Legislature(1993 - 1994)

03/23/1993 01:36 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                     HOUSE FINANCE COMMITTEE                                   
                         March 23, 1993                                        
                            1:36 p.m.                                          
                                                                               
  TAPE HFC 93-54, Side 2, #000 - end.                                          
  TAPE HFC 93-55, Side 1, #000 - end.                                          
  TAPE HFC 93-55, Side 2, #000 - #481.                                         
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson called the House  Finance Committee to order                 
  at 1:36 p.m.                                                                 
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Larson             Representative Hoffman                           
  Co-Chair MacLean            Representative Martin                            
  Vice-Chair Hanley           Representative Navarre                           
  Representative Brown        Representative Parnell                           
  Representative Foster       Representative Therriault                        
  Representative Grussendorf                                                   
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative  Ulmer;  Mike  Greany, Director,  Legislative                 
  Finance  Division;  Cheryl  Frasca,  Director,  Division  of                 
  Budget Review, Office  of Management  and Budget; Darrel  J.                 
  Rexwinkel,  Commissioner,  Department  of  Revenue;  Rod  R.                 
  Mourant,  Special Assistant,  Department  of Revenue;  Tracy                 
  McGill,  Director,  Division  of   Administrative  Services,                 
  Department    of    Revenue;   Jeff    Morrison,   Director,                 
  Administrative and Support Services, Department of  Military                 
  and  Veterans   Affairs;  Karen  Rehfeld,   Fiscal  Analyst,                 
  Legislative Finance Division.                                                
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB 19     "An Act relating to the crime of conspiracy."                      
                                                                               
            SB 19 was  placed in a subcommittee  consisting of                 
            Chair Hanley with members  Representatives Parnell                 
            and Hoffman.                                                       
                                                                               
  HB 55     "An Act  making appropriations  for the  operating                 
            and loan program expenses  of state government and                 
            to  capitalize   funds;  and   providing  for   an                 
            effective date."                                                   
                                                                               
            HB 55 was HELD in Committee.                                       
                                                                               
  Co-Chair Larson provided  members with a copy  of Work Draft                 
  8-LSO896\E:    "An Act  amending  the basis  for determining                 
                                                                               
                                1                                              
                                                                               
                                                                               
  refunds to  local governments  under the  program of  shared                 
  fisheries  taxes;  and  providing  for  an  effective  date"                 
  (Attachment 1).  He announced  his intentions to submit  the                 
  work draft as House Finance Committee legislation.  He asked                 
  members to contact his office if they had objections.                        
  SENATE BILL NO. 19                                                           
                                                                               
       "An Act relating to the crime of conspiracy."                           
                                                                               
  Co-Chair Larson announced  that SB 19  would be placed in  a                 
  subcommittee  consisting   of  Chair  Hanley   with  members                 
  Representatives Parnell and Hoffman.                                         
  HOUSE BILL NO. 55                                                            
                                                                               
       "An  Act making  appropriations for  the operating  and                 
       loan  program  expenses  of  state  government  and  to                 
       capitalize funds; and providing for an effective date."                 
                                                                               
                                                                               
  DEPARTMENT OF MILITARY AND VETERANS AFFAIRS - AMENDMENTS                     
                                                                               
  CHERYL FRASCA,  DIVISION DIRECTOR, OFFICE OF  MANAGEMENT AND                 
  BUDGET,  OFFICE  OF  THE  GOVERNOR  discussed  the Governors                 
  amendment  to  the  Department   of  Military  and  Veterans                 
  Affairs' FY  94  operating  budget  (copy  on  file).    She                 
  explained  that  the amendment  would  reduce  the Hazardous                 
  Materials Response component to conform to the budget amount                 
  in  the Department  of  Environmental Conservation  Response                 
  Fund.    The  amendment  would  also  centralize  accounting                 
  functions.                                                                   
                                                                               
  Co-Chair  Larson MOVED  to ADOPT, the  Governor's Amendment.                 
  There being NO OBJECTION, it was so ordered.                                 
                                                                               
  Representative Foster MOVED to Adopt Amendment MVA-1.                        
                                                                               
  JEFF   MORRISON,   DIRECTOR,   DIVISION  OF   ADMINISTRATIVE                 
  SERVICES,  DEPARTMENT  OF  MILITARY   AND  VETERANS  AFFAIRS                 
  explained  that Amendment  MVA-1 would allow  the Department                 
  two  additional  preventative   maintenance  cycles.    Most                 
  manufactures   recommend   at   least    four   preventative                 
  maintenance cycles  a year.   Each  maintenance cycle  costs                 
  approximately $140.0 thousand dollars.                                       
                                                                               
  Representative Foster  MOVED to  AMEND, Amendment  MVA-1, to                 
  delete "$240.0 thousand dollars" and insert "$140.0 thousand                 
  dollars" (copy on file).   He stated that one cycle would be                 
  added instead  of two.  Representative Hanley noted that the                 
  amendment should also be AMENDED to delete "$5,200.9 million                 
  dollars" and insert "$5340.9 million dollars."                               
                                                                               
                                2                                              
                                                                               
                                                                               
  Representative Martin asked if regional personnel from other                 
  departments  could   perform  maintenance.     Mr.  Morrison                 
  observed  that  the  Department  of  Military  and  Veterans                 
  Affairs is instituting a pilot project in Bethel.                            
                                                                               
  There  being  NO  OBJECTION,  Amendment MVA-1  was  Amended.                 
  Representative  Foster MOVED  to Adopt  Amendment  MVA-1, as                 
  AMENDED.   Representative Martin OBJECTED.  A roll call vote                 
  was taken on the motion.                                                     
                                                                               
  IN FAVOR: Foster, Grussendorf, Hoffman, Brown, Navarre                       
  OPPOSED:  Hanley,  Martin,  Parnell,   Therriault,  MacLean,                 
                 Larson                                                        
                                                                               
  The MOTION FAILED (5-6).                                                     
                                                                               
  Representative Foster MOVED to Adopt Amendment MVA-2, $270.0                 
  thousand dollars to  fund the Veterans Death  Gratuity (copy                 
  on  file).    Mr. Morrison  observed  that  federal veterans                 
  receive $350.0 hundred dollars.  He estimated  20 percent of                 
  Alaskan  veterans  would  receive the  federal  grant.   Mr.                 
  Morrison thought  that there will be a $90.0 thousand dollar                 
  shortfall in the FY 94 Operating Budget.                                     
                                                                               
  Representative Navarre questioned whether the State is under                 
  obligation to fund the death gratuity.  Mr. Morrison did not                 
  feel the State is under obligation to fund the gratuity.                     
                                                                               
  REPRESENTATIVE WILLIS  read  written remarks  in support  of                 
  Amendment MVA-2 (Attachment 2).                                              
                                                                               
  Co-Chair Larson  stated that  he has  been advised  that the                 
  gratuity  would  not  be  paid  after the  appropriation  is                 
  depleted.   Representative  Hoffman  felt  that  legislation                 
  should be introduced to change  statutes regarding the death                 
  gratuity.                                                                    
                                                                               
  Members  discussed the  state's  responsibility to  fund the                 
  gratuity.   Representative Martin noted that  other unfunded                 
  programs remain  in the  statutes.   Representative  Hoffman                 
  asked if a  supplemental request  will follow  underfunding.                 
  Co-Chair Larson agreed  that the  Department could submit  a                 
  supplemental.                                                                
                                                                               
  Co-Chair  Larson  discussed  transferring  funding from  the                 
  Veterans Death Gratuity to the Veterans Services component.                  
                                                                               
  Representative  Navarre  asked  if  it  is  the  Committee's                 
  intention  to introduce  legislation  to  repeal  the  death                 
  gratuity if Amendment  MVA-2 fails.  Co-Chair  Larson stated                 
  that he would  interpret a failure  to fund the gratuity  as                 
                                                                               
                                3                                              
                                                                               
                                                                               
  the   Committee's   intention   to   repeal  the   gratuity.                 
  Representative  Martin did not  agree with Co-Chair Larson's                 
  interpretation.                                                              
                                                                               
  Co-Chair  Larson reiterated  the motion  to adopt MVA-2.   A                 
  roll call vote was taken on the motion.                                      
                                                                               
  IN FAVOR: Brown, Grussendorf, Hoffman, Navarre                               
  OPPOSED:  Foster,  Hanley,   Martin,  Parnell,   Therriault,                 
                 MacLean, Larson                                               
                                                                               
  The MOTION FAILED (4-7).                                                     
                                                                               
  Co-Chair  Larson  MOVED to  increase  the  Veterans Services                 
  component #421 by $100.0  thousand dollars.   Representative                 
  Brown clarified that the funding would be in the contractual                 
  line.  Mr. Morrison discussed  potential services that could                 
  be adopted  with  the increased  funding.   There  being  NO                 
  OBJECTION, it was so ordered.                                                
                                                                               
  DEPARTMENT OF REVENUE                                                        
                                                                               
  COMMISSIONER DARREL  J. REXWINKEL  discussed the  Governor's                 
  proposed amendments  to the  Department of  Revenue's FY  94                 
  operating  budget  (copy  on  file).     He  summarized  the                 
  Governor's amendment.  The amendment would:                                  
                                                                               
       *    Restore  5  PFNs to  the  Income and  Excise Audit                 
            Division;                                                          
                                                                               
       *    Restore $297.0  thousand dollar to the  Income and                 
            Excise Audit Division;                                             
                                                                               
       *    Restore 4 PCNs to the Oil and Gas Audit Division;                  
                                                                               
       *    Restore $338.0 thousand dollars to the Oil and Gas                 
            Audit Division;                                                    
                                                                               
       *    The total request is $3,380.0 million dollars;                     
                                                                               
  (Tape Change, HFC 93-55, Side 1)                                             
                                                                               
                                                                               
       *    Funding  for Oil and  Litigation contained  in the                 
            front section of  HB 55 will be reduced  by $149.0                 
            thousand dollars.                                                  
                                                                               
  Co-Chair   Larson  MOVED   to  ADOPT  and   INCORPORATE  the                 
  Governor's amendment for the Department of Revenue component                 
  103, Amusement and Gaming Tax, <$35,0 thousand dollars> into                 
  CSHB 50 (FIN) (copy  on file). There being NO  OBJECTION, it                 
  was so ordered.                                                              
                                                                               
                                4                                              
                                                                               
                                                                               
  Co-Chair   Larson  MOVED  to   ADOPT  and   INCORPORATE  the                 
  Governor's amendment for the Department of Revenue component                 
  104, Aviation Fuel  Tax, <$30.0 thousand dollars>  into CSHB                 
  50 (FIN)(copy on file).  There being NO OBJECTION, it was so                 
  ordered.                                                                     
                                                                               
  Co-Chair  Larson   MOVED  to   ADOPT  and  INCORPORATE   the                 
  Governor's amendment for the Department of Revenue component                 
  106, Liquor License Tax, $10.0 thousand dollars into CSHB 50                 
  (FIN) (copy on  file).  There being NO OBJECTION,  it was so                 
  ordered.                                                                     
                                                                               
  Commissioner Rexwinkel stated that the Governor's amendments                 
  reflect actual numbers collected for taxes in FY 93.                         
                                                                               
  Co-Chair  Larson   MOVED  to   ADOPT  and   INCORPORATE  the                 
  Governor's amendment for the Department of Revenue component                 
  107, Fisheries Tax,  $3,700.0 million  dollars into CSHB  50                 
  (FIN) (copy on file).   There being NO OBJECTION, it  was so                 
  ordered.                                                                     
                                                                               
  TRACY MCGILL, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,                 
  DEPARTMENT   OF  REVENUE   explained  that   the  Department                 
  anticipates that the  municipal share for the  Fisheries Tax                 
  will  be  $16  million  dollars.     Members  discussed  the                 
  Fisheries Tax.                                                               
                                                                               
  Co-Chair  Larson   MOVED  to   ADOPT  and  INCORPORATE   the                 
  Governor's amendment for the Department of Revenue component                 
  111, Child  Support Enforcement (copy on file).   Ms. McGill                 
  clarified that  there Department needs  the appropriation to                 
  match federal funds.   There being  NO OBJECTION, it was  so                 
  ordered.                                                                     
                                                                               
  Co-Chair Larson referred to the Governor's amendment for the                 
  Department  of  Revenue  component  113,  Income and  Excise                 
  Audit, $297.0 thousand  dollars into CSHB 50  (FIN) (copy on                 
  file).  Commissioner Rexwinkel reiterated that the amendment                 
  restores  five  positions.    He  spoke  in  support  of the                 
  amendment.   He  asserted that  each position will  bring $1                 
  million dollars to the  state in the form of  collected tax.                 
  He emphasized the  importance of  addressing the backlog  of                 
  cases.                                                                       
                                                                               
  Co-Chair  Larson noted  that  Amendment REV-4  addresses the                 
  Governor's amendment for component 113  (copy on file).  Ms.                 
  McGill  reviewed  Amendment  REV-4.    She stated  that  the                 
  amendment   will   adopt  the   Governor's   amendments  for                 
  components 113 and  115 and the Subcommittee's  reduction of                 
  $114.8 thousand  dollars.  Commissioner  Rexwinkel explained                 
  amendment REV-4.                                                             
                                                                               
                                5                                              
                                                                               
                                                                               
  Representative Brown  spoke in support of additional funding                 
  for the Income and Excise Audit Division and the Oil and Gas                 
  Audit Division.   She noted  that the Subcommittee's  budget                 
  would bring  these Divisions  below the  FY 93  level.   She                 
  stressed that the Divisions maintain oversight of taxpayers.                 
  She asserted that some taxes are  not being monitored at the                 
  current funding level.                                                       
                                                                               
  Commissioner Rexwinkel  explained the Governor's  budget for                 
  the Divisions of  Oil and  Gas Audit and  Income and  Excise                 
  Audit.                                                                       
                                                                               
  Members  discussed   the  Governor's   amendments  for   the                 
  Department of Revenue components 113, 115, 1854 (Oil and Gas                 
  Litigation  Audit  Front  Section $149.5  thousand  dollars>                 
  (copy  on  file).    Co-Chair  Larson  MOVED  to  ADOPT  and                 
  INCORPORATE the  Governor's amendment for the  Department of                 
  Revenue  component 113,  115 and  1854  into CSHB  50 (FIN).                 
  Representative Martin OBJECTED.   A roll call vote was taken                 
  on the motion.                                                               
                                                                               
  IN FAVOR: Brown,  Grussendorf,  Hoffman,  Navarre,  MacLean,                 
                 Larson                                                        
  OPPOSED:  Foster, Hanley, Martin, Parnell, Therriault                        
                                                                               
  The MOTION PASSED (6-5).                                                     
                                                                               
  Amendment REV-4 was WITHDRAWN.                                               
                                                                               
  Co-Chair   Larson  MOVED  to   ADOPT  and   INCORPORATE  the                 
  Governor's amendment for the Department of Revenue component                 
  125, Administrative  Services into  CSHB 50  (FIN) (copy  on                 
  file).  Commissioner Rexwinkel  explained that the amendment                 
  reclasses a PPT to PFT.  There being NO OBJECTION, it was so                 
  ordered.                                                                     
                                                                               
  Co-Chair   Larson  MOVED  to   ADOPT  and   INCORPORATE  the                 
  Governor's amendment for the Department of Revenue component                 
  1883, Gaming,  $686.4 thousand  dollars into  CSHB 50  (FIN)                 
  (copy  on  file).   Representative Navarre  noted  that  the                 
  position being transferred out of the Department of Commerce                 
  and Economic Development  is $681.4  thousand dollars.   Ms.                 
  McGill clarified  that an  additional $5.0 thousand  dollars                 
  will be  appropriated to the  Department of Revenue.   There                 
  being NO OBJECTION, it was so ordered.                                       
                                                                               
  Co-Chair Larson noted corrections to Amendments REV-1, REV-2                 
  and REV-3 (copy on file).                                                    
                                                                               
  Co-Chair  Larson MOVED  to ADOPT  and  INCORPORATE Amendment                 
  REV-1, $2.0  thousand  dollars for  the  Alcoholic  Beverage                 
  Control Board travel,  into CSHB  50 (FIN)  (copy on  file).                 
                                                                               
                                6                                              
                                                                               
                                                                               
  Representative  Martin  OBJECTED.    Commissioner  Rexwinkel                 
  spoke in  support of  Amendment REV-1.   He  noted that  the                 
  Board is mandated by statute to conduct  hearings around the                 
  state.      Representative   Brown   did   not   feel   that                 
  teleconference hearings were a viable alternative to travel.                 
  She  noted  that  the  Board's  budget has  been  previously                 
  reduced.                                                                     
                                                                               
  Representative Martin discussed the need to  redeem frequent                 
  flyer mileage now  given to employees.  A roll call vote was                 
  taken on the motion to adopt Amendment REV-1.                                
                                                                               
  IN FAVOR: Brown, Grussendorf, Hoffman, Navarre, Larson                       
  OPPOSED:  Hanley, Martin, Parnell, Therriault, Foster                        
                                                                               
  The MOTION PASSED (6-5).                                                     
                                                                               
  Co-Chair  Larson MOVED  to  ADOPT and  INCORPORATE Amendment                 
  REV-2,   $18.1   thousand  dollars   for   travel,  Treasury                 
  Management,   into   CSHB   50   (FIN)   (copy   on   file).                 
  Representative Martin OBJECTED.   Representative Brown noted                 
  that there has  been a 10  percent travel reduction to  this                 
  component.    She  observed that  the  Board  is  new.   She                 
  stressed the Board's need for training.                                      
                                                                               
  (Tape Change, HFC 93-55, Side 2)                                             
                                                                               
  A roll call vote was taken  on the motion to adopt Amendment                 
  REV-2.                                                                       
                                                                               
  IN FAVOR: Navarre,  Parnell,  Brown,   Grussendorf,  Hanley,                 
                 Larson                                                        
  OPPOSED:  Therriault, Foster, Hoffman, Martin, MacLean                       
                                                                               
  The MOTION PASSED (6-5).                                                     
                                                                               
  Co-Chair Larson  MOVED  to ADOPT  and INCORPORATE  Amendment                 
  REV-3, $2.2 thousand dollars for oil and gas tax case review                 
  travel, into CSHB 50 (FIN)  (copy on file).   Representative                 
  Martin OBJECTED.  A roll call vote was taken on the motion.                  
                                                                               
  IN FAVOR: Parnell, Brown, Grussendorf, Larson                                
  OPPOSED:  Therriault,  Foster,   Hanley,  Hoffman,   Martin,                 
                 Navarre, MacLean                                              
                                                                               
  The MOTION FAILED (4-7).                                                     
                                                                               
  Amendments REV-4 and REV-5 were WITHDRAWN (copies on file).                  
                                                                               
  Representative Brown  discussed  Amendment  REV-6  (copy  on                 
  file).    She noted  that  REV-6  would restore  the  $114.8                 
  thousand dollars to the  front section of HB 55  to maintain                 
                                                                               
                                7                                              
                                                                               
                                                                               
  the Divisions of Oil and Gas and  Excise and Income Audit at                 
  the FY 93  level.  Commissioner Rexwinkel  stressed that the                 
  Department needs  additional funding to address  the backlog                 
  of tax audit  cases.   He observed that  the Department  has                 
  cases dating to  1976. Representative  Brown MOVED to  ADOPT                 
  and INCORPORATE Amendment REV-6.  A roll call vote was taken                 
  on the motion to adopt Amendment REV-6.                                      
                                                                               
  IN FAVOR: Brown, Grussendorf, Hoffman, Navarre                               
  OPPOSED:  Hanley,  Martin,  Parnell,   Therriault,  MacLean,                 
  Larson                                                                       
                                                                               
  The MOTION FAILED (4-6).                                                     
                                                                               
  Representative Grussendorf discussed  Amendment REV-7  (copy                 
  on file).   He explained  that the  amendment would  restore                 
  Child  Support  Enforcement  field  offices  in  Juneau  and                 
  Fairbanks.   He stressed  the need to  retain field offices.                 
  Representative Grussendorf  MOVED to  ADOPT and  INCORPORATE                 
  Amendment REV-7 into  CSHB 50 (FIN).   Representative Martin                 
  OBJECTED.   He  asserted that  the  positions do  not  carry                 
  caseloads.  A roll call vote was taken on the motion.                        
                                                                               
  IN FAVOR: Brown, Grussendorf, Hoffman, Navarre                               
  OPPOSED:  Foster,  Hanley,   Martin,  Parnell,   Therriault,                 
                 MacLean, Larson                                               
                                                                               
  The MOTION FAILED (4-7).                                                     
                                                                               
  Amendment REV-8 was WITHDRAWN (copy on file).                                
                                                                               
  Representative  Brown  MOVED  to  AMEND  Amendment  REV-9 to                 
  $200.0 as an  increment to the contractual  services line of                 
  the  Oil  and  Gas Audit  Division.    Representative Martin                 
  OBJECTED.    Representative   Brown  spoke  in  support   of                 
  Amendment  REV-9.    Commissioner Rexwinkel  clarified  that                 
  there  is  a three  year  statute of  limitation  for filing                 
  assessments.  There is a six  year statute of limitation for                 
  resolving assessment issues.  Amendment REV-9 was HELD OPEN.                 
                                                                               
  HB 55 was HELD in Committee.                                                 
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 3:35 p.m.                                           
                                                                               
                                                                               
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