Legislature(1993 - 1994)

03/02/1994 01:30 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                    HOUSE  FINANCE COMMITTEE                                   
                          March 2, 1994                                        
                            1:30 p.m.                                          
                                                                               
  TAPE HFC 94-45, Side 1, #000 - end.                                          
  TAPE HFC 94-45, Side 2, #000 - end.                                          
  TAPE HFC 94-46, Side 1, #000 - #501.                                         
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson called the House  Finance Committee to order                 
  at 1:30 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                                                                 
                                                                               
  Mike Greany, Director, Legislative Finance Division;  Shelby                 
  Stastny, Director, Office  of Management and  Budget, Office                 
  of the Governor; Nancy Slagle,  Director, Division of Budget                 
  Review,  Office  of  Management and  Budget,  Office  of the                 
  Governor;    Kevin    Brooks,    Director,    Division    of                 
  Administration, Department  of Fish and Game;  Janet Clarke,                 
  Director, Division of Administrative Services, Department of                 
  Health  and   Social  Services;  Jeff   Morrison,  Director,                 
  Administrative and Support Services,  Department of Military                 
  and  Veterans  Affairs; Nico  Bus, Acting  Director, Support                 
  Services  Division, Department  of  Natural Resources;  Jill                 
  Sandleben, AGENET, Juneau.                                                   
                                                                               
  SUMMARY INFORMATION                                                          
  HB 441    An Act reducing certain appropriations for  fiscal                 
            year 1994; and providing for an effective date.                    
                                                                               
            HB   441  was  HELD   in  Committee   for  further                 
            consideration.                                                     
  HB 455    An Act  making and amending operating  and capital                 
            appropriations   and   ratifying   certain   state                 
            expenditures; and providing for an effective date.                 
                                                                               
            HB   455  was  HELD   in  Committee   for  further                 
            discussion.                                                        
                                                                               
                                1                                              
                                                                               
                                                                               
  HB 505    An  Act  making  appropriations  to  and from  the                 
            constitutional budget reserve  fund under art. IX,                 
            sec. 17(c),  Constitution of the  State of Alaska,                 
            for  operating  and  capital  expenses  of   state                 
            government for fiscal year 1994; and providing for                 
            an effective date.                                                 
                                                                               
            HB   505  was  HELD   in  Committee   for  further                 
            discussion.                                                        
  GENERAL DISCUSSION                                                           
                                                                               
  Co-Chair Larson provided the Committee with an updated House                 
  Finance   Committee  -   FY95  Operating   Budget  Schedule,                 
  [Attachment #1].   He provided an  overview of the  schedule                 
  beginning on  Page  4,  the  Non Formula  and  General  Fund                 
  reductions.    An  itemized  reduction  scenario  per agency                 
  allocation was listed.                                                       
                                                                               
  Representative  Brown  asked how  program receipts  would be                 
  addressed in the department cap  proposals.  Co-Chair Larson                 
  responded that  program receipts  would be  included in  the                 
  reduction projection.   Representative Brown urged Committee                 
  members  not  to consider  program receipts  as part  of the                 
  reduction scenario.                                                          
                                                                               
  Representative Therriault stated  that program receipts  are                 
  general funds to the state  treasury.  Representative Larson                 
  provided the Committee with a letter from  the House Finance                 
  Co-Chairs to  the Subcommittee Chairs explaining  the intent                 
  of  budget   reductions  resulting   from  program   receipt                 
  reduction goals.  [Attachment #2].                                           
                                                                               
  Co-Chair  Larson  continued the  overview of  Attachment #1,                 
  Page 2,  listing  the FY94  and  FY95 expenditures  and  the                 
  necessary  sources  of revenue.    Page 3  lists legislation                 
  required for the  budget package, including HB  441, HB 455,                 
  HB  454, HB  456  & 457,  HB 370,  HB 361  and  HB 505.   He                 
  explained  that the  education  component  would be  handled                 
  separately with a  funding source  decision.  Also  included                 
  were amounts necessary to fund the HESS budget, Alaska Court                 
  System  and  the  Longevity Bonus  Program.    Pages 5-8  of                 
  Attachment #1  provide a  list of  the taxation  legislation                 
  currently being proposed.                                                    
  HOUSE BILL 505                                                               
                                                                               
       "An  Act  making   appropriations  to   and  from   the                 
       constitutional budget  reserve fund under art. IX, sec.                 
       17(c),  Constitution  of  the  State  of   Alaska,  for                 
       operating and capital expenses  of state government for                 
                                                                               
                                2                                              
                                                                               
                                                                               
       fiscal year 1994; and providing for an effective date."                 
                                                                               
  SHELBY STASTNY,  DIRECTOR, OFFICE OF MANAGEMENT  AND BUDGET,                 
  OFFICE  OF  THE  GOVERNOR,  provided   an  overview  of  the                 
  Governor's  position  on  HB 505.    The  Governor  does not                 
  support the changes made by the House Judiciary Committee.                   
                                                                               
  Mr. Stastny explained the Administration's concerns with the                 
  Constitutional Budget  Reserve Fund amendment  which directs                 
  the  amount  necessary to  be  placed  into that  fund.   He                 
  pointed out the history of  prior action regarding the fund.                 
  Last Year the Attorney General was consulted and stated that                 
  informal settlements were not  "administrative proceedings".                 
  The Attorney General added that those funds should be placed                 
  into the General Fund and not into the Constitutional Budget                 
  Reserve  Fund.    Mr.  Stastny  advised  that  the  Governor                 
  accepted the opinion of the Attorney General.  This decision                 
  was challenged in court.                                                     
                                                                               
  Mr. Stastny continued, that there has been a decision by the                 
  Supreme Court regarding the placement of the  funds into the                 
  budget  reserve  fund.    This  decision  has  been  upheld.                 
  Litigants recommended that an injunction  be placed upon the                 
  Administration in  order that the  funds be placed  into the                 
  Constitutional  Budget  Reserve Fund.    The judge  issued a                 
  supplemental opinion stating that the money should have been                 
  transferred into that fund.  The judge observed that:                        
                                                                               
       1.   This  was  not  only  an  Administration   problem                 
            because  the Legislature knew  the money  had been                 
            placed into the general  fund and had appropriated                 
            from  the general  fund  rather than  placing  the                 
            funds into the Constitutional Budget Reserve Fund;                 
            and that                                                           
                                                                               
       2.   The Legislature's involvement in appropriating the                 
            money was improper.                                                
                                                                               
  HB 505 provides  that the  Legislature participate with  the                 
  Administration in  appropriating the money from  the general                 
  fund  into  the  Constitutional Budget  Reserve  Fund.   The                 
  legislation would  then appropriate  that money  out of  the                 
  Budget Reserve Fund into the general fund in two increments.                 
  One amounting to  $416 million  dollars, the calculation  of                 
  the  necessary  amount   to  the  Budget  Reserve   Fund  as                 
  appropriated last year.                                                      
                                                                               
  Co-Chair  Larson inquired  where  settlement money  received                 
  since May,  1993, is located.  Mr.  Stastny understood funds                 
  to be in the constitutional Budget Reserve Fund.                             
                                                                               
  (Tape Change, HFC 94-46, Side 2).                                            
                                                                               
                                3                                              
                                                                               
                                                                               
  Mr.  Stastny   discussed   the   legal   interpretation   of                 
  transferring money from  the Budget Reserve Fund  for public                 
  purposes.  He stated that the House Judiciary version of the                 
  legislation would create a legal problem for the State.                      
                                                                               
  Representative Brown asked  which funds had been  improperly                 
  placed in the General Fund in  FY91.  Mr. Stastny understood                 
  that when  the attorney  general's opinion  was issued,  the                 
  Department  of  Revenue  returned  the settlements  received                 
  after the constitutional amendment's passage and then  tried                 
  to conform the deposits into  the appropriate account.   Co-                 
  Chair Larson asked  that a financial  sheet be submitted  to                 
  the  Committee  explaining  which  funds are  available  for                 
  distribution and where those funds are located.  Mr. Stastny                 
  provided  the  Committee   with  a  handout  of   FY94  fund                 
  sufficiency  balances  in  the   General  Fund  group  dated                 
  1/28/94.  [Attachment #4].                                                   
                                                                               
  Representative Brown questioned the status of the Governor's                 
  employment and fish  tax legislation.   Mr. Stastny  replied                 
  that  the  employment  tax  will  be introduced  very  soon,                 
  although the fisheries tax might not be introduced this year                 
  as  a  result  of the  current  difficulties  facing Alaskan                 
  fisheries.  He added that passing a tax bill in an  election                 
  year would be difficult.                                                     
                                                                               
  Co-Chair  Larson  opened  for  discussion   the  subject  of                 
  repayment of a  loan which had been  forgiven by legislative                 
  action.   The  $441 million  dollar loan  originated to  the                 
  Permanent Fund Corporation and was distributed.                              
                                                                               
  Representative   Brown  provided   the  Committee   with  an                 
  amendment to  HB 505  (JUD) which  would delete  "findings".                 
  [Attachment #3].  She asked that the amendment be considered                 
  and incorporated into the House Finance Committee substitute                 
  version of the legislation.                                                  
                                                                               
  HB 505 was HELD in Committee for further consideration.                      
  HOUSE BILL 455                                                               
                                                                               
       "An  Act making  and  amending  operating  and  capital                 
       appropriations    and    ratifying     certain    state                 
       expenditures; and providing for an effective date."                     
                                                                               
  DEPARTMENT OF HEALTH AND SOCIAL SERVICES                                     
                                                                               
  JILL SANDLEBEN, ALASKA GERIATRICS EXCHANGE NETWORK (AGENET),                 
  JUNEAU,  testified in  opposition to  the  proposed Medicaid                 
  reduction in HB 455.  She explained how the Medicaid program                 
  affects the  Home Waivers  Program.   This program  provides                 
                                                                               
                                4                                              
                                                                               
                                                                               
  services to clients in order to bring seniors out of nursing                 
  home facilities and into home care services.  She emphasized                 
  that the  program  provides more  services  at a  lower  per                 
  client cost.                                                                 
                                                                               
  NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF                 
  MANAGEMENT AND BUDGET,  OFFICE OF  THE GOVERNOR, provided  a                 
  sectional overview of HB 455, the supplemental legislation.                  
                                                                               
       *    Sec. 21   Medicaid State Programs       $7,000.0                   
                                                                               
            This  request  provides  for the  disproportionate                 
            share payments for API operations.                                 
                                                                               
  JANET CLARKE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,                 
  DEPARTMENT  OF  HEALTH  AND  SOCIAL  SERVICES, provided  the                 
  Committee  with  a  handout   which  explains  the  Medicaid                 
  disproportionate  share  payments  made to  state  hospitals                 
  which serve a disproportionate share of low income patients.                 
  The payments are matched 50/50 by the federal government and                 
  the State.  [Attachment #5].                                                 
                                                                               
       *    Sec. 22   Waivers Services              $0.0                       
                                                                               
            This  request  would transfer  funds  from Waivers                 
            Authorization to the Community DD grants.                          
                                                                               
  Ms. Clarke explained that whatever  remains from the waivers                 
  will be distributed to the  grantees.  Representative Hanley                 
  pointed out that 10% of the  final quarterly advance is held                 
  from the grant  money until  all bills are  received by  the                 
  Department.  Ms. Clarke stated that  was not the policy this                 
  year due to cash flow problems.   Grantees would receive all                 
  the money available for the appropriation.                                   
                                                                               
  Representative Brown  requested that the  Committee consider                 
  introducing  a  House  Fiance  Committee  bill  which  would                 
  address Section #22 of the  proposed legislation to expedite                 
  the net zero appropriation.                                                  
                                                                               
       *    Sec. 23   McLaughlin Youth Center       $215.0                     
                                                                               
            This request would cover  the increased costs  due                 
            to   the   increase   in    gang-related   violent                 
            admissions.                                                        
                                                                               
       *    Sec. 24   Johnson Youth Center          $41.0                      
                                                                               
            This request would  cover the increased costs  due                 
            to a population increase  in violent youth  crimes                 
            resulting in contractual services.                                 
                                                                               
                                                                               
                                5                                              
                                                                               
                                                                               
       *    Sec. 25   Laboratory Services           $358.7                     
                                                                               
            This  request   would  move  money   from  program                 
            receipts to the  general fund  to cover a  delayed                 
            implementation  of a  program  for collecting  lab                 
            fees resulting in the loss of program receipts.                    
                                                                               
  Ms.  Clarke  explained that  the  Department tried  to adopt                 
  regulations  for  the  laboratory fees.    There  was public                 
  concern  regarding  the  fee  schedule.    Regulations  were                 
  withdrawn  due to  public concern  and testimony.   The  fee                 
  schedule is currently being reworked in order  to match what                 
  Medicaid has paid.                                                           
                                                                               
       *    Sec. 26   Post Mortem Examinations      $201.8                     
                                                                               
            This request would cover  costs related to delayed                 
            implementation of the Medical Examiner Program.                    
                                                                               
  (Tape Change, HFC 94-46, Side 1).                                            
                                                                               
       *    Sec. 27   Designated Evaluation & Treatment                        
                      $271.0                                                   
                                                                               
            This request  would cover the  costs of  increased                 
            client caseload and inpatient days.                                
                                                                               
  Ms. Clarke  stated that  the Department  has been unable  to                 
  come to an agreement with the Fairbanks Memorial Hospital on                 
  a daily rate.  The Department  has contracted with the North                 
  Star  Hospital  in  Anchorage for  an  interim  agreement to                 
  handle any  of the Fairbanks overflow.  Currently, Sitka and                 
  Anchorage are the only sites  being covered.  Representative                 
  Hanley questioned why the program was running over cost when                 
  so few sites were being covered.  Ms. Clarke stated that the                 
  program pays  for psychiatric designated  treatment services                 
  in hospitals.   Last year there  were unforeseen late  bills                 
  from hospitals which the Department  was responsible to pay.                 
                                                                               
                                                                               
       *    Sec. 28   Alaska Psychiatric Institute  $624.6                     
                                                                               
            This  request  would  cover costs  of  an eighteen                 
            percent  increase in admissions  and a fund change                 
            due to the Disproportionate Share Program.                         
                                                                               
  Ms. Slagle explained that this was  a transfer of money from                 
  the Medical Assistance Division to API where it will be used                 
  for  operations.   At that time,  given the  availability of                 
  mental   health  funds,   they  will   be   used  elsewhere.                 
  Representative Hanley pointed  out that  a large portion  of                 
  the funds would  replace Mental  Health Trust  money.   This                 
                                                                               
                                6                                              
                                                                               
                                                                               
  will be a cost savings to the State.                                         
                                                                               
       *    Sec. 29   Harborview Development Center $598.2                     
                                                                               
            This  request would  cover  the  costs related  to                 
            certification deficiencies and heating.                            
                                                                               
  Ms.  Slagle stated that the request  would address the steam                 
  heat plant  obligations  and problems  encountered with  the                 
  fast-track certification which  Harborview encountered  last                 
  year.                                                                        
                                                                               
  Ms. Clarke noted that $100 thousand dollars of the requested                 
  amount resulted  from a construction delay in the steam heat                 
  plant at Harborview, a joint  project between the Department                 
  of  Transportation   and  Public   Facilities  (DOTPF)   and                 
  Harborview.    The  remaining amount  will  cover  personnel                 
  services.                                                                    
                                                                               
  DEPARTMENT OF MILITARY AND VETERANS' AFFAIRS                                 
                                                                               
       *    Sec. 30   Veteran's Death Gratuity $37.5                           
                                                                               
            This request would cover the death gratuity claims                 
            received in FY93.                                                  
                                                                               
  Ms. Slagle pointed out  that the program is no  longer being                 
  funded although these applicants were  not considered in the                 
  appropriation  requests  last  year.    This  request  would                 
  conclude the program.                                                        
                                                                               
  DEPARTMENT OF NATURAL RESOURCES                                              
                                                                               
       *    Sec. 31   Fire Suppression         $4,643.8                        
                                                                               
            This request would cover fire suppression costs.                   
                                                                               
  NICO  BUS,  ACTING  DIRECTOR,  SUPPORT  SERVICES   DIVISION,                 
  DEPARTMENT  OF  NATURAL  RESOURCES,  stated  that  the total                 
  request would include  1,754 actual fires and  the remaining                 
  would cover the fixed  costs owed to the federal  government                 
  for fighting fires on state land.                                            
                                                                               
  Mr.  Bus explained  that  the front  section  of the  budget                 
  itemized the amount of money used  for fixed costs and would                 
  not  cover any fire activity.   The average fire suppression                 
  costs for the past  five years is $9.5 million  general fund                 
  dollars.                                                                     
                                                                               
       *    Sec. 32   Various                  $0.0                            
                                                                               
            This request addresses  the ratification of  prior                 
                                                                               
                                7                                              
                                                                               
                                                                               
            year expenditures.                                                 
                                                                               
  DEPARTMENT OF FISH AND GAME                                                  
                                                                               
       *    Sec. 33   Administrative Services  $20.0                           
                                                                               
            This request would  grant additional  compensation                 
            to vendors for king salmon tag sales.                              
                                                                               
       *    Sec. 34   Subsistence              $60.5                           
                                                                               
            This request  would provide  a fund  source change                 
            from federal to general fund program receipts.                     
                                                                               
  Ms. Slagle pointed out this would be a fund source change to                 
  program receipts  from  federal receipts  resulting from  an                 
  anticipated federal grant  but in reality received  from the                 
  University of Utah.  This would correct the funding source.                  
                                                                               
       *    Sec. 35   Various                  $0.0                            
                                                                               
            This component would clarify ratification of prior                 
            year expenditures.                                                 
                                                                               
  KEVIN   BROOKS,   DIRECTOR,   DIVISION  OF   ADMINISTRATION,                 
  DEPARTMENT  OF  FISH AND  GAME,  explained that  Section #35                 
  resulted from  an audit  by Legislative Audit,  OMB and  the                 
  Division of Finance  to clean up old balances.   Many of the                 
  balances  have been  over-spent  and  some  are  uncollected                 
  revenues.  All items listed  in Section #5 occurred  between                 
  1985 and  1991.  The expenditures have  already occurred and                 
  the fund  balance is not  affected yet the  expenditures did                 
  exceed appropriation levels.                                                 
                                                                               
       *    Sec. 36   Fisheries Management     ($10.0)                         
                                                                               
            This request would address the Wood River project,                 
            reappropriation and reduction in those funds.                      
                                                                               
  Ms. Slagle  stated that Section 36 would  change the project                 
  title and reduce the amount by $10 thousand dollars.                         
                                                                               
  DEPARTMENT OF PUBLIC SAFETY                                                  
                                                                               
       *    Sec. 37   Motor Vehicle Administration  $331.9                     
                                                                               
            This  request  would  cover  the  data  processing                 
            charge back.                                                       
                                                                               
  Ms. Slagle explained that  when the charge back process  was                 
  initiated,  the  amount provided  to  the Division  of Motor                 
  Vehicles  was  less that  required.   Consequently,  DMV was                 
                                                                               
                                8                                              
                                                                               
                                                                               
  short funded last year.                                                      
                                                                               
       *    Sec. 38   Contract Jails                $70.4                      
                                                                               
            This   request   would    fully   fund    prisoner                 
            transportation costs negotiated in FY94.                           
                                                                               
  HB 455 was HELD in Committee for further consideration.                      
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 3:30 P.M.                                           
                                                                               
                                                                               
                    HOUSE  FINANCE COMMITTEE                                   
                          March 2, 1994                                        
                            1:30 p.m.                                          
                                                                               
  TAPE HFC 94-45, Side 1, #000 - end.                                          
  TAPE HFC 94-45, Side 2, #000 - end.                                          
  TAPE HFC 94-46, Side 1, #000 - #501.                                         
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson called the House  Finance Committee to order                 
  at 1:30 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                                                                 
                                                                               
  Mike Greany, Director, Legislative  Finance Division; Shelby                 
  Stastny, Director, Office  of Management and  Budget, Office                 
  of the Governor; Nancy Slagle,  Director, Division of Budget                 
  Review,  Office  of  Management and  Budget,  Office  of the                 
  Governor;    Kevin    Brooks,    Director,    Division    of                 
  Administration, Department  of Fish and Game;  Janet Clarke,                 
  Director, Division of Administrative Services, Department of                 
  Health  and   Social  Services;  Jeff   Morrison,  Director,                 
  Administrative and Support  Services, Department of Military                 
  and  Veterans  Affairs; Nico  Bus, Acting  Director, Support                 
  Services  Division, Department  of  Natural Resources;  Jill                 
  Sandleben, AGENET, Juneau.                                                   
                                                                               
                                                                               
                                9                                              
                                                                               
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  HB 441    An Act reducing  certain appropriations for fiscal                 
            year 1994; and providing for an effective date.                    
                                                                               
            HB   441  was   HELD  in  Committee   for  further                 
            consideration.                                                     
                                                                               
  HB 455    An  Act making and  amending operating and capital                 
            appropriations   and   ratifying   certain   state                 
            expenditures; and providing for an effective date.                 
                                                                               
            HB   455  was   HELD  in  Committee   for  further                 
            discussion.                                                        
                                                                               
  HB 505    An  Act  making  appropriations  to  and from  the                 
            constitutional budget reserve fund under art.  IX,                 
            sec. 17(c),  Constitution of the  State of Alaska,                 
            for  operating  and  capital   expenses  of  state                 
            government for fiscal year 1994; and providing for                 
            an effective date.                                                 
                                                                               
            HB   505  was  HELD   in  Committee   for  further                 
            discussion.                                                        
                                                                               
  GENERAL DISCUSSION                                                           
                                                                               
  Co-Chair Larson provided the Committee with an updated House                 
  Finance  Committee   -  FY95   Operating  Budget   Schedule,                 
  [Attachment  #1].  He  provided an overview  of the schedule                 
  beginning  on Page  4,  the  Non  Formula and  General  Fund                 
  reductions.    An  itemized  reduction  scenario  per agency                 
  allocation was listed.                                                       
                                                                               
  Representative  Brown  asked how  program receipts  would be                 
  addressed in the department cap  proposals.  Co-Chair Larson                 
  responded that  program receipts  would be  included in  the                 
  reduction projection.  Representative Brown urged  Committee                 
  members not  to  consider program  receipts as  part of  the                 
  reduction scenario.                                                          
                                                                               
  Representative Therriault  stated that program  receipts are                 
  general funds to the state  treasury.  Representative Larson                 
  provided the Committee with a letter from the  House Finance                 
  Co-Chairs to  the Subcommittee Chairs explaining  the intent                 
  of  budget   reductions  resulting   from  program   receipt                 
  reduction goals.  [Attachment #2].                                           
                                                                               
  Co-Chair  Larson  continued the  overview of  Attachment #1,                 
  Page  2, listing  the  FY94 and  FY95  expenditures and  the                 
  necessary  sources  of revenue.    Page 3  lists legislation                 
  required for the budget  package, including HB 441,  HB 455,                 
                                                                               
                               10                                              
                                                                               
                                                                               
  HB  454, HB  456 &  457,  HB 370,  HB 361  and HB  505.   He                 
  explained that  the  education component  would  be  handled                 
  separately with a  funding source  decision.  Also  included                 
  were amounts necessary to fund the HESS budget, Alaska Court                 
  System  and  the  Longevity Bonus  Program.    Pages  5-8 of                 
  Attachment #1  provide a  list of  the taxation  legislation                 
  currently being proposed.                                                    
                                                                               
  HOUSE BILL 505                                                               
                                                                               
       "An  Act   making  appropriations  to   and  from   the                 
       constitutional budget reserve fund  under art. IX, sec.                 
       17(c),   Constitution  of  the  State  of  Alaska,  for                 
       operating and capital expenses of  state government for                 
       fiscal year 1994; and providing for an effective date."                 
                                                                               
  SHELBY STASTNY,  DIRECTOR, OFFICE OF MANAGEMENT  AND BUDGET,                 
  OFFICE  OF  THE  GOVERNOR,  provided   an  overview  of  the                 
  Governor's position  on  HB  505.   The  Governor  does  not                 
  support the changes made by the House Judiciary Committee.                   
                                                                               
  Mr. Stastny explained the Administration's concerns with the                 
  Constitutional Budget  Reserve Fund amendment  which directs                 
  the  amount  necessary to  be  placed  into that  fund.   He                 
  pointed out the history of prior  action regarding the fund.                 
  Last Year the Attorney General was consulted and stated that                 
  informal settlements were not  "administrative proceedings".                 
  The Attorney General added that those funds should be placed                 
  into the General Fund and not into the Constitutional Budget                 
  Reserve  Fund.    Mr.  Stastny  advised  that  the  Governor                 
  accepted the opinion of the Attorney General.  This decision                 
  was challenged in court.                                                     
                                                                               
  Mr. Stastny continued, that there has been a decision by the                 
  Supreme Court regarding the placement of the funds  into the                 
  budget  reserve  fund.    This  decision  has  been  upheld.                 
  Litigants recommended that an injunction  be placed upon the                 
  Administration in  order that the  funds be placed  into the                 
  Constitutional  Budget  Reserve Fund.    The judge  issued a                 
  supplemental opinion stating that the money should have been                 
  transferred into that fund.  The judge observed that:                        
                                                                               
       1.   This  was  not  only   an  Administration  problem                 
            because  the Legislature knew  the money  had been                 
            placed into the general  fund and had appropriated                 
            from  the general  fund  rather than  placing  the                 
            funds into the Constitutional Budget Reserve Fund;                 
            and that                                                           
                                                                               
       2.   The Legislature's involvement in appropriating the                 
            money was improper.                                                
                                                                               
                                                                               
                               11                                              
                                                                               
                                                                               
  HB 505 provides  that the  Legislature participate with  the                 
  Administration  in appropriating the  money from the general                 
  fund  into  the  Constitutional Budget  Reserve  Fund.   The                 
  legislation would  then appropriate  that money  out of  the                 
  Budget Reserve Fund into the general fund in two increments.                 
  One amounting to  $416 million  dollars, the calculation  of                 
  the  necessary  amount   to  the  Budget  Reserve   Fund  as                 
  appropriated last year.                                                      
                                                                               
  Co-Chair  Larson  inquired where  settlement  money received                 
  since May, 1993,  is located.  Mr.  Stastny understood funds                 
  to be in the constitutional Budget Reserve Fund.                             
                                                                               
  (Tape Change, HFC 94-46, Side 2).                                            
                                                                               
  Mr.   Stastny   discussed   the   legal  interpretation   of                 
  transferring money from  the Budget Reserve Fund  for public                 
  purposes.  He stated that the House Judiciary version of the                 
  legislation would create a legal problem for the State.                      
                                                                               
  Representative Brown asked  which funds had been  improperly                 
  placed in the General Fund in  FY91.  Mr. Stastny understood                 
  that when  the attorney  general's opinion  was issued,  the                 
  Department  of  Revenue  returned the  settlements  received                 
  after the constitutional amendment's passage and then  tried                 
  to  conform the deposits into the  appropriate account.  Co-                 
  Chair  Larson asked that  a financial sheet  be submitted to                 
  the  Committee  explaining  which  funds are  available  for                 
  distribution and where those funds are located.  Mr. Stastny                 
  provided  the  Committee   with  a  handout  of   FY94  fund                 
  sufficiency  balances  in  the   General  Fund  group  dated                 
  1/28/94.  [Attachment #4].                                                   
                                                                               
  Representative Brown questioned the status of the Governor's                 
  employment and fish  tax legislation.   Mr. Stastny  replied                 
  that  the  employment  tax  will  be introduced  very  soon,                 
  although the fisheries tax might not be introduced this year                 
  as  a  result  of the  current  difficulties  facing Alaskan                 
  fisheries.  He added that passing  a tax bill in an election                 
  year would be difficult.                                                     
                                                                               
  Co-Chair  Larson  opened  for  discussion   the  subject  of                 
  repayment of a loan  which had been forgiven  by legislative                 
  action.   The  $441  million dollar  loan originated  to the                 
  Permanent Fund Corporation and was distributed.                              
                                                                               
  Representative  Brown   provided  the   Committee  with   an                 
  amendment to  HB 505  (JUD) which  would delete  "findings".                 
  [Attachment #3].  She asked that the amendment be considered                 
  and incorporated into the House Finance Committee substitute                 
  version of the legislation.                                                  
                                                                               
                                                                               
                               12                                              
                                                                               
                                                                               
  HB 505 was HELD in Committee for further consideration.                      
                                                                               
  HOUSE BILL 455                                                               
                                                                               
       "An  Act  making  and amending  operating  and  capital                 
       appropriations    and    ratifying     certain    state                 
       expenditures; and providing for an effective date."                     
                                                                               
  DEPARTMENT OF HEALTH AND SOCIAL SERVICES                                     
                                                                               
  JILL SANDLEBEN, ALASKA GERIATRICS EXCHANGE NETWORK (AGENET),                 
  JUNEAU,  testified in  opposition to  the proposed  Medicaid                 
  reduction in HB 455.  She explained how the Medicaid program                 
  affects the  Home Waivers  Program.   This program  provides                 
  services to clients in order to bring seniors out of nursing                 
  home facilities and into home care services.  She emphasized                 
  that  the program  provides  more services  at  a lower  per                 
  client cost.                                                                 
                                                                               
  NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF                 
  MANAGEMENT AND BUDGET,  OFFICE OF  THE GOVERNOR, provided  a                 
  sectional overview of HB 455, the supplemental legislation.                  
                                                                               
       *    Sec. 21   Medicaid State Programs       $7,000.0                   
                                                                               
            This  request  provides  for the  disproportionate                 
            share payments for API operations.                                 
                                                                               
  JANET CLARKE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,                 
  DEPARTMENT  OF  HEALTH  AND  SOCIAL  SERVICES, provided  the                 
  Committee  with  a  handout   which  explains  the  Medicaid                 
  disproportionate share  payments  made  to  state  hospitals                 
  which serve a disproportionate share of low income patients.                 
  The payments are matched 50/50 by the federal government and                 
  the State.  [Attachment #5].                                                 
                                                                               
       *    Sec. 22   Waivers Services              $0.0                       
                                                                               
            This  request would  transfer  funds from  Waivers                 
            Authorization to the Community DD grants.                          
                                                                               
  Ms. Clarke explained that whatever  remains from the waivers                 
  will be distributed to the  grantees.  Representative Hanley                 
  pointed out that 10% of the  final quarterly advance is held                 
  from the grant  money until  all bills are  received by  the                 
  Department.  Ms. Clarke stated that  was not the policy this                 
  year due to cash flow problems.   Grantees would receive all                 
  the money available for the appropriation.                                   
                                                                               
  Representative Brown  requested that the  Committee consider                 
  introducing  a  House  Fiance  Committee  bill  which  would                 
  address Section #22 of the  proposed legislation to expedite                 
                                                                               
                               13                                              
                                                                               
                                                                               
  the net zero appropriation.                                                  
                                                                               
       *    Sec. 23   McLaughlin Youth Center       $215.0                     
                                                                               
            This request  would cover the increased  costs due                 
            to   the   increase   in    gang-related   violent                 
            admissions.                                                        
                                                                               
       *    Sec. 24   Johnson Youth Center          $41.0                      
                                                                               
            This request  would cover the  increased costs due                 
            to a  population increase in violent  youth crimes                 
            resulting in contractual services.                                 
                                                                               
       *    Sec. 25   Laboratory Services           $358.7                     
                                                                               
            This  request   would  move  money   from  program                 
            receipts to the  general fund  to cover a  delayed                 
            implementation  of  a program  for  collecting lab                 
            fees resulting in the loss of program receipts.                    
                                                                               
  Ms.  Clarke  explained that  the  Department tried  to adopt                 
  regulations  for  the  laboratory fees.    There  was public                 
  concern  regarding  the  fee  schedule.    Regulations  were                 
  withdrawn  due  to public  concern and  testimony.   The fee                 
  schedule is currently being reworked in order to  match what                 
  Medicaid has paid.                                                           
                                                                               
       *    Sec. 26   Post Mortem Examinations      $201.8                     
                                                                               
            This request would cover  costs related to delayed                 
            implementation of the Medical Examiner Program.                    
                                                                               
  (Tape Change, HFC 94-46, Side 1).                                            
                                                                               
       *    Sec. 27   Designated Evaluation & Treatment                        
                      $271.0                                                   
                                                                               
            This request  would cover the  costs of  increased                 
            client caseload and inpatient days.                                
                                                                               
  Ms. Clarke  stated that  the Department  has been  unable to                 
  come to an agreement with the Fairbanks Memorial Hospital on                 
  a daily rate.  The Department  has contracted with the North                 
  Star  Hospital  in  Anchorage for  an  interim  agreement to                 
  handle any of  the Fairbanks overflow.  Currently, Sitka and                 
  Anchorage are the only sites  being covered.  Representative                 
  Hanley questioned why the program was running over cost when                 
  so few sites were being covered.  Ms. Clarke stated that the                 
  program pays  for psychiatric designated  treatment services                 
  in hospitals.   Last year  there were unforeseen  late bills                 
  from hospitals which the Department  was responsible to pay.                 
                                                                               
                               14                                              
                                                                               
                                                                               
       *    Sec. 28   Alaska Psychiatric Institute  $624.6                     
                                                                               
            This  request would  cover  costs  of an  eighteen                 
            percent increase in  admissions and a  fund change                 
            due to the Disproportionate Share Program.                         
                                                                               
  Ms. Slagle explained that this was  a transfer of money from                 
  the Medical Assistance Division to API where it will be used                 
  for operations.   At  that time,  given the  availability of                 
  mental   health  funds,   they  will   be  used   elsewhere.                 
  Representative Hanley pointed  out that  a large portion  of                 
  the  funds would  replace Mental  Health Trust money.   This                 
  will be a cost savings to the State.                                         
                                                                               
       *    Sec. 29   Harborview Development Center $598.2                     
                                                                               
            This  request would  cover  the  costs related  to                 
            certification deficiencies and heating.                            
                                                                               
  Ms. Slagle  stated that the request would  address the steam                 
  heat plant  obligations  and problems  encountered with  the                 
  fast-track certification which  Harborview encountered  last                 
  year.                                                                        
                                                                               
  Ms. Clarke noted that $100 thousand dollars of the requested                 
  amount resulted from  a construction delay in the steam heat                 
  plant at Harborview, a joint  project between the Department                 
  of   Transportation  and   Public  Facilities   (DOTPF)  and                 
  Harborview.    The  remaining amount  will  cover  personnel                 
  services.                                                                    
                                                                               
  DEPARTMENT OF MILITARY AND VETERANS' AFFAIRS                                 
                                                                               
       *    Sec. 30   Veteran's Death Gratuity $37.5                           
                                                                               
            This request would cover the death gratuity claims                 
            received in FY93.                                                  
                                                                               
  Ms. Slagle pointed out  that the program is no  longer being                 
  funded although these applicants were  not considered in the                 
  appropriation  requests  last  year.    This  request  would                 
  conclude the program.                                                        
                                                                               
  DEPARTMENT OF NATURAL RESOURCES                                              
                                                                               
       *    Sec. 31   Fire Suppression         $4,643.8                        
                                                                               
            This request would cover fire suppression costs.                   
                                                                               
  NICO  BUS,  ACTING  DIRECTOR,   SUPPORT  SERVICES  DIVISION,                 
                                                                               
                               15                                              
                                                                               
                                                                               
  DEPARTMENT  OF NATURAL  RESOURCES,  stated  that  the  total                 
  request would include  1,754 actual fires and  the remaining                 
  would cover the fixed costs  owed to the federal  government                 
  for fighting fires on state land.                                            
                                                                               
  Mr.  Bus explained  that  the front  section  of the  budget                 
  itemized the amount of money used  for fixed costs and would                 
  not  cover any fire activity.   The average fire suppression                 
  costs for the past  five years is $9.5 million  general fund                 
  dollars.                                                                     
                                                                               
       *    Sec. 32   Various                  $0.0                            
                                                                               
            This request  addresses the ratification  of prior                 
            year expenditures.                                                 
                                                                               
  DEPARTMENT OF FISH AND GAME                                                  
                                                                               
       *    Sec. 33   Administrative Services  $20.0                           
                                                                               
            This request would  grant additional  compensation                 
            to vendors for king salmon tag sales.                              
                                                                               
       *    Sec. 34   Subsistence              $60.5                           
                                                                               
            This request  would provide  a fund  source change                 
            from federal to general fund program receipts.                     
                                                                               
  Ms. Slagle pointed out this would be a fund source change to                 
  program receipts  from  federal receipts  resulting from  an                 
  anticipated federal grant  but in reality received  from the                 
  University of Utah.  This would correct the funding source.                  
                                                                               
       *    Sec. 35   Various                  $0.0                            
                                                                               
            This component would clarify ratification of prior                 
            year expenditures.                                                 
                                                                               
  KEVIN   BROOKS,   DIRECTOR,   DIVISION  OF   ADMINISTRATION,                 
  DEPARTMENT  OF  FISH AND  GAME,  explained that  Section #35                 
  resulted  from an  audit by  Legislative Audit, OMB  and the                 
  Division of Finance to  clean up old balances.   Many of the                 
  balances  have been  over-spent  and  some  are  uncollected                 
  revenues.   All items listed in  Section #5 occurred between                 
  1985 and 1991.   The expenditures have already  occurred and                 
  the fund balance  is not affected  yet the expenditures  did                 
  exceed appropriation levels.                                                 
                                                                               
       *    Sec. 36   Fisheries Management     ($10.0)                         
                                                                               
            This request would address the Wood River project,                 
            reappropriation and reduction in those funds.                      
                                                                               
                               16                                              
                                                                               
                                                                               
  Ms. Slagle stated  that Section 36 would  change the project                 
  title and reduce the amount by $10 thousand dollars.                         
                                                                               
  DEPARTMENT OF PUBLIC SAFETY                                                  
                                                                               
       *    Sec. 37   Motor Vehicle Administration  $331.9                     
                                                                               
            This  request  would  cover  the  data  processing                 
            charge back.                                                       
                                                                               
  Ms. Slagle explained that when  the charge back process  was                 
  initiated,  the  amount provided  to  the Division  of Motor                 
  Vehicles  was  less that  required.   Consequently,  DMV was                 
  short funded last year.                                                      
                                                                               
       *    Sec. 38   Contract Jails                $70.4                      
                                                                               
            This   request   would    fully   fund    prisoner                 
            transportation costs negotiated in FY94.                           
                                                                               
  HB 455 was HELD in Committee for further consideration.                      
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 3:30 P.M.                                           
                                                                               
                                                                               
                               17                                              

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