Legislature(2015 - 2016)HOUSE FINANCE 519
03/02/2015 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB72 || HB73 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 72 | TELECONFERENCED | |
| += | HB 73 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 2, 2015
1:32 p.m.
1:32:49 PM
CALL TO ORDER
Co-Chair Neuman called the House Finance Committee meeting
to order at 1:32 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
Pete Ecklund, Staff, Representative Mark Neuman; Joan
Brown, Staff, Representative Mark Neuman.
SUMMARY
HB 72 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB was HEARD and HELD in committee for further
consideration.
HB 73 APPROP: MENTAL HEALTH BUDGET
HB 73 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 72
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs, capitalizing funds, making
reappropriations, and making appropriations under art.
IX, sec. 17(c), Constitution of the State of Alaska,
from the constitutional budget reserve fund; and
providing for an effective date."
HOUSE BILL NO. 73
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
1:33:04 PM
Co-Chair Neuman discussed the agenda for the day. He
relayed that the committee would hear public testimony
Tuesday through Thursday of the current week. He
communicated that the operating budget amendment deadline
was on Thursday, March 2, 2015.
Co-Chair Thompson MOVED to ADOPT the proposed committee
substitute for HB 72, Work Draft 29-GH1780\P (Wallace,
2/27/15).
Co-Chair Thompson MOVED to ADOPT the proposed committee
substitute for HB 73, Work Draft 29-GH1782\H (Wallace,
2/27/15).
Representative Gara OBJECTED for discussion.
Co-Chair Neuman noted that the adoption of the Committee
Substitutes would provide the committee with working
documents for discussion.
1:36:04 PM
Representative Gara WITHDREW his OBJECTION. There being NO
further OBJECTION, Work Drafts 29-GH1780\P and 29-GH1782\H
were ADOPTED.
PETE ECKLUND, STAFF, REPRESENTATIVE MARK NEUMAN, read a
statement:
As you've heard during various presentations before
the Committee, the state's fiscal situation is
troubling. When the legislature left at the end of
last session, there was an expectation that there
would be a deficit of approximately 1.3 Billion
dollars for FY15.
When the legislature convened in January, those
projections had changed. Now we anticipate the FY15
deficit to be nearly 3.5 Billion dollars. To compound
the situation, revenues are not forecast to cover our
expenditures for several years.
Mr. Chair, with this in mind, you directed
Subcommittees to look for additional savings from the
Unrestricted General Fund agency operations, non-
formula budget.
Why did you direct additional reductions in agency
operations, non-formula? For two reasons:
Number one, simply put, when the public thinks about
state government, agency operations, non-formula is
the day to day government they are most likely
thinking about.
But Mr. Chair, agency operations, non-formula is only
half of the story. The total UGF in agency operations
is nearly split 50/50 between formula programs and
non-formula funding.
This brings us to reason number two: Generally it
takes a statutory change to adjust spending in formula
programs.
As you know Mr. Chair, but the public may not, for
statutory change to take place, legislation must pass
and be signed by the Governor, which is beyond the
finance subcommittee's control. That being said, we
have made some reductions to formula programs where we
could.
So Mr. Chair, to sum up, subcommittees concentrated on
agency operations non-formula UGF for reductions
because that is the area of the budget they could
affect change through the budget process.
Beyond agency operations non-formula, this committee
has talked about the areas of our budget that are
growing the fastest, commonly referred to as our 3
'budget drivers': that being Medicaid and education
formula programs, and retirement funding.
If we are really going to get a handle on state
spending and extend the life of our savings account,
we've got to address more than just the dollars we
invest in each department's programs, we've got to
address our budget drivers.
Last year the legislature appropriated 3 Billion
dollars to our retirement systems and lowered our
annual payment to the unfunded liability from
approximately 1 Billion dollars down to 256 Million.
That action addressed one of our 3 budget drivers.
To get a handle on our other two budget drivers, we
will have to find efficiencies and most likely make
statutory changes to our current formula programs.
To that end, the HSS subcommittee that you all are
members of, will continue to meet this session to
explore Medicaid reform, other formula programs, and
to just get a better understanding of departmental
issues.
We also must continue working on a plan to slow
correctional system growth and recidivism, to blunt
the need to build a new prison in the near future.
With all of that in mind, your instructions for the
operating budget subcommittees were to reduce UGF in
particular, as any reduction in the expenditure of
Unrestricted General Funds extends the length of time
our savings account, the Constitutional Budget
Reserve, will last.
Mr. Chair, you also directed the Subcommittees to
continue to review the agency budgets via a five-step
process that was modified to a four-step process for
this unique budget year.
1:40:36 PM
Mr. Ecklund continued to read from a statement:
1. Review the agency Mission, Core Services, and
Performance Measures so through results-based
budgeting, the public could see how effective and
efficient agency programs are and agencies could
demonstrate the value the public is receiving for
our investments in them.
2. Review budget changes since FY06, enabling us to
track GF and Total Funds changes over time to see
where budget growth has been
3. We omitted Step 3 this year which was to "Review
agency 10-year plans, to evaluate future changes
that department's see coming" since the agency
10-year plans were not available this year
4. Review audit findings made by the Division of
Legislative Audit -providing an accountability
check
5. And get a status update on budget changes
approved for the current fiscal year, FY15.
Then, after looking at an agency's mission and
results, looking back at agency growth, looking
forward, and looking at current year progress, each
Subcommittee had a context in which to review the
budget changes proposed for FY16.
I'd like to thank Pat Pitney and the staff of the
Office of Management and Budget, and the leadership
teams of the Executive Branch agencies for their help
and cooperation in the budget review process.
I'd also like to thank David Teal and the staff at the
Legislative Finance Division as they provide all of us
with excellent service so we can understand the
dollars and programs associated with putting the
budget together. The Legislature is fortunate to have
such an outstanding and patient group of people
assisting in development of the state's budget.
Last, but certainly not least, a big thank you must go
to all of the subcommittee staff, members, and chairs
for their hard work and diligence in order to put this
budget together.
From the start of the legislative session, there were
just 39 days prior to the February 27 Subcommittee
close-out deadline. While this is a very short review
timeframe under normal circumstances, this year
provided some unique challenges.
The placeholder "work in progress" budget largely
developed by former Governor Parnell was released on
December 15 simply to meet the statutory budget
submission deadline. Subcommittees were provided with
the:
· Supplemental budget requests submitted on
February 2,
· Governor Walker's FY16 "endorsed" budget on
February 5,
· Early the next week, the week of February 9th,
subcommittees received the subcommittee books and
detailed transactions from legislative finance
needed to evaluate Governor Walker's endorsed
budget and
· Governor's budget amendments on February 17.
That has meant this year has been an extremely
compressed timeframe for the Subcommittees to complete
their work by last Friday, February 27.
As you have stated many times, Mr. Chair,
subcommittees were to find as many reductions as
possible within the short time available to evaluate
the details of the Governor's endorsed budget, with an
eye to protecting the core missions of each
department.
With our fiscal situation looming, much more work lies
ahead.
We have already begun talking to the Administration to
detail a process by which the Finance Committee can
work with the Departments over this interim to wisely
rethink the size, shape and functions of government.
Ideally when we get back here next year discussing the
budget, we will have worked out many details over the
interim of what state government is going look like
going forward. Alaskans are going to have to come to
grips with their state government doing less while
more responsibility must be taken upon themselves and
their local governments.
Mr. Co-Chair, all of the Subcommittee reports are
found on the Legislative Finance website. Reports on
these two committee substitute bills will also be
posted on the Legislative Finance website immediately
after this hearing.
1:45:03 PM
Mr. Ecklund read the numbers in the budget:
The operating budget work draft Committee Substitute
totals $9.492 Billion (all funds), a reduction of just
over $3 Billion from the current year budget.
Mr. Chairman, the operating budget has been reduced by
$239.5 Million Unrestricted General Funds below the
current year, FY15 Management Plan, for agency
operations, non-formula. That equates to a 10.5%
reduction from the FY15 Management Plan. For a frame
of reference, last year at this point in time, this
committee had reduced agency operations non-formula by
$52.7 million from FY14 management plan.
Back to FY16, the budget work draft you have in front
of you is $220.2 Million UGF below FY16 Adjusted Base,
agency operations non-formula.
The operating budget also contains reductions in
agency operations formula programs in the amount of
$199.9 Million UGF. That is an 8.8% reduction from the
FY15 Management Plan budget.
The Statewide operating budget items (those are debt
service, assistance to retirement, special
appropriations, and fund capitalization) increased in
the FY16 budget in large part due to the State
Assistance to Retirement appropriation. Last year that
appropriation was part of the $3 Billion
Constitutional Budget Reserve transfer to the
retirement funds, i.e., not from the general fund.
This year the Unrestricted General Fund retirement
assistance appropriation is $262.5 Million, an
increase of $257.3.
Well Mr. Chairman, you might ask, 'how does this
proposed operating budget affect our savings'?
The Statutory Budget Reserve Fund will be depleted by
the end of this Fiscal Year 15. We will need to access
the Constitutional Budget Reserve Fund to close out
FY15 to the tune of $700 Million or so. The
Constitutional Budget Reserve Fund balance is
estimated to be around $9.3 Billion dollars at the
start of Fiscal Year 2016.
As the operating budget sits in front of you, and IF
there were no additional capital budget spending above
the Governor's request of $158.7 Million UGF, we would
have a projected deficit of approximately $3.3 Billion
dollars for FY16.
But we know that this budget is truly a work in
progress and only one piece of our budget puzzle.
There are likely to be some changes before this work
draft leaves committee and certainly will be changes
in the other body which will be settled in conference
committee.
How much of our savings we will use in FY16 will be
determined as this session progresses.
Now, Ms. Brown will describe the changes we made to
the language sections of the bill.
1:48:07 PM
JOAN BROWN, STAFF, REPRESENTATIVE MARK NEUMAN, read from a
statement:
Mr. Co-Chair, before I begin with the language
sections, I need to mention a few changes that were
made to Section 1 of House Bill 72, the numbers
section.
Two Subcommittees reduced personal services funding
equal to the amount of salary adjustment transactions.
That action was not under the purview of the
Subcommittees. The funding has been restored so that
all departments are treated equitably vis-a-vis the
salary adjustments.
In addition, the Budget Action worksheet for the
Department of Commerce, Community, and Economic
Development inadvertently did not include a
transaction to establish a separate appropriation for
Tourism Marketing & Development, though the
Subcommittee's narrative report did highlight that
change. The bill before you includes the separate
appropriation. A few line item corrections were also
included.
Now, starting on page 54, I'll identify the language
sections where changes were made and describe those
changes.
Section 6, PERSONAL SERVICES TRANSFERS. We reinstated
this section that requires executive branch agencies
to report on funding transfers to and from the
personal services line to the legislature in January
and October.
Page 55, Section 8, ALASKA HOUSING FINANCE
CORPORATION, Mr. Co-Chair, in subsection (c) we
changed the location of where any excess Alaska
Housing Finance Corporation Dividend funds would be
deposited from the Governor-proposed Budget Reserve
Fund to the Alaska Capital Income Fund. This
recognizes the legislature's traditional use of
corporate dividends for capital projects. However, no
"excess" dividend funds are anticipated.
Pages 55-56, Section 9, ALASKA PERMANENT FUND
CORPORATION. Mr. Co-Chair, in subsection (b) we
reduced the estimated amount to be transferred for
inflation proofing from the Governor's amendment of
$894 Million dollars down $5 Million dollars to $889
Million.
The Governor's amendment was based on the
corporation's November 30th projection. Our change is
based on the corporation's most recent projection as
of December 31st.
Page 56, Section 10, ALASKA INDUSTRIAL DEVELOPMENT AND
EXPORT AUTHORITY. Mr. Co-Chair, just as we did in the
Alaska Housing Finance Corporation section, we revised
subsection (b) so if there should be any excess AIDEA
Dividend funds, they will be deposited into the Alaska
Capital Income Fund, instead of the budget reserve
fund. Again, no "excess" dividend funds are
anticipated.
Pages 60 - 61, Section 16, DEPARTMENT OF NATURAL
RESOURCES. Mr. Co-Chair, in subsection (e), we added
wording to clarify that our expectation is that the
amount necessary will be zero, but if the general
funds are necessary to fund the three professional
firefighting crews, the general funds may not exceed
$1,125,000.
Pages 61 - 63 Section 19, OFFICE OF THE GOVERNOR. Mr.
Co-Chair, we reinstated the fuel trigger
appropriation, but changed the estimated funding
amount to zero and also changed the percentage
allocations based on the Governor's recent
supplemental amendment to the FY15 fuel trigger
appropriation. Reinstating this language is just a
back-stop in case the price of oil exceeds $70 per
barrel in FY16. The Department of Revenue's current
FY16 projection is $66.03 per barrel.
We did not include the Governor's requests for $10
Million and the ability to transfer funds between
appropriations within a department and between
departments in order to "fix" any unexpected funding
problems caused by this year's budget reductions.
1:52:27 PM
Ms. Brown continued to read from a statement:
Pages 67 - 69 Section 21, DEBT AND OTHER OBLIGATIONS.
Mr. Co-Chair, on page 67, in subsection (h) paragraph
(13), we reduced the estimated amount from $20 Million
to $10 Million for the general obligation bonds,
series 2015A. This reduction is based upon slower than
anticipated spending.
On page 68, we reworded subsection (k) related to
school debt reimbursement by changing the
appropriation from an amount certain to an estimated
amount, and we reduced the general fund estimate by $5
Million. The general funds appropriated for school
debt reimbursement were reduced by $5 Million in FY13,
by $15.4 Million in FY 14, and by $5.5 Million in the
FY15 Supplemental. School debt reimbursement is fully
funded with this revision.
On page 69, we made a slight wording change in
subsection (l) by adding the word "and" in front of
the last phrase so it reads "and for early redemption
of those bonds".
Page 69, Section 22, FEDERAL AND OTHER PROGRAM
RECEIPTS. The only change we made was to delete the
reference to the receipts of the Alaska Aerospace
Corporation. This was redundant as Aerospace has its
own language in section 7 of this Act.
Pages 70 - 71, Section 23, FUND CAPITALIZATION. Mr.
Co-Chair, in subsection (c) on page 70, we reduced the
$5 Million general fund appropriation into the
Disaster Relief Fund down to $2 Million. As of
February 17th, the unobligated balance of the Fund was
$9.4 Million.
On page 71, in subsection (n), we increased the
program receipt estimate for the crime victim
compensation fund from $34,000 to $125,000 to reflect
anticipated revenue.
Pages 72 - 74 Section 24, FUND TRANSFERS. Mr. Co-
Chair, we did not include the Governor's amendment
that sought to have a $5 Million general fund
contingency deposit into the oil and hazardous
substance release prevention account in the oil and
hazardous substance release prevention and response
fund, if an expected FY15 settlement is not received
timely. We realize that this action leaves a shortfall
in the Department of Environmental Conservation's
budget, but expect the funding issue to be resolved
before the legislative session concludes.
Page 74, Section 25, RETIREMENT SYSTEM FUNDING. Mr.
Co-Chair, in subsection (a) regarding the Public
Employee Retirement System we corrected the language
so that the deposit is "in the defined benefit plan
account" within PERS.
Pages 74 - 75 Section 26, SALARY AND BENEFIT
ADJUSTMENTS. Mr. Co-Chair, in subsection (a) we
deleted the word "ongoing" from the phrase "of the
following ongoing collective bargaining agreements" as
it is unnecessary.
In subsection (c), we changed "appropriations made by
this Act" to "appropriations made in this Act". As a
note, there are still four bargaining units that have
not submitted agreements for FY16.
1:56:46 PM
Ms. Brown continued to read from a prepared statement:
Page 76 Mr. Co-Chair, we deleted what had been Section
28, STATUTORY BUDGET RESERVE FUND. As Mr. Ecklund
mentioned earlier, the Fund will be depleted at the
end of the current fiscal year.
Mr. Co-Chair, we also deleted what had been Section
29, CONSTITUTIONAL BUDGET RESERVE FUND, as a more
comprehensive version of this section will be included
in another appropriation bill later during this
legislative session.
Sections 29 - 33. Mr. Co-Chair, only section numbers
have been updated.
Mr. Co-Chair, those were all of the changes made to
the language sections in House Bill 72.
Ms. Brown described the changes made in the Mental Health
bill, HB 73:
On Page 11, Section 4, CAPITAL PROJECTS.
A total of four mental health capital projects have
been submitted for legislative authorization, two were
in the original bill and two were submitted as
amendments.
Each year the House Finance Committee removes one
capital project from the Mental Health budget. This
year we've added the two Department of Revenue
projects submitted as amendments to the bill and
deleted the Department of Transportation and Public
Facilities project for MH Coordinated Transportation
and Vehicles for $1.3 Million, ($1,000.0 GFMH and
$300.0 MHTAAR).
The other body, in its version of the Mental Health
bill, will add back that project and delete the three
capital projects in the House's budget bill, thus
making all of the mental health capital projects
subject to Conference Committee.
Mr. Co-Chair, the language sections begin on page 14.
Pages 14 - 15 Mr. Co-Chair, the only changes we made
were minor wording corrections in Sections 7, 8(a),
and 9(c) and (d), changing the phrase "appropriations
made by this Act" to "appropriations made in this
Act", just as we did in House Bill 72.
Mr. Co-Chair, those are all of the language changes in
House Bill 73.
1:59:10 PM
Representative Gara asked for verification that there was
no Constitutional Budget Reserve (CBR) language in either
bill. Ms. Brown replied in the affirmative.
Representative Gara believed the original mental health
bill [HB 73] included a contribution for Medicaid
expansion. He asked whether the provision had been removed.
Ms. Brown answered that some Medicaid expenditures had been
in the mental health bill, but they had been deleted. She
clarified that anything referring to Medicaid expansion had
been deleted from both bills.
Representative Gara referred to a spreadsheet titled
"Agency Summary Numbers and Language (UGF Only)" (copy on
file). He observed that page one included two changes from
the finance subcommittee recommendations to the Committee
Substitute: one in the Department of Administration (DOA)
and one in the Department of Education and Early
Development (DEED). He asked for detail.
Ms. Brown responded that the changes pertained to the
salary adjustment transactions she had mentioned
previously.
Representative Gara pointed to page D of the spreadsheet.
He noted that the DOA number increased. He surmised that
the increase occurred because it factored in all funds. Ms.
Brown answered that the item included federal, and other
funds.
Co-Chair Neuman asked subcommittee chairs to present their
individual budget highlights.
2:01:56 PM
Representative Gattis addressed personal services
reductions taken by her two subcommittees (DOA and DEED).
She recognized that the subject was not germane to the
subcommittee process and that there were more appropriate
places to have the conversation. She believed the issue
needed to be addressed on a statewide level rather than in
individual departments; it would be better evaluated
through legislation or standing committees. She looked
forward to joining the conversation as it began.
Representative Gattis spoke to the DEED budget subcommittee
recommendations. She shared that the subcommittee had held
five meetings to discuss the department's budget; it
recommended an overall reduction of $12,704,000. The
reduction was 18.6 percent from the FY 15 management plan
and 16.1 percent from the governor's proposed budget. She
acknowledged that the reductions had been challenging to
make and had been given much thought. The budget would
eliminate the statewide literacy program ($150,000 GF), K-3
literacy project funding ($320,000 GF), broadband program
funding that had been added the prior year ($5 million),
Best Beginnings ($937,000 GF), Parents as Teachers
($307,000 GF), and Pre-K pilot program grants ($2 million
GF).
2:04:31 PM
Representative Gattis reported on the DOA budget
subcommittee recommendations. The budget totaled
approximately $80 million in unrestricted general funds
(UGF); $50 million of the total was allocated to the Public
Defenders Agency and the Office of Public Advocacy. She
noted that the funding for the two agencies could not be
cut without statutory changes. She hoped that the
legislature moved some of the statute changes forward; the
offices were backlogged and would be in worse shape without
the changes. She discussed that the subcommittee had denied
the proposal to close the Alaska Public Offices Commission
(APOC) Juneau office and had asked the department to look
at comprehensive changes. Just over $1 million UGF had been
removed; $600,000 GF had been backfilled with program
receipts to be collected in the form of increased lobbyist
and independent expenditure fees. The net effect was a
reduction to APOC's overall size. She relayed that the
longer-term goal was to make APOC self-sufficient and to
reduce its overall footprint. The UGF budget for Public
Communications had been reduced by 50 percent; it did not
represent a 50 percent reduction of the agency's entire
budget given other revenue sources such as federal and
advertising. She did not believe the office provided a core
government service. She reasoned that with advances in
technology, many communities had other broadcasting
sources. The recommendations included intent language to
ensure that service would not be cut to communities with no
other broadcasting source (12 of the 24 communities had
other options). The subcommittee had reduced agency core
services by 10 percent; services that were more
administrative in function had been reduced by 20 percent.
The budget included two small fund source changes where the
department had over collected in the prior year.
Co-Chair Neuman noted that questions would be addressed
after committee reports.
2:07:06 PM
Representative Edgmon reported on the Department of
Corrections (DOC) budget subcommittee recommendations. He
detailed that the department's budget was comprised of 86
percent UGF; total proposed funds for FY 16 were
$328,400,000. He explained that the subcommittee proposed
to make a 5.5 percent reduction of $16,476,400; the
reduction would decrease the governor's FY 15 management
plan total of $297,654,000 down to $281,178,000. Accepted
items from the governor's amended budget included a 2
percent cut in personnel services to the 12 in-state
correctional facilities. He detailed that the governor had
originally proposed to cut the entire $10.2 million from
the 15 community contract jails, but had reinstated $7
million; the subcommittee accepted the proposed
restoration. He shared that the process of transferring
eligible prisoners from the Palmer Correctional Center to
halfway houses or electronic monitoring was beginning and
would be a byproduct of the budget reduction process. The
subcommittee had denied the Medicaid expansion element,
which totaled $4.1 million; the money was added in UGF to
the overall department budget. The funding source for
prisoner healthcare had been switched from UGF to criminal
Permanent Fund Dividend (PFD) funds totaling $2.8 million;
the switch was a byproduct of a larger dividend and an
increased number of eligible prisoners.
2:09:53 PM
Representative Edgmon addressed the Department of Public
Safety budget recommendations. He relayed that the criminal
justice agency was largely funded by UGF (83 percent).
Total funds for FY 16 were $196,961,600. The subcommittee
proposed a total of $165,148,800 compared to the governor's
FY 15 management plan of $171,410,000 (a UGF reduction of
3.7 percent or $6,261,800). The subcommittee accepted the
elimination of 32 permanent full-time PCNs [Position
Control Numbers], 9 temporary PCNs, and the transfer of 20
of the permanent full-time troopers to vacant PCNs. He
explained that a number of troopers in Fairbanks, Wasilla,
and Soldotna would be transferred from the Bureau of
Highway Patrol to regular trooper duties given that federal
funds for highway patrol had run their course. The Village
Public Safety Officer (VPSO) program would be capped at the
services it provided; the reduction totaled about $1.6
million from the prior year. Additionally, six oversight
trooper positions would be filled by regular troopers who
would be stationed in Fairbanks, Bethel, and other
locations; the troopers would have the duty of working with
the VPSO component in addition to regular trooper duties.
The subcommittee had appropriated $1.5 million of what had
been the Choose Respect funds directly to the Council on
Domestic Violence and Sexual Assault (CDVSA) rather than
through the governor's office. He detailed that the prior
year CDVSA had received $2.3 million of the funds; under
the proposed budget the funds were a one-time
appropriation. Four non-permanent cold case investigator
positions had been deleted, which were retired state
troopers. He relayed that the specialized services would
continue to be provided in a different manner throughout
the department. He relayed that the Stimson patrol vessel
would be transferred from Unalaska to Kodiak. He noted that
the decision had been difficult (Unalaska was in his
district), but he felt it was currently the appropriate
action in order to reduce the budget. The subcommittee had
denied $2.37 million for pilots and four mechanics for
maintenance of aircraft contract work.
2:13:41 PM
Co-Chair Neuman remarked that Representative Edgmon would
continue to work on the DOC budget with the recidivism task
force.
Representative Munoz thanked the personnel with the
departments she had worked with. She thanked Commissioner
Hartig and Director Thomas Cherian [Division of
Administrative Services, Department of Environmental
Conservation]. The total Department of Environmental
Conservation (DEC) funds for FY 16 were $85,864,700;
including total UGF of $20,454,600. The UGF reduction from
the FY 15 management plan to the subcommittee was
$1,787,400 (8 percent). Highlights of the budget included a
reduction of 25 permanent PCNs. She relayed that an
increment had been approved for the Air Quality permitting
program to meet growing oil and gas industry needs; the PCN
would be paid for with program fees. She communicated that
$250,000 had been decremented from the Laboratory Services
Fish Tissue Monitoring Program. The subcommittee had denied
a fund source change of $250,000 from the Ocean Ranger
program to pay for the activity because the fish monitoring
did not meet the legislative intent with the original ocean
ranger legislation. The subcommittee had included intent
language to encourage the Spill Prevention and Response
(SPAR) division to increase cost recovery efforts.
Additionally, the division had been encouraged to work to
consolidate its drill activities as much as possible within
any given region. Lastly, she was working on draft
legislation to address a SPAR division funding shortfall.
Representative Munoz addressed the subcommittee
recommendations for the Alaska Court System [Judiciary].
She thanked Doug Wooliver, Deputy Administrative Director,
Alaska Court System and other department staff. Total funds
for FY 16 were $114,356,300; including total UGF of
$110,405,700. The UGF reduction from the FY 15 management
plan to the subcommittee was $1,000,400 (1.3 percent).
Budget highlights included the denial of all UGF increments
and reductions in personnel services through unpaid days
off; the amounts were roughly six days in unpaid leave. The
subcommittee reduced supplies, travel, and contractual
costs; advertising funds; and eliminated the Court Watch
Program.
2:17:37 PM
Co-Chair Neuman addressed the Department of Fish and Game
(DFG), Office of the Governor, and the Alaska Legislature.
He read from a statement beginning with the Office of the
Governor:
The subcommittee accepted the Office of the Governor's
budget as requested. The budget totals $24.3 million,
of which $25.3 million is UGF. The governor's budget
includes reductions affecting nearly every allocation
and eliminates seven vacant full-time positions. After
the removal of the one-time items such as the election
year funding, redistricting, and the Domestic Violence
and Sexual Assault Initiative, that brings us to the
FY 16 adjusted budget. From the FY 16 adjusted budget
the Office of the Governor reduced UGF by $2.2 million
or 8.3 percent. For an apples-to-apples comparison if
the governor had not transferred the $1.5 million to
the Department of Public Safety for domestic violence
prevention, the governor's office reduction from
adjusted base would have been $625,100 or 2.4 percent.
The subcommittee for the Alaska Legislature
recommended a budget totaling $76.4 million, of which
$75.6 million was UGF. The subcommittee denied all
increment requests, removed one-time items, and made
additional budget reductions of nearly $1.8 million to
the legislature's proposed budget. From the FY 16
adjusted budget the [subcommittee] budget reduces UGF
by $2.7 million or 3.5 percent.
The House Finance Subcommittee for DFG recommends an
operating budget for FY 16 of $67,872,200 in UGF and a
total of $210,521,900. This is a reduction of
$11,515,600 from the FY 15 management plan to the
House subcommittee; that is a 14.5 percent decrease in
UGF. The subcommittee for DFG held a total of six
meetings during which we went through the governor's
FY 16 budget for the department and recommend
accepting the governor's FY 16 budget with the
additional actions listed in this report. Our focus
was on reduction in personnel programs and
restructuring without negatively impacting the core
services. The department was very cooperative in
working through this complex budget where there were a
lot of different numbers that are used to fund and
manage our fish and game resources; it's a fairly
complex task deciding which projects can be reduced
and where the long-range impacts are. We had many
discussions on the research projects that are going
around the state whether its fish and game; there are
a lot of areas where there were stressed fisheries and
fish and game issues. We worked very closely with the
department to make sure that we funded the projects
that were necessary to make sure we had fish and game
for our state. There were quite a few projects that
were not funded. Almost every one of the projects that
is funded, if not all the way funded, came from
special use funds: the Pittman Robertson fund, which
is a 10 percent excise tax on sporting goods that
people pay into (those funds go back into research);
also the Dingle Johnson funds, which go back into
access for fisheries. There was $3 million in other
funds that was originally recommended by the
administration to reduce the Division of Commercial
Fisheries agency operations. We took that $3 million
and put that into projects to enhance fisheries around
the state that are used by the commercial fishing
industry and all users.
2:22:00 PM
Co-Chair Thompson spoke to Department of Military and
Veterans Affairs budget subcommittee.
The subcommittee had held 5 meetings with the
department and analyzed the governor's budget
transactions. The total funds for FY 16 DMVA are
$61,910,000; the UGF total is $17,588,100. The UGF
difference from the FY 15 management plan to
subcommittee was the reduction of $7,228,800 or 29.1
percent. A large portion of the reduction in the DMVA
budget was the elimination of general funds to Alaska
Aerospace Corporation. Alaska Aerospace did receive
authority to spend Alaska Aerospace receipts to
replace the general fund reductions as they move
towards more privatization operations. A total of 15
positions were eliminated from DMVA in consolidation
efforts in the Office of the Commissioner and both
Army and Air Guard facilities maintenance. The
subcommittee eliminated a physician's service contract
who is replaced with an existing health practitioner
who will be on premises.
The Department of Revenue (DOR) budget subcommittee
held six meetings with the department and analyzed the
governor's budget transactions. The total funds for FY
14 for DOR was $402,132,200. The UGF total in the FY
16 DOR budget is $30,225,600. The UGF difference from
FY 15 management plan to subcommittee was a reduction
of $3,605,800 or 10.7 percent. A total of 13 positions
were eliminated from DOR. To facilitate the
consolidation of information services and technology
within DOR, 2 of the 13 positions eliminated were from
information service personnel and funding for 2
information service positions was changed from UGF to
CIP receipts. To capitalize on investment
opportunities the Alaska Permanent Fund Corporation
expanded by 4 positions.
The Department of Transportation and Public Facilities
(DOT) budget subcommittee held 12 meetings with the
department and analyzed the governor's budget
transactions. The actions forwarded from DOT are as
follows: $612,488,800 in total funds. This is
comprised of $247,905,900 of UGF; a reduction of
$30,698,700 from the FY 15 management plan or 11
percent. There were many technical changes in this
year's budget. The department has gone through a major
change by creating a new South Coast region that
encompasses the old Southern region and parts of the
Central region to better reflect the geographical
similarities of parts of the state. A change for the
State of Alaska to assume complete responsibility in
the National Environmental Policy Act (NEPA)
authorizations. This action will allow projects to go
from design to completion at a more rapid rate. The
committee made reductions in two areas that contain 92
percent of general funds appropriated to the
department. These divisions have had an increase of
general fund dollars of 66 percent and 59 percent
respectively over the last 10 years. A 9.9 percent
reduction in general funds for the Alaska Marine
Highway System (AMHS) and a 9.6 percent reduction in
general funds from the maintenance and operations of
highways, aviation, and facilities; both of the
reductions reflect the need to bring the State of
Alaska's budget more in line with its fiscal
situation. A $30.6 million reduction from FY 15
management is a combination of governor cuts and the
finance subcommittee cuts. The governor reduced the
department's general fund by $10.8 million below the
FY 15 management plan; this number includes minor
reductions to almost every line item in the budget.
The one fact to remember, is two appropriations really
take up 92 percent of the general fund of DOT's
budget: maintenance and operations of our highway and
state airports and other facilities ($168 million GF
or 46 percent); and AMHS at $169 million or 46.4
percent of the budget. All other allocations are a mix
of CIP receipts, interagency receipts, and federal
money. There are minor aspects of general fund
involved. The next two highest general fund items are
administration and support for $23 million and design,
engineering, and construction at $4.6 million.
2:27:37 PM
Vice-Chair Saddler spoke to the Department of Health and
Social Services (DHSS) budget subcommittee recommendations.
The subcommittee recommended a total budget of
$2,626,288,100; including $1,173,564,800 in UGF, which was
a reduction from the FY 15 management plan of $77,814,400
or 6.2 percent. Highlights included denying the governor's
budget transactions related to Medicaid expansion, which
had proposed $145 million of federal authorization. He
looked forward to the administration submitting legislation
on Medicaid expansion and reform. Other highlights included
making general fund reductions to grants and other programs
in the department. The subcommittee had eliminated funding
for the Healthcare Commission Obesity Prevention grants and
the Youth Court program. The subcommittee had added funding
for the Office of Children's Services frontline social
workers to address the increasing workload.
Vice-Chair Saddler addressed the Department of Law budget
subcommittee recommendations. The subcommittee recommended
total funds of $88,393,600; including $54,112,200 in UGF,
which was a reduction from the FY 15 management plan of
$5,163,100 or 8.7 percent. Highlights included reducing the
Criminal Division by $1.6 million and 9 permanent full-time
positions and reducing the Civil Division by $1.5 million
and 10 permanent full-time positions.
2:29:44 PM
Representative Pruitt thanked the departments for their
work. He addressed the budget subcommittee recommendations
for the Department of Commerce, Community and Economic
Development (DCCED). Total funds for FY 16 were
$157,560,500; including $27,711,400 in UGF, which was a
$3,099,500 (10.1 percent) decrease from FY 15. Highlights
from the budget included a $2,883,000 UGF (39 percent)
reduction to the Alaska Seafood Marketing Institute (ASMI)
budget. A $5,935,600 or 39.05 percent reduction had been
made to tourism marketing; it had been placed in its own
separate appropriation (from the Division of Economic
Development). The subcommittee had also reduced the 8 named
grant recipients in the governor's proposed budget down to
4. The subcommittee eliminated 19 vacant positions that had
been vacant somewhere between 6 to 36 months. Lastly, there
had been a department-wide travel reduction.
Representative Pruitt reported on the Department of Natural
Resources (DNR) budget subcommittee recommendations. Total
funds for FY 16 were $162,118,400; including $82,758,600 in
UGF, which was a $3,896,700 (4.5 percent) decrease from FY
15. Highlights included an increase in funding of
$13,886,700 UGF for North Slope gas commercialization; the
increment would continue the state's participation in the
pipeline and gas commercialization. There was a $1.54
million UGF reduction to the RS2477 Navigability program
(the pad unit). Additionally, there was a $1 million UGF
reduction to airborne geophysical survey funding; and a
reduction of $1.3 million UGF and of $400,000 designated
general funds (DGF) and timber receipts to the timber sales
program.
2:33:00 PM
Representative Wilson began with the Department of Labor
and Workforce Development. The subcommittee had focused on
the mission of putting people back to work or into higher
paying jobs. She stated that there were many good programs,
but many were geared towards high school and middle school
students; the subcommittee felt that programs targeting
youths belonged in DEED. The subcommittee recommended UGF
of $23,042,200 and total funds of $173,297,100. She
detailed that most of the non-matching funds had been
eliminated. She spoke to employment security and adult
basic education and stated that with a test changing a
$25,000 decrement had been made. She elaborated that most
of the students paid for the tests that were done by a
private company; therefore, costs could not be changed
significantly. Career and technical education had been
reduced because much of the money had been aimed at K-12
students instead of focusing on putting adults back to
work. Funding had been removed from the Alaska Technical
Center, Southwest Alaska Vocational and Education Center,
and Northwest Alaska Career and Technical Center; all three
schools received Technical Vocational Education Program
funds and State Training and Employment Program funding.
She elaborated that state funds had been provided to the
programs in the past, but she did not find justification to
continue the funding. The Alaska Construction Academy had
been reduced by $3.1 million; over half the program went to
high schools, but not into programs that put adults to
work. She looked to see if there was a private/public
partnership financially; none had been brought forward. She
stated that the budget had been reduced by $6,127,700 or 21
percent.
She addressed the University of Alaska budget subcommittee
recommendations. She explained that one increment went to
the university, but she had split the figure up to
demonstrate the subcommittee's intent. The university
received $334,768,500 UGF, $327,169,000 DGF. She detailed
that most states only provided 18 percent in state funds to
their universities; the State of Alaska's contribution was
much higher. The subcommittee did not accept the governor's
$1.4 million in one-time funding for facility maintenance
and student advising. She believed student advising should
be included in tuition fees. The subcommittee had divided
the university budget between the Fairbanks, Anchorage, and
Juneau systems; the smaller schools were attached to one of
the three primary campuses. The subcommittee had removed
$500,000 from the $1,094,000 travel budget. Additionally,
20 percent had been removed from the Office of Information
System-Wide Education statewide services. The subcommittee
had removed 50 percent of travel funds from main campuses
(the university could choose to allocate the reduction in
any way); it had removed $2 million from a $5.3 million
allocation for University of Alaska Anchorage travel. She
elaborated that $2.1 million had been removed from an $8.7
million travel budget for University of Alaska Fairbanks;
$438,500 had been removed from the University of Alaska
Southeast travel funds ($520,400 remained). Lastly, the
subcommittee had removed 4.3 percent from each of the
campuses (divided between personal and contractual
services). She stated that the university could allocate
money much easier than most of the departments. She added
that it had over 400 buildings to maintain.
2:38:15 PM
Co-Chair Neuman discussed that there had been a wrap up of
the budget subcommittee process, but the operating budget
had a long journey ahead. He shared that the committee
would hear public comments and would take amendments from
finance members. Based on public comments a finalized bill
would eventually move to the House floor. He noted that all
members would have a say in how the budget process worked.
He relayed that the budget had been difficult to work with
due to the time situation with the new governor. He
discussed the short budget timeline. He detailed that the
legislature had received Governor Walker's endorsed budget
on February 5, with subcommittee work beginning on February
9, 2015. Subsequently, the legislature had received the
governor's amended budgets on February 27, 2015 in
preparation for subcommittee closeouts. He referred to the
House CS numbers on the Agency Summary page C. He
referenced the FY 15 management plan to House Committee
Substitute of $387,244,700. He reiterated that budget
discussions would be ongoing. He recognized that no one was
happy with the budget; some people wanted more reductions
and others wanted fewer.
Co-Chair Thompson discussed the schedule for the following
day. He shared that the committee would hear public
testimony during the upcoming three days. He discussed
protocol related to public testimony.
Co-Chair Neuman thanked members for their hard work.
Representative Gara discussed that the governor's proposed
budget appeared to be $250 million less than the FY 15
management plan; however, due to a technicality in budget
reporting, it was really $500 million less. He stated that
the $250 million extra cut should be shown in the
legislature's proposed budget. He elaborated that both
budgets counted the $250 million (the state was putting
towards paying down its retirement debt) as an increase in
spending. He asserted that the amount did not represent an
increase in spending. He elaborated that the state spent $3
billion the prior year for the unfunded retirement
liability out of the CBR; the $250 million increment would
come out of general funds in the current year. He pointed
out that on paper the amount looked like an increase;
however, it was not. He observed that the governor's cuts
were closer to $500 million and the Committee Substitute
cuts were closer to $615 million. Additionally, he
understood there would be continued discussions on the
budget, but he believed it was a mistake to eliminate the
state's Pre-K program. He reported that children who
attended Pre-K graduated in higher numbers, went to jail in
lower numbers, and cost less money in social services. The
issue represented just one of his concerns related to the
budget.
ADJOURNMENT
2:44:57 PM
The meeting was adjourned at 2:44 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 72 Agency Summaries.pdf |
HFIN 3/2/2015 1:30:00 PM |
HB 72 |
| HB 72 -CS Workdraft - 29-GH1780P.pdf |
HFIN 3/2/2015 1:30:00 PM |
HB 72 |
| HB 73 CS WorkDraft - 29-GH1782H.pdf |
HFIN 3/2/2015 1:30:00 PM |
HB 73 |