricted. She remarked that each ARDOR was required to
provide a breakdown of how the $62,000 was spent each year.
Vice-Chair Neuman asked if the ARDOR board could determine
the salary of their director. Ms. Grewe replied in the
affirmative.
2:38:52 PM
Representative Edgmon asked whether the creator of the
program had envisioned it to be a state/private
partnership. He thought the audit would look at state
activities and private funding move would more towards the
board of directors. He asked if the statement was fair. Ms.
Palmer replied in the affirmative, and felt that the audit
would provide more information regarding the ARDOR
activities across the board.
Representative Edgmon surmised that many of the ARDOR
activities were outside the scope of state oversight. Ms.
Palmer replied that the purpose of the ARDOR was for
economic development in different regions. The department
hoped that the individual ARDOR programs were able to
leverage the money to get the most out of it.
Representative Edgmon asked if the structures of the
organizations and boards were determined by the individual
ARDORS. Ms. Palmer replied in the affirmative.
Co-Chair Austerman wondered if it was the department's
responsibility to ensure that the money was being spent in
the way it was intended. Ms. Palmer replied in the
affirmative.
2:43:42 PM
Co-Chair Austerman noted that he could read the reports,
but he did not see the economic development that occurred
over the past 25 years. He was not that hopeful unless he
could see it in black and white. He believed the department
needed to take on a more active role in shepherding the
funds. Ms. Palmer replied that DCCED was exploring ways to
evaluate and review the plans to allow the ARDOR to
exercise its autonomy while ensuring grant performance
recording.
Co-Chair Austerman supported the ARDORS, but with no
information it was hard to know what was going on. He
wanted to make sure funds were spent on the right thing.
Representative Thompson asked if any of the funds in the
ARDORS programs could be available to board members or
their families. Ms. Grewe answered that if an ARDOR was
using state money, the ARDOR did not report to the
recipient of the grant. She furthered that it would not be
appropriate under the terms to provide a grant.
Representative Thompson surmised that the ARDOR did not
need to report a grant recipient to DCCED. Ms. Grewe
responded had not seen a single ARDOR give out a grant in
the past three years.
2:47:52 PM
Representative Kawasaki referred to AS Title 44. He
referred to concern over grant eligibility requirements,
specifically concerning matching grant funds with non-state
sources. He wondered if DCCED helped grantees to find other
sources outside of state sources. Ms. Grewe replied in the
affirmative. She stated that DCCED provided assistance in
encouraging ARDORS to pursue non-state and federal funding.
Representative Kawasaki pointed to statute and asked if
there was a specific formula the department could show
regarding matching grant funds. Ms. Grewe replied that it
was typically 20 percent match.
Representative Wilson wondered if DCCED had ever not
renewed an ARDOR grant. Ms. Grewe answered in the
affirmative. She continued that every few years an award
would be reduced for non-compliance. She added that things
could happen in the middle of a fiscal year that would free
up funds.
2:50:50 PM
Representative Gara wondered if DCCED used ARDOR money for
oversight. Ms. Palmer replied that DCCED used ARDOR funds
for administering the program.
Representative Gara was concerned about that. He noted that
the funds were already small. Ms. Palmer replied that 6
percent was used for administering the grants.
Co-Chair Stoltze wondered if money was used from inactive
ARDORS. Ms. Palmer answered that the money came out of the
total allocation and then money was dispersed to ARDORS.
Co-Chair Austerman asked for verification that the number
was 6 percent. Ms. Palmer replied in the affirmative.
Representative Gara restated his concern about the money
being taken from ARDORS from the department.
Representative Wilson wondered if the 6 percent was used
for the position's total wages, or if it was an additional
6 percent. Ms. Palmer answered that the 6 percent
represented what was allocated to DCCED.
Representative Wilson asked for verification that the funds
were used was for a person. Ms. Palmer responded in the
affirmative.
2:54:05 PM
Representative Edgmon discussed his perception of the ARDOR
program as a state and private partnership. He discussed
leveraging state funds in planning, conferences, research,
and other services. He noted that some of the conversation
may seem to indicate otherwise. He asked about the
department's perception of the program. He wondered how
effective the program is. Ms. Palmer answered that every
ARDOR is different, with a different purpose and region.
She pointed to inherent challenges such as lack of
infrastructure and other that meant performance would be
different across the state. She discussed support from
DCCED for leading, directing, guiding and overseeing on
their behalf. She believed the program had a lot of
strengths, but also needed improvements. She discussed the
need to communicate the importance of the individual ARDORS
to the individual regions across the state.
Representative Gara queried the reason for the 6 percent
cut to the ARDORS from DCCED. Co-Chair Stoltze stated that
the discussion would occur during the budget process the
following year.
Representative Costello MOVED to ADOPT a conceptual
amendment:
Page 2, line 27:
Delete "the board."
Insert: "the board; and
(c) a report on any work done on statewide
economic development projects."
Co-Chair Stoltze OBJECTED for discussion.
2:59:58 PM
AT EASE
3:04:53 PM
RECONVENED
Representative Costello WITHDREW the conceptual amendment.
She MOVED to ADOPT Amendment 1:
Page 1, line 7
Insert a after "Shall"
compile a report on work on statewide economic
development projects and
Renumber the following sections of the bill.
Co-Chair Stoltze explained that the subject was originally
in the wrong section of the bill, so it would be in a new
section.
Representative Gara wondered why the report should not
include regional economic development projects. He wondered
if they were already doing that. Co-Chair Austerman
believed so, but will reread the bill.
Co-Chair Stoltze surmised that the ARDORS were responsive,
and felt that DCCED should provide more information.
Representative Edgmon noted that ARDORS are regional
organizations with regional boards of directors.
Co-Chair Austerman pointed to Alaska Forward. He wondered
whether ARDORS were still involved with Alaska Forward.
3:07:13 PM
Representative Gara MOVED to AMEND Amendment 1 to insert
"and regional" following the word "statewide":
Page 1, line 7
Insert a after "Shall"
compile a report on work on statewide and
regional economic development projects and
Renumber the following sections of the bill.
There being NO OBJECTION, the amendment to Amendment 1 was
ADOPTED.
Representative Costello spoke to Amendment 1. She remarked
that the importance of economic development was important
to the legislature. She felt that communication with the
regions would further legislative objectives.
Amendment 1 as amended was ADOPTED.
Representative Costello spoke to the fiscal note. She
stated that there would be a fiscal impact of $859,500 to
DCCED for FY 14, FY 15, and FY 16.
Representative Gara moved to amend the fiscal note. He felt
that DCCED should not have a full-time employee to "watch"
what the ARDORS were doing. He felt that $20,000 should be
moved to the grants and benefits position.
3:11:01 PM
AT EASE
3:11:57 PM
RECONVENED
Co-Chair Stoltze asked if there were other questions on the
fiscal note.
Representative Costello MOVED to REPORT CSHB 71(FIN) out of
committee with individual recommendations and the
accompanying fiscal note.
CSHB 71(FIN) was REPORTED out of committee with a "do pass"
recommendation and with one new fiscal impact note from the
Department of Commerce, Community and Economic Development.
Co-Chair Stoltze made remarks. He discussed the schedule
for the following day.
ADJOURNMENT
3:15:35 PM
The meeting was adjourned at 3:15 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB71 supporting documents AVCP 5Mar13.pdf |
HFIN 3/18/2013 1:30:00 PM |
HB 71 |
| HB71 supporting documents - letters of support 1mar13.pdf |
HFIN 3/18/2013 1:30:00 PM |
HB 71 |
| HB71 Supporting documents - ARDORS program.pdf |
HFIN 3/18/2013 1:30:00 PM |
HB 71 |
| HB71 supporting documents - ARDORS annual report.pdf |
HFIN 3/18/2013 1:30:00 PM |
HB 71 |
| HB71 sponsor statement (H)FIN 13Mar13.pdf |
HFIN 3/18/2013 1:30:00 PM |
HB 71 |
| HB 71-NEW FN-DCCED-DED-03-15-13.pdf |
HFIN 3/18/2013 1:30:00 PM |
HB 71 |
| HB 71 CS WORKDRAFT 28-LS0288-N 3-18-13.pdf |
HFIN 3/18/2013 1:30:00 PM |
HB 71 |
| HB 71 AMENDMENT-Costello-Austerman.pdf |
HFIN 3/18/2013 1:30:00 PM |
HB 71 |
| HB 71 CS NEW AMENDMENT 1.pdf |
HFIN 3/18/2013 1:30:00 PM |
HB 71 |
| HB 71 House FIN Follow up 3-26-13 (rev).pdf |
HFIN 3/18/2013 1:30:00 PM |
HB 71 |