Legislature(2015 - 2016)HOUSE FINANCE 519
02/11/2015 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 | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
February 11, 2015
1:33 p.m.
1:33:07 PM
CALL TO ORDER
Co-Chair Thompson called the House Finance Committee
meeting to order at 1:33 p.m.
MEMBERS PRESENT
Representative Mark Neuman, Co-Chair
Representative Steve Thompson, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative Lynn Gattis
Representative David Guttenberg
Representative Scott Kawasaki
Representative Cathy Munoz
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Pat Pitney, Director, Office of Management and Budget,
Office of the Governor.
SUMMARY
HB 71 BUDGET: CAPITAL
HB 71 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 71
"An Act making appropriations, including capital
appropriations and other appropriations; making
appropriations to capitalize funds; and providing for
an effective date."
1:33:56 PM
PAT PITNEY, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, addressed capital project summaries
for all departments printed in green (copy on file). She
explained that the packet only included items added by the
administration as amendments to HB 71.
Co-Chair Thompson asked members to hold questions until the
end of the presentation.
Ms. Pitney began with a $3 million deferred maintenance,
renewal, repair, and equipment increment for the Department
of Administration on page 1. The increment included
projects for the Public Building Fund (PBF). The packet
encompassed four deferred maintenance, renewal, and
replacement projects. She detailed that deferred
maintenance requests were significantly less than in prior
years. The administration aimed to keep providing a small
amount of money for deferred maintenance. She highlighted a
listing of projects the $3 million increment would fund on
page 3. She turned to a $15 million request for the Alaska
Energy Authority (AEA) Renewable Energy Fund on page 4. She
explained that the Renewable Energy Fund had been
capitalized in the operating budget. The increment would
provide the capital project authority to use the fund for
the Renewable Energy Grant Recommendation Program. The
funding was smaller than it had been in the past; the
projects included had a good return on investment going
forward.
Ms. Pitney moved to a reappropriation to the Alternative
Energy and Energy Efficiency Programs on page 6. She noted
that pages 9 and 11 included additional reappropriations
from the same project (Mount Spurr Geothermal Project). The
project had stalled for various reasons, primarily because
the cost relative to the benefit made it less feasible for
the private company that had been moving the project
forward. The reappropriation on page 6 was $2.2 million
through AEA.
1:38:11 PM
Ms. Pitney addressed a $1.070 million increment for a Kake
Rural Power System Upgrade Project on page 8. The increment
would allow a few of the rural power system projects to
continue forward. Page 9 included the Port Heiden Rural
Power System Upgrade Project that was not to exceed $4
million (funded by the same reappropriation from Mount
Spurr). Page 10 included the Tuluksak Bulk Fuel Upgrade,
which was not to exceed $3.9 million (also funded by the
Mount Spurr project reappropriation). The last AEA
reappropriation from the Mount Spurr project was for the
Electrical Emergencies Program in the amount of $330,000.
Page 13 included a reappropriation of $10 million with a
net increase of $3.4 million for projects related to the
Education Deferred Maintenance Fund. She relayed that the
project was one of the four deferred maintenance components
in the package.
Ms. Pitney remarked on page 15 that included a continuation
of school deferred maintenance projects. Page 17 included a
$500,000 shooting range deferred maintenance request for
the Department of Natural Resources (DNR); $375,000 was
federally funded and $125,000 was funded with fish and game
receipts. Page 19 included a small amount of funding for
Alaska's Arctic Policy leadership to take advantage of the
U.S. chairmanship of the Arctic Council that began in the
present year and continued into the following year. She
relayed that there was a short timeframe in which to take
advantage of the council chairmanship. She stated that the
goal was to put Alaska's policy priorities at the top of
the agenda for the U.S. chairmanship in conjunction with
the legislative Arctic Policy Commission that had done
excellent work in the past several years to help develop
policies.
1:41:43 PM
Ms. Pitney advanced to page 21 that included a
reappropriation for the Alaska Vocational Technical Center
(AVTEC) information technology systems and equipment. She
detailed that there was an unexpended balance of $530,000
from a dormitory replacement. Page 23 included a DNR
request for $1 million from the Exxon Valdez Oil Spill
Trustee Council. Funds would be used to purchase a
subsurface estate and occupancy agreement for Northern
Afognak Island. Page 25 included funding in the amount of
$800,000 ($400,000 general funds and a $400,000 federal
match) to implement and populate a statewide energy
database. The database would help with development and
would take advantage of the federal matching funds. Page 28
included a $500,000 request from DNR to upgrade and repair
existing volcano monitoring equipment. The equipment would
be used for volcanic activity and to alert flights from
flying through nearby airspace in the event of an eruption.
1:44:19 PM
Ms. Pitney addressed page 31 that included a
reappropriation of $1 million from DNR shale oil
environmental data to DNR unified permit automation and
document management. She communicated that the project had
been in existence for several years. The status and
progress was shown on pages 31 through 34. She turned to an
$850,000 request from the Department of Public Safety (DPS)
for the Alaska Domestic Violence and Sexual Assault
Intervention Program to be funded by the Permanent Fund
Dividend Criminal Fund. Page 36 included a $2 million DPS
increment for rental assistance for victims funded with the
Permanent Fund Dividend Criminal Fund. Page 38 contained a
$350,000 reappropriation from DPS video arraignments to
trooper video equipment and storage.
Ms. Pitney turned to a $4.6 million request from the Alaska
Housing Finance Corporation (AHFC) Dividend Program for two
housing programs (page 40). She detailed that $3.6 million
would fund the AHFC Teacher, Health Professional, and
Public Safety Housing Program. The remaining $1 million
would go to housing for Village Public Safety Officers
(VPSO)(detail was included on page 45). The amount was
slightly reduced from the past several years. Page 47
included an $11.1 million increment for AHFC energy
programs; the amount was significantly below prior year
requests. The item proposed the use of several funding
sources including $3 million from AHFC dividends, $1.5
million in federal receipts, and $6.6 million in general
funds. She relayed that the funds would keep two programs
moving. First, the AHFC Weatherization Program was detailed
on page 49. Second, the AHFC Home Energy Rebate Program was
detailed on page 51. She noted that both requests were
significantly smaller than in prior years. She added that
prior year funding would continue as well, which would keep
the programs robust in the upcoming fiscal year. However, a
similar low investment would change the nature of the
program in a future fiscal year.
1:49:09 PM
Ms. Pitney advanced to an increment on page 54 for the AHFC
Cold Climate Housing Research Center. She noted that the
program had previously been called Energy Efficiency
Monitoring; the appropriation was similar to past years.
She addressed a Department of Transportation and Public
Facilities (DOT) request on page 56 in the amount of $29.6
million for fleet replacement. Funding was made up of $5
million in Capital Improvement Project Receipts and $24.6
million in Highway Capital Funds (a DOT fund that allowed
for replacement of various heavy equipment and vehicles
that had reached the end of their useful lifecycle).
She turned to page 60 that included an $8 million deferred
maintenance request from DOT; the increment was
significantly lower than prior year appropriations. The
funding would allow for the continuation of the program at a
limited basis. Page 61 included a $12 million
reappropriation for the Alaska Marine Highway System (AMHS)
annual maintenance program. Funds would be appropriated out
of a $22 million increment funded to the Alaska Aerospace
Corporation for construction of a medium lift launch pad in
2012. She detailed that the maintenance program had
traditionally been funded in the capital budget. She noted
that the items could easily be separated; there could be a
repeal of the $22 million and a $12 million request could be
made for AMHS. She stated that the important thing was that
the annual maintenance get done.
1:52:53 PM
Ms. Pitney addressed page 64 that included an $8 million
increment for another year of work on the University of
Alaska Fairbanks (UAF) engineer building. The total funding
needed to finish the building was $31.3 million. She
explained that the walls and floors had been installed. She
remarked that the project funding had been piecemealed over
the past several years. The final request was an $8 million
increment for University of Alaska deferred maintenance
(page 65). She relayed that the increment was small
relative to prior years; funds would keep the program
moving, but at a limited basis.
Representative Kawasaki recalled that the committee had
been told the prior year that if all of the money was not
put into the UAF engineering building that construction
would stop in April 2015. He wondered about the total cost
to finish the building if it was completed in one year and
what $8 million would achieve.
Ms. Pitney replied that the total amount needed was $31.3
million. She shared that $8 million would pay to complete
the floor with labs; the goal was to achieve usable space.
Co-Chair Thompson believed the increment included funding
to connect the facility with another building. Ms. Pitney
replied that the new building had connected the old
engineering building and the business building. She noted
that the entryway that connected the two buildings was part
of getting the building walls up.
Representative Kawasaki wondered if the $31.3 million
represented current dollars. He asked what it would cost in
the future if the full amount was not appropriated. Ms.
Pitney replied that $31.3 million was slightly above what
it would have cost if the project had been funded in full
the prior year (between $2.5 million to $3 million). Every
month the project was delayed represented an additional
cost.
Representative Kawasaki asked for verification that the
added cost was $2 million to $3 million. Ms. Pitney
responded in the affirmative. Representative Kawasaki asked
if the increases would occur annually. Ms. Pitney replied
that the increases would be less each year because the
unfunded total would be reduced.
Representative Gara believed there was usually $9 million
or $10 million for homeless shelters in the capital budget.
He noted that the funds also leveraged federal funds. He
asked where the funds were.
1:58:12 PM
Ms. Pitney answered that the absence of the funds related
to an unintended consequence of a stripped down capital
budget. The administration intended to address the item in
the near-term.
Representative Gara pointed to the reappropriation of $12
million to AMHS from $22 million previously designated for
the Alaska Aerospace Corporation (page 61). He wondered
what the remaining $10 million would be used for. Ms.
Pitney directed attention to page 13 [funding would go to
school district major maintenance grants].
Representative Wilson remarked that several of the projects
listed on page 13 had already been completed. She wondered
if it was normal to pay back a school district after it had
done a capital project. She could not remember a time when
that had happened; it had never occurred in Fairbanks.
Ms. Pitney would get back to the committee with an answer.
Representative Wilson referred to the increment on page 19
for the governor's advisor on the Arctic. She thought the
$500,000 increment appeared to be an operating expense. She
wondered why the increment was included in the capital
budget instead of the operating budget.
Ms. Pitney responded that the request was a one-time
increment to take advantage of the U.S. Arctic
chairmanship. She stated that the decision to include the
item in the capital budget had been a choice; it could have
been in the operating budget as well. She would be happy to
have the increment included in either budget.
Representative Wilson believed the increment would be more
appropriate in the operating budget. She looked at a
reappropriation for troopers on page 38. She wondered if
there were sufficient funds in the budget to maintain the
equipment. She wondered if the maintenance funds were in
the current operating budget.
Ms. Pitney replied that the concept of equipment and
information technology refresh was a constant struggle with
agencies. Choosing to have upgraded equipment had to be
balanced with the knowledge that the equipment would
require replacement and server support. The hope was that
upgraded equipment would reduce other costs, but it was a
constant struggle and balance that would be weighed against
other operating obligations. The use of a reappropriation
was due to a lack in operating funds. She added that
operating reductions in all agencies would necessitate
moving to reappropriations for upgrades in the future.
2:02:36 PM
Representative Wilson asked if the increment was for an
upgrade or for new equipment for troopers who did not
currently have it. Ms. Pitney replied that the increment
would fund new equipment to replace a slightly different
technology that was currently used by the agency.
Representative Wilson believed that in the past the state
had been guilty of purchasing items or constructing
buildings without considering how to pay for future
maintenance.
Representative Pruitt also remarked on the increment on
page 38. He cited language in the project description that
current in-car video systems were limited, antiquated, and
failing at an increasing rate. He wondered if the $350,000
was sufficient for the purchase of the in-car systems, body
cameras, and storage of the data. He observed that several
data storage servers would be repurposed, but he wondered
if it would be enough. He wondered if there would be
requests in the future to continue funding the technology.
Ms. Pitney would have DPS follow up with more detail. She
reiterated that keeping up with increased technology
demands while reducing agency operating budgets was always
going to be a struggle. She confirmed that there would be
additional equipment and storage requests in the future
either as a separate request or in the form of a reduction
to another area in the DPS trooper budget. The item
represented a new operating need that was more efficient
than past practices.
Representative Pruitt noted that the increment was only for
troopers. He wondered if there had been similar requests
from local police departments. If so, he wondered why every
police department would have its own server or if they
would utilize the state's servers. He asked about costs to
the state associated with facilitating the service. He
asked Ms. Pitney to pass the question on to DPS. He moved
to page 23 related to a purchase of the Afognak Island
surface estate. He noted that Parks and Recreation had done
a phenomenal job on limiting costs to them by raising their
fees. He wondered if the state was required to fund the
associated costs. He believed it was a larger discussion
about how many times something was purchased and then given
to the state, leaving the state responsible for
facilitating payment. He noted that the practice occurred
quite a bit. He wondered about the overall costs to the
state.
Ms. Pitney would follow up on the question.
Vice-Chair Saddler turned to a renewable energy grant
program on page 4. He referred to Ms. Pitney's testimony
that the return on investment was high. He wondered what
the return had been for the program. He asked about the
program's success in generating power for Alaskans.
Ms. Pitney answered that she would follow up with the
committee. She did not know if the data was available for
the program as a whole, but there was significant
information available at an individual project level.
Co-Chair Thompson asked for the information to be provided
to his office for distribution to committee members. Ms.
Pitney replied in the affirmative.
Vice-Chair Saddler remarked that the goal of renewable
energy was positive. However, he surmised that locating
heating efficiencies and providing AHFC weatherization may
provide a more direct application of limited funds. He
appreciated any information Ms. Pitney could provide.
2:08:02 PM
Representative Kawasaki looked at a $400,000 request with a
$400,000 federal match on page 25 for a statewide Cook
Inlet energy database. He observed that the project date
went through 2020. He wondered whether there would be
funding over the upcoming five years or if the increment
would be spread out over the time period.
Ms. Pitney would get back to the committee with an answer.
Representative Kawasaki referred to page 25 and noted that
positions were listed as existing. He wondered if the cost
was further reflected in the DNR budget. Ms. Pitney
answered in the affirmative. She elaborated that the fund
source would pay for the expertise of the particular
positions within DNR. She noted that if no project existed
necessitating the expertise it would require a reduction in
staffing.
Representative Kawasaki referred to the energy
weatherization and rebate programs. He commented that the
state was fortunate to invest $300 million into the
programs in 2008 or 2009. He noted that the number had
subsequently been whittled down in the following years. He
wondered what the total encumbrance was for the current
year. He wondered about the difference in the anticipated
funding versus actual funding in the current budget. Ms.
Pitney replied that there were balances in both programs
from prior years. The relatively small increments requested
would continue the programs at a similar level to prior
years; however, the funds would be spent out in the coming
year. She detailed that either the programs would be much
smaller in FY 17 if funds were not increased or a policy
decision would be required to reinstate funds at the
traditional level. The administration's recommendation was
to limit the funding to allow the programs to run at their
current level and to make a conscious decision about their
level of continuation in the FY 17 budget.
2:11:10 PM
Representative Wilson referred to the renewable energy
project grants. She relayed that she had heard concerns
that the state was competing with private business using
state funds. She asked if the state used a system to ensure
that it was not competing with entities that were privately
funding energy projects. Ms. Pitney replied that she would
follow up on the question.
Co-Chair Neuman thought there had been $10 million
appropriated into the capital budget to mitigate unforeseen
issues. Ms. Pitney replied that the line item was included
in the operating budget; it had been requested to provide
flexibility to cover items that may have been trimmed too
far.
Co-Chair Neuman asked where the money had come from. Ms.
Pitney replied that the total operating and capital budget
allocation was $5.5 billion in unrestricted general funds;
$2.2 billion would come from general revenue based on
$66/bbl oil. The remaining $3.5 billion would come from
reserves.
Co-Chair Neuman restated his question. He agreed that there
should be some funds available to cover unforeseen items.
He wondered if the increment came from a prior capital
project fund. Ms. Pitney replied that no reappropriations
had been made in the operating budget.
Vice-Chair Saddler spoke to the $2 million increment for
transitional housing for victims of domestic violence and
sexual assault (page 36). He observed that there were a
wide range of state funded programs offering assistance for
housing. He wondered if the $2 million increment
represented a small or large portion of the overall housing
assistance funding. Ms. Pitney answered that the $2 million
increment was the only housing assistance request that
focused on victims of violent crimes and sexual assault.
There were additional housing assistance requests for
teachers, VPSOs, and troopers. She communicated that in
prior years there had been a homeless assistance grant. She
relayed that the administration intended to offer a budget
amendment to repair the unanticipated reduction. The
operating budget included different assistance programs
related to public assistance and behavioral health. She did
not have the detail on hand.
2:16:46 PM
Vice-Chair Saddler wondered if individuals were prevented
from utilizing more than one of the housing assistance
programs. He observed that the program for victims of
domestic violence and sexual assault was limited to 36
months. He wanted to prevent "double dipping" or excess
capacity.
Ms. Pitney replied that the question provided an excellent
opportunity for her office to provide a matrix of the time
limits and eligibility requirements.
Representative Guttenberg pointed to page 13 related to
school district major maintenance grants. He wondered if
the request included the summation of the four projects
listed. Ms. Pitney guessed there were over 50 on the list;
the page included the top 4 projects. Representative
Guttenberg asked for verification that the increment only
pertained to the 4 projects listed. Ms. Pitney replied in
the affirmative.
Vice-Chair Saddler looked at page 47 for the AHFC energy
programs. He noted that past appropriations had been as
little as $2.6 million and as high as $51 million. He
observed that the administration projected an annual need
for $50 million for a period of five years. He believed the
cost was high. He wondered if there were other programs in
the capital or operating budgets that may help reduce the
need for energy assistance.
Ms. Pitney replied that it was not the intent of the
administration to provide annual $50 million
appropriations. She communicated that the office would
revise the information.
Representative Edgmon spoke to the weatherization and home
energy rebate programs. He believed funding for the
programs would carry out until the end of FY 15. He thought
there was $29 million in the weatherization program and
less for the home energy rebate program. He surmised that
the amount proposed in the governor's budget was a small
amount of what would be ideal to keep particularly the
weatherization program going forward. He relayed that the
program had been very successful in rural Alaska because it
provided jobs, sealed up individual homes, and provided 30
to 40 percent cost savings. He stated that $8.1 million in
the weatherization program going forward barely kept the
program alive. He would like to see funds of $100 million
per year because only 10 to 12 percent of Alaska homes had
been weatherized. He mentioned his membership on the
advisory committee to the renewable energy grant program.
He stated that the screening process was rigorous; he had
never heard of any projects being in direct competition
with a private entity. He spoke in support of the programs
and appreciated that the governor kept some funds in the
budget.
2:22:37 PM
Co-Chair Thompson referenced Representative Kawasaki's
earlier questions. He discussed that the previous year he
had looked at fund balances; the home energy rebate had
been looked at as a potential place to save money. He
stated that in actuality the money was there, but a
significant number of people had applied for the program.
He detailed that applicants had up to 18 months to do the
repairs and could receive up to $10,000 depending on how
much work was done and the energy star rating they
achieved. He explained that funds needed to be kept in
reserve to pay the money out over time.
Representative Wilson pointed to the AHFC Cold Climate
Housing Research Center increment on page 54. She believed
the increment looked like an operating cost and observed
that the funding was projected through FY 21. She wondered
why it was not part of the regular AHFC budget. Ms. Pitney
would double check on the increment.
Co-Chair Thompson noted that AHFC used the research center
more than anyone else in the state. He added that there was
statewide use.
Representative Guttenberg surmised that part of the problem
was that the state was paying for projects and not
operations.
Vice-Chair Saddler pointed a $12 million reappropriation
from the Alaska Aerospace Corporation to AMHS on page 61.
He wondered if there was an annual appropriation in the
operating budget for overhauls for AMHS vessels. He
wondered if the $12 million reappropriation to AMHS meant
there was $12 million "being squeezed into some other
expenditure else place."
Ms. Pitney replied that the increment was a traditional
capital budget item, but DOT viewed the need as operating.
She detailed that the $12 million went to the everyday
maintenance conducted to keep ships in good working order.
She relayed that DOT would be happy with the increment in
operating budget, but it had traditionally been in the
capital budget.
Vice-Chair Saddler surmised that the reappropriation [from
the Alaska Aerospace Corporation] just happened to be where
the administration had located the funding for the FY 16
budget.
Ms. Pitney replied in the affirmative. She added that there
was some interest to leave the increment as a capital
budget item, but the administration's primary interest was
to ensure the funding was provided in the budget somewhere.
2:26:41 PM
Representative Gara asked if the funding had traditionally
been $12 million per year. Ms. Pitney pointed historical
funding listed on page 61. The annual payment the prior
year had been $12 million, whereas it had been $10 million
the two years before, and $15 million the year before that.
Representative Gara surmised that if the figure changed
annually it indicated that DOT was measuring the amount of
funds needed instead of asking for a fixed amount each
year.
Co-Chair Thompson would ask the question during a DOT House
Finance Subcommittee meeting. He asked members to provide
further questions for the administration to his office.
HB 71 was HEARD and HELD in committee for further
consideration.
Co-Chair Thompson discussed the schedule for the following
day.
ADJOURNMENT
2:28:54 PM
The meeting was adjourned at 2:28 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| FY2016 Capital Gov Amend Dept Appropriations and Allocations 2-5-15.pdf |
HFIN 2/11/2015 1:30:00 PM |
HB 71 |
| FY2016 Capital Gov Amend Dept Summary 2-5-15.pdf |
HFIN 2/11/2015 1:30:00 PM |
HB 71 |
| FY2016 Capital Gov Amend Priority Summary.pdf |
HFIN 2/11/2015 1:30:00 PM |
HB 71 |
| FY2016 Capital Gov Amend Reapprop Balances.pdf |
HFIN 2/11/2015 1:30:00 PM |
HB 71 |
| FY2016 Capital Gov Amended Items Only Project Summary.pdf |
HFIN 2/11/2015 1:30:00 PM |
HB 71 |
| FY2016 Capital Gov Amended Items Summary.pdf |
HFIN 2/11/2015 1:30:00 PM |
HB 71 |