Legislature(2001 - 2002)

03/15/2002 03:44 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 15, 2002                                                                                           
                          3:44 PM                                                                                               
                                                                                                                                
TAPE HFC 02 - 49, Side A                                                                                                        
TAPE HFC 02 - 49, Side B                                                                                                        
TAPE HFC 02 - 50, Side A                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Mulder  called the  House Finance Committee  meeting                                                                   
to order at 3:44 PM.                                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Bill Williams, Co-Chair                                                                                          
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative Richard Foster                                                                                                   
Representative John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Carl Moses                                                                                                       
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Ethan Berkowitz;  Representative Gary Stevens;                                                                   
David  Teal, Director,  Legislative  Finance Division;  Karen                                                                   
Rehfeld, Director,  Division of  Education Support  Services,                                                                   
Department  of  Education  and   Early  Development;  Annalee                                                                   
McConnell, Director, Office of  Management and Budget, Office                                                                   
of  the  Governor:   Tom  Lawson,  Director,   Administrative                                                                   
Services, Department of Community and Economic Development;                                                                     
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
There were no teleconference testifiers.                                                                                        
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 403    "An  Act making  appropriations  for the  operating                                                                   
          and loan program expenses  of state government, for                                                                   
          certain programs,  and to capitalize  funds; making                                                                   
          appropriations   under   art.   IX,   sec.   17(c),                                                                   
          Constitution  of  the  State  of Alaska,  from  the                                                                   
          constitutional  budget reserve fund;  and providing                                                                   
          for an effective date."                                                                                               
                                                                                                                                
         The following amendments were considered:                                                                              
          Technical Amendments 1 -3                                                                                             
          Language Amendments 1 - 6                                                                                             
          Community & Economic Development Amendment - 6                                                                        
          Fish and Game Amendment 3                                                                                             
          University Amendment 2                                                                                                
          Health and Social Services Amendment 11                                                                               
          Environmental Conservation Amendment 1                                                                                
                                                                                                                                
          HB 403 was Amended and HELD in Committee for                                                                          
          further consideration.                                                                                                
                                                                                                                                
HB 404    "An Act making appropriations for the operating                                                                       
          and capital expenses of the state's integrated                                                                        
          comprehensive mental health program; and providing                                                                    
          for an effective date."                                                                                               
                                                                                                                                
          The following amendments were considered:                                                                             
          Technical Amendments 1 -3                                                                                             
          Language Amendments 1 - 6                                                                                             
          Labor Amendment 1                                                                                                     
          Fish and Game Amendment 3                                                                                             
          University Amendment 2                                                                                                
          Health and Social Services Amendment 11                                                                               
          Environmental Conservation Amendment 1                                                                                
                                                                                                                                
          HB 404 was Amended and HELD in Committee for                                                                          
          further consideration.                                                                                                
HOUSE BILL NO. 403                                                                                                            
                                                                                                                                
     "An  Act making  appropriations  for  the operating  and                                                                   
     loan program  expenses of state government,  for certain                                                                   
     programs,    and    to    capitalize    funds;    making                                                                   
     appropriations  under art. IX, sec.  17(c), Constitution                                                                   
     of the State  of Alaska, from the  constitutional budget                                                                   
    reserve fund; and providing for an effective date."                                                                         
                                                                                                                                
HOUSE BILL NO. 404                                                                                                            
                                                                                                                                
     "An  Act making  appropriations  for  the operating  and                                                                   
     capital    expenses    of   the    state's    integrated                                                                   
     comprehensive mental  health program; and  providing for                                                                   
     an effective date."                                                                                                        
                                                                                                                                
Co-Chair Mulder MOVED to ADOPT Amendment TEC-1.                                                                                 
                                                                                                                                
DAVID   TEAL,   DIRECTOR,   LEGISLATIVE   FINANCE   DIVISION,                                                                   
explained that  Amendments TEC-1  and TECH-2 are  corrections                                                                   
of  errors  by the  Legislative  Finance  Division.  Co-Chair                                                                   
Mulder  observed that  the substance of  the amendments  were                                                                   
included in the subcommittee reports.                                                                                           
                                                                                                                                
There being NO OBJECTION, Amendment TEC- 1 was adopted.                                                                         
                                                                                                                                
Co-Chair Mulder MOVED to ADOPT Amendment TEC-2.                                                                                 
                                                                                                                                
     Insert:                                                                                                                    
                                                                                                                                
     No  money  appropriated  in this  appropriation  may  be                                                                   
     expended  for  an  abortion  that  is  not  a  mandatory                                                                   
     service required under AS 47.O7.030 (a)                                                                                    
                                                                                                                                
     The  money appropriated  for Medical  Assistance may  be                                                                   
     expended  only  for  mandatory  services  require  under                                                                   
     Title XIX  of the Social  Security Act and  for optional                                                                   
     services offered  by the state under the  state plan for                                                                   
     medical assistance that has  been approved by the United                                                                   
     States  Department of  Health and  Human Services.  This                                                                   
     statement  is   a  statement  of  the  purpose   of  the                                                                   
     appropriation  for  Medical  Assistance and  is  neither                                                                   
     merely   descriptive  language   nor   a  statement   of                                                                   
     legislative intent.                                                                                                        
                                                                                                                                
     It  is the  intent of  the legislature  that the  amount                                                                   
     appropriated  in this appropriation  is the  full amount                                                                   
     that  will be  appropriated for  Medical Assistance  for                                                                   
     the  fiscal year  ending June  30, 2003.  If the  amount                                                                   
     appropriated in this appropriation  is not sufficient to                                                                   
     cover the  costs of Medical Assistance for  all eligible                                                                   
     persons,  the department  shall  eliminate coverage  for                                                                   
     optional medical services  that have a federal match and                                                                   
     optionally eligible groups  of individuals in accordance                                                                   
     with AS 47.07.035.  It is the intent of  the legislature                                                                   
     that  requests   for  supplemental  appropriations   for                                                                   
     Medical Assistance  for the fiscal year  ending June 30.                                                                   
     2003  will  not  be approved.  This  intent  covers  the                                                                   
     budgeted reductions  to Medicaid, but does  not apply to                                                                   
     any loss  of funds  that may  occur if the  department's                                                                   
     "Fair Share"  funding mechanism  is not approved  by the                                                                   
     federal government.                                                                                                        
                                                                                                                                
Mr.  Teal explained  that  the Legislative  Finance  Division                                                                   
failed  to incorporate  intended  subcommittee language  into                                                                   
the  bill.   This  amendment  corrects  this   omission.  The                                                                   
amendment did not change the language of the Subcommittee.                                                                      
                                                                                                                                
Representative John Davies did  not object to the adoption of                                                                   
the amendment,  but felt that  the language in  the amendment                                                                   
recommended  by  the Subcommittee  was  unconstitutional  and                                                                   
maintained that it  has no effect on the budget.  There being                                                                   
NO OBJECTION, TEC- 2 was adopted.                                                                                               
                                                                                                                                
Co-Chair Mulder MOVED to ADOPT Amendment TEC-3.                                                                                 
                                                                                                                                
     *   Sec.  10.     LEGISLATIVE  FINDINGS.     The   money                                                                   
     appropriated  by  this  Act  may  be  expended  only  in                                                                   
     accordance with  the purpose of the  appropriation under                                                                   
     which   the   expenditure    is   authorized.      Money                                                                   
     appropriated  by this  Act may  not be  expended for  or                                                                   
     transferred  to a  purpose  other than  the purpose  for                                                                   
     which the  appropriation is made unless  the transfer is                                                                   
     authorized  by  the legislature  by  law.   See,  Alaska                                                                   
     Legislative  Council  v. Knowles,  21  P.3d 367  (Alaska                                                                   
     2001).  All appropriations  made by this Act are subject                                                                   
     to AS  37.07.080(e).   A payment  or authorization  of a                                                                   
     payment not  authorized by this  Act may be  a violation                                                                   
     of  AS  37.10.030 and  may  result  in action  under  AS                                                                   
     37.10.030  to make good  to the state  the amount  of an                                                                   
     illegal,  improper, or incorrect  payment that  does not                                                                   
     represent  a legal  obligation  under the  appropriation                                                                   
     involved.                                                                                                                  
                                                                                                                                
Mr.  Teal  explained  that the  Health  and  Social  Services                                                                   
Subcommittee added  the language without direction  as to its                                                                   
placement.  The  Legislative   Finance  Division  placed  the                                                                   
language  at the  beginning  of  Section 1.  The  Legislative                                                                   
Legal Section recommended that  the language be placed in the                                                                   
language section. The wording is identical.                                                                                     
                                                                                                                                
There being NO OBJECTION, TEC- 3 was adopted.                                                                                   
                                                                                                                                
Co-Chair Mulder MOVED to ADOPT Amendment LANG-2. Co-Chair                                                                       
Williams OBJECTED for the purpose of discussion.                                                                                
                                                                                                                                
     INSERT:                                                                                                                    
                                                                                                                                
     Section  NATIONAL FOREST  RECEIPTS.  The unexpended  and                                                                   
     unobligated balance of federal  money apportioned to the                                                                   
     state as  national forest income that the  Department of                                                                   
     Community  and  Economic  Development  determines  would                                                                   
     lapse into the unrestricted  portion of the general fund                                                                   
     June 30, 2003, under AS 41.15.180(j)  is appropriated as                                                                   
     follows:                                                                                                                   
                                                                                                                                
        (1) The sum of $170,000 is appropriated to the                                                                          
        Department of  Transportation and Public  Facilities,                                                                   
        commissioner's office, for road maintenance in the                                                                      
        unorganized borough; and                                                                                                
        (2) The balance remaining is appropriated to home                                                                       
        rule  cities,  first   class  cities,   second  class                                                                   
        cities, a municipality  organized under  federal law,                                                                   
        or regional educational attendance  areas entitled to                                                                   
        payment  from  the national  forest  income  for  the                                                                   
        fiscal year  ending June  30, 2003,  to be  allocated                                                                   
        among  the  recipients  of  national   forest  income                                                                   
        according  to  their  pro rata  share  of  the  total                                                                   
        amount distributed under AS 41.15.180(c)  and (d) for                                                                   
        the fiscal year ending June 30, 2003.                                                                                   
                                                                                                                                
     This  section  must have  been  unintentionally  omitted                                                                   
     when the language section  was redrafted. This federally                                                                   
     funded program allocates  federal funding to communities                                                                   
     based on formula. Due to  various factors in the formula                                                                   
     there  are   some  funds  that  are  not   allocated  to                                                                   
     communities  and  that lapse  each  year. This  language                                                                   
     section  appropriates $170,000  of the  lapse amount  to                                                                   
     the Department  of Transportation and  Public Facilities                                                                   
     for  road maintenance  in the  unorganized borough,  and                                                                   
     then allows  the remaining amount to be  spread again by                                                                   
     the formula.  Failure to  include this language  section                                                                   
     would result  in funding  not being available  to DOT-PF                                                                   
     for  unorganized borough  road  maintenance, plus  allow                                                                   
     federal  funds to  lapse  into the  general fund,  which                                                                   
     should be used by the communities entitled to it.                                                                          
                                                                                                                                
TOM LAWSON, DIRECTOR, ADMINISTRATIVE  SERVICES, DEPARTMENT OF                                                                   
COMMUNITY  AND  ECONOMIC  DEVELOPMENT,   explained  that  the                                                                   
federal formula was changed and  $600 - $700 thousand dollars                                                                   
were added. The  amendment would reappropriate  the funds and                                                                   
prevent a lapse into the General Fund.                                                                                          
                                                                                                                                
Representative  Hudson  noted that  it was  an  unintentional                                                                   
omission and  that the language  is needed to  distribute the                                                                   
funds to the municipalities.                                                                                                    
                                                                                                                                
In response to a question by Representative  John Davies, Mr.                                                                   
Lawson  noted that  the  funds are  used  for maintenance  of                                                                   
schools  and roads.  The  balance  is $600  thousand  dollars                                                                   
minus $170 thousand dollars [$430,000].                                                                                         
                                                                                                                                
There being NO OBJECTION, Amendment LANG-2 was adopted.                                                                         
                                                                                                                                
Co-Chair Mulder MOVED to ADOPT LANG-3.                                                                                          
                                                                                                                                
     Sec.  15   LEARNING  OPPORTUNITY  GRANTS.   The  sum  of                                                                   
     $12,372,000  is appropriated  from the  general fund  to                                                                   
     the Department  of Education  and Early Development  for                                                                   
     the fiscal  year ending  June 30,  2003, for payment  as                                                                   
     learning  opportunity grants  to school districts  based                                                                   
     on  the school  district's average  daily membership  to                                                                   
     pay  for  supplemental  student  instructional  programs                                                                 
     intended  to   improve  student  performance.   Learning                                                                   
     opportunity grants will provide  the opportunity to move                                                                   
     schools  toward  standards-based   education,  including                                                                   
     vocational education programs.  The increased funding is                                                                   
     available  to pay  for costs  associated with  improving                                                                   
     student   performance  by   developing   standards-based                                                                   
     programs,   including   implementation   of   standards,                                                                   
     aligning  student  assessment   to  standards,  adopting                                                                   
     instructional models based  on basic skills, performance                                                                   
     tasks,  and  projects, and  adopting  a  standards-based                                                                   
     reporting  system. Accomplishing  this goal may  include                                                                   
     acquisition of textbooks and other educational                                                                             
     material.                                                                                                                  
                                                                                                                                
Co-Chair  Mulder  observed  that the  Department  has  denied                                                                   
rural districts' applications  to hire trainers. The trainers                                                                   
would  be used  to assist  in transition  to standards  based                                                                   
programs  similar   to  the   Chugach  School  District.   He                                                                   
explained that  language would  be clarified by  the deletion                                                                   
of  "supplemental   student".   There  being  NO   OBJECTION,                                                                   
"supplemental student" was deleted from the amendment.                                                                          
                                                                                                                                
KAREN  REHFELD,  DIRECTOR,  DIVISION   OF  EDUCATION  SUPPORT                                                                   
SERVICES,  DEPARTMENT  OF EDUCATION  AND  EARLY  DEVELOPMENT,                                                                   
stated  that the  Department understands  the  intent of  the                                                                   
amendment.  Since the  funding is outside  of the  Foundation                                                                   
Program, the  department has attempted  to make sure  that it                                                                   
can demonstrate to the legislature  that school districts are                                                                   
accountable for  the funds. The  Department has  been limited                                                                   
in their use of the funds.                                                                                                      
                                                                                                                                
Representative  John Davies  questioned  how  the funds  were                                                                   
used before adoption  of the amendment and how  they would be                                                                   
used  after  the  adoption  of  the  amendment.  Ms.  Rehfeld                                                                   
explained this is the second year  of the grants. Funding has                                                                   
been used for  a variety of purposes. The grants  are focused                                                                   
on supplemental  student and instructional programs,  such as                                                                   
tutoring and  summer school.  The original appropriation  was                                                                   
specifically  to assist  students on the  benchmark and  exit                                                                   
exams. The  language was  expanded in  the last year.  School                                                                   
districts  would be  able  to use  the  funds for  activities                                                                   
related  to   professional  development   or  transition   to                                                                   
standards based programs. Outcomes  would have to be measured                                                                   
in order to assure further funding.                                                                                             
                                                                                                                                
Co-Chair Mulder clarified that  use of the funds would not be                                                                   
constricted. School districts  would have more flexibility in                                                                   
utilizing the funds. Rural school  districts would be allowed                                                                   
to  hire trainers  to help  transition  into standards  based                                                                   
curriculums.                                                                                                                    
                                                                                                                                
Ms. Rehfeld added that the Department  has directed districts                                                                   
to  other fund  sources in  situations  where the  district's                                                                   
request did  not fall under the  grants. It's clear  that the                                                                   
Legislature  would   like  the  Department  to   broaden  the                                                                   
application of the grants as long  as measurable gains can be                                                                   
demonstrated.                                                                                                                   
                                                                                                                                
Co-Chair Mulder agreed that the  connection should be made to                                                                   
results.                                                                                                                        
                                                                                                                                
Co-Chair Mulder MOVED to ADOPT Amendment LANG-4.                                                                                
                                                                                                                                
    * Sec. 32.  SALARY AND BENEFIT ADJUSTMENTS.  (a) The                                                                        
     operating budget appropriations made to the University                                                                     
     of  Alaska in  sec. 1 of  this Act  include amounts  for                                                                   
     salary and benefit adjustments  for university employees                                                                   
     who are not members of a  collective bargaining unit and                                                                   
     for  implementing the  monetary terms  of the  following                                                                   
     collective    bargaining   agreements   with    entities                                                                   
    representing employees of the University of Alaska:                                                                         
     (1)   Alaska   Higher  Education   Crafts   and   Trades                                                                   
     Employees;                                                                                                                 
     (2) Alaska Community Colleges' Federation of Teachers;                                                                     
     (3) United Academics;                                                                                                      
     (4) United Academics-Adjuncts.                                                                                             
     (b)  The operating  budget  appropriations  made to  the                                                                   
     executive branch  of state government in sec.  1, 4, and                                                                   
     7 of  this Act  include amounts  for salary and  benefit                                                                   
     adjustments   for   public  officials,   officers,   and                                                                   
     employees  of the executive  branch who are  not members                                                                   
     of  a collective  bargaining unit  and for  implementing                                                                   
     the   monetary  terms   of   the  following   collective                                                                   
     bargaining agreements:                                                                                                     
          (1)  Alaska Public Employees  Association,  for the                                                                   
          Supervisory Unit;                                                                                                     
          (2)  Alaska State  Employees  Association, for  the                                                                   
          General Government Unit;                                                                                              
          (3)  Alaska  Vocational Technical  Center  Teachers                                                                   
          Association,  representing teachers  at the  Alaska                                                                   
          Vocational Technical Center                                                                                           
          (4)   Alyeska   Correspondence   School   Education                                                                   
          Association,  representing teachers at  the Alyeska                                                                   
          Central School;                                                                                                       
          (5) Confidential Employees Association;                                                                               
          (6)   Inlandboatmen's   Union   of   the   Pacific,                                                                   
          representing the unlicensed marine unit;                                                                              
          (7) International  Organization of  Masters, Mates,                                                                   
          and  Pilots,  Pacific   Maritime  Region,  for  the                                                                   
          Masters, Mates, and Pilots Unit;                                                                                      
          (8)   Marine  Engineers   Beneficial   Association,                                                                   
          representing  licensed  engineers  employed by  the                                                                   
          Alaska marine highway system;                                                                                         
          (9)  Public  Employees  Local  71, for  the  Labor,                                                                   
          Trades and Crafts Unit;                                                                                               
          (10) Public  Safety Employees Association,  for the                                                                   
          Correctional Officers Unit;                                                                                           
          (11)    Public   Safety   Employees    Association,                                                                   
          representing state troopers  and other commissioned                                                                   
          law enforcement personnel;                                                                                            
          (12)   Teachers'  Education   Association  of   Mt.                                                                   
          Edgecumbe.                                                                                                            
          (c)  The operating  budget  appropriations made  to                                                                   
          the  Alaska Court  System  in sec.  1  of this  Act                                                                   
          include amounts for  salary and benefit adjustments                                                                   
          for Alaska Court System employees.                                                                                    
          (d)   The operating  budget appropriations  made to                                                                   
          the legislative branch  of state government in sec.                                                                   
          1  of  this  Act include  amounts  for  salary  and                                                                   
          benefit   adjustments    for   employees   of   the                                                                   
          legislature and for benefit adjustments for                                                                           
          legislators.                                                                                                          
                                                                                                                                
Co-Chair  Mulder  noted  that   the  amendment  reflects  the                                                                   
acceptance  of the state  employee contracts.  Representative                                                                   
John Davies  clarified that the  intent is that  contracts be                                                                   
accepted,  regardless  of  the  level  of  funding.  Co-Chair                                                                   
Mulder agreed.                                                                                                                  
                                                                                                                                
There being NO OBJECTION, Amendment LANG-4 was adopted.                                                                         
                                                                                                                                
Representative Hudson MOVED to ADOPT Amendment LAB-1.                                                                           
                                                                                                                                
     ADD                                                                                                                        
     Department: Labor and Workforce Development                                                                                
     BRU: Office of the Governor                                                                                              
                                                                                                                              
     Component: Occupational Safety & Health                                                                                    
     Federal Receipts              50,000                                                                                     
     Workers' Safety Account       23,000                                                                                     
     DESCRIPTION:                                                                                                               
                                                                                                                                
Representative  John  Davies  OBJECTED  for  the  purpose  of                                                                   
discussion.   Representative   Hudson  explained   that   the                                                                   
amendment   corrects  an  error.   This  non-general   funded                                                                   
increase   was  inadvertently   excluded  from  the   Finance                                                                   
Subcommittee  budget proposal.  This amendment would  restore                                                                   
the  additional  matching  funds to  allow  the  Occupational                                                                   
Safety and  Health component to  fill an existing  Industrial                                                                   
Hygienist  position that  has been  held vacant  for lack  of                                                                   
sufficient   state   match  for   existing   federal   funds.                                                                   
Currently, the compliance assistance  program has a two-month                                                                   
backlog  on   health  consultation   requests  from   Alaskan                                                                   
businesses.  The amendment  would  allow the  use of  federal                                                                   
funds to hire the position.                                                                                                     
                                                                                                                                
There being NO OBJECTION, LAB-1 was adopted.                                                                                    
                                                                                                                                
Representative John  Davies MOVED to ADOPT  Amendment LANG-5.                                                                   
Co-Chair Mulder OBJECTED for the purpose of discussion.                                                                         
                                                                                                                                
     Sec.   29.   CONDITIONAL   EFFECT   OF   APPROPRIATIONS.                                                                   
     Notwithstanding  any contrary provision of  this Act, no                                                                   
     money  may  be  expended   under  the  authority  of  an                                                                   
     appropriation made by this Act, unless and until                                                                           
                      (1) A bill or bills that will generate                                                                    
     at least $410,000,000              new state revenue                                                                       
     annually  is passed  by the  Twenty-Second Alaska  State                                                                   
     Legislature and enacted into law; and                                                                                      
                      (2) A bill or bills     that        (A)                                                                   
     establishes  a municipal  dividend program, (B)  changes                                                                   
     the amount  available for distribution from  earnings of                                                                   
     the permanent  fund to a  formula based on  a percentage                                                                   
     of  the market  value  of the  permanent  fund, and  (C)                                                                   
     authorizes  50  percent  of  the  amount  available  for                                                                   
     distribution  from the income  of the permanent  fund to                                                                   
     be transferred  to the dividend fund (AS  43.23.045) and                                                                   
     the  other  50  percent  of  the  amount  available  for                                                                   
     distribution  from the income  of the permanent  fund to                                                                   
     be  transferred to  the general  fund is  passed by  the                                                                   
     Twenty-Second Alaska State  Legislature and enacted into                                                                   
     law."                                                                                                                      
                                                                                                                                
Representative  John  Davies  explained  that  the  amendment                                                                   
would condition  the entire operating budget  on the adoption                                                                   
of a fiscal plan. The amendment  would direct the Legislature                                                                   
to establish  bills that  would: generate approximately  $410                                                                   
million dollars in new state revenues,  establish a municipal                                                                   
dividend program,  change the calculation of  the earnings of                                                                   
the  Permanent  Fund to  a  percent  of market  approach  and                                                                   
authorize a 50/50  split of the dividend stream  to dividends                                                                   
and the  General Fund. He  explained that this  would satisfy                                                                   
the intent of the Policy Fiscal Caucus.                                                                                         
                                                                                                                                
Representative  Croft  added  that  the  amendment  not  only                                                                   
incorporates the sense of the  caucus, but that it implements                                                                   
many of  the details.  It also  establishes a permanent  fund                                                                   
dividend  and municipal  dividend. He  felt that  it was  the                                                                   
most important  amendment before  the Committee.  He stressed                                                                   
that a budget  must include a  plan. He stated that  it would                                                                   
be impossible  to adequately address  the needs of  the state                                                                   
of  Alaska   without  a   plan.  The   two  are  linked.   He                                                                   
acknowledged  that  the provision  could  be  removed in  the                                                                   
other body. He  stressed the need to make a  statement that a                                                                   
budget would not  be passed without a plan.  The amendment is                                                                   
specific  and  balances  the   budget,  which  would  provide                                                                   
stability and allow the state to have a budget for decades.                                                                     
                                                                                                                                
Representative   John  Davies  observed   that  one   of  the                                                                   
arguments made  to pass the budget  before the plan  was that                                                                   
it was necessary to demonstrate  that there is discipline. He                                                                   
maintained that if that is the  message, it should be part of                                                                   
the plan. The  amendment would tie the operating  budget with                                                                   
the revenue and send the message  that there is commitment to                                                                   
budget discipline.  He stressed the importance  for the House                                                                   
to send the  message that it views  the two as a  package. He                                                                   
clarified  that the language  does not  proscribe or  prevent                                                                   
the option of phasing the impact of any new revenues.                                                                           
                                                                                                                                
Representative Hudson  agreed with many of the  statements of                                                                   
Representative  John  Davies  and  Representative  Croft.  He                                                                   
noted that the  Caucus has attempted to develop  a plan where                                                                   
revenues   on  a   recurring   basis  were   appropriate   to                                                                   
expenditures. He observed that  he would oppose the amendment                                                                   
with  deference  to  an  amendment that  he  would  offer  at                                                                   
another time.  He showed respect for the  leadership decision                                                                   
to move the budget ahead of the fiscal plan.                                                                                    
                                                                                                                                
Representative Whitaker agreed  with comments of the previous                                                                   
speakers, but noted that the amendment  infers that the state                                                                   
of Alaska is at the point of "no  return". He maintained that                                                                   
while the state  is close, it is not yet at  the point of "no                                                                   
return".  He felt  that  there was  strategic  wisdom with  a                                                                   
cautious approach in regards to  the linkage of the budget to                                                                   
a long-term plan.                                                                                                               
                                                                                                                                
Co-Chair  Mulder emphasized  that the  Co-Chairs are  serious                                                                   
about  placing a  revenue package  before  the Committee  and                                                                   
that it  is their goal  to move a  package from  Committee by                                                                   
the end of the next week.                                                                                                       
                                                                                                                                
Representative   Lancaster   reiterated   that   there   were                                                                   
assurances  from the Co-Chairs  that a  fiscal plan  would be                                                                   
developed.                                                                                                                      
                                                                                                                                
Representative John Davies stressed  the merit of linking the                                                                   
[budget to a plan].                                                                                                             
                                                                                                                                
A roll call vote was taken on the motion to adopt LANG-5.                                                                       
                                                                                                                                
IN FAVOR: Croft, Davies, Moses                                                                                                  
OPPOSED:  Bunde,    Foster,   Harris,   Hudson,    Lancaster,                                                                   
          Whitaker, Williams, Mulder                                                                                            
                                                                                                                                
The MOTION FAILED (3-8).                                                                                                        
                                                                                                                                
Representative  Hudson amended  Amendment LANG-1 by  reducing                                                                   
"$750"  million  to "$600"  million  and  MOVED to  ADOPT  an                                                                   
amended Amendment LANG-1.                                                                                                       
                                                                                                                                
     * Sec.  38.   CONSTITUTIONAL BUDGET  RESERVE FUND.   (a)                                                                   
     Deposits in  the budget reserve fund (art.  IX, sec. 17,                                                                   
     Constitution  of the  State of Alaska)  for fiscal  year                                                                   
     2002 that  were made from  sub funds and  accounts other                                                                   
     than  the  operating  general   fund  (state  accounting                                                                   
     system fund number 11100)  by operation of art. IX, sec.                                                                   
     17(d),  Constitution of  the State  of Alaska,  to repay                                                                   
     appropriations   from  the   budget  reserve   fund  are                                                                   
     appropriated  from the  budget reserve  fund to  the sub                                                                   
     funds and accounts from which they were transferred.                                                                       
     (b)  If the  unrestricted  state revenue  available  for                                                                   
     appropriation  in fiscal  year 2003  is insufficient  to                                                                   
     cover the  general fund  appropriations made  for fiscal                                                                   
     year 2003,  the amount necessary to balance  revenue and                                                                   
     general    fund    appropriations,   not    to    exceed                                                                   
     $600,000,000, is  appropriated to the general  fund from                                                                   
     the budget reserve fund (art.  IX, sec. 17, Constitution                                                                   
     of the State of Alaska).                                                                                                   
     (c) The sum of $125,000 is  appropriated from the budget                                                                   
     reserve  fund (art.  IX,  sec. 17,  Constitution of  the                                                                   
     State of Alaska) to the Department  of Revenue, treasury                                                                   
     division, for the fiscal  year ending June 30, 2003, for                                                                   
     investment management  fees for the budget  reserve fund                                                                   
     (art.  IX,  sec.  17,  Constitution   of  the  State  of                                                                   
     Alaska).                                                                                                                   
     (d) The appropriations in (a) - (c) of this section are                                                                    
     made under art. IX, sec. 17(c), Constitution of the                                                                        
     State of Alaska.                                                                                                           
                                                                                                                                
Representative Croft OBJECTED.  He pointed out that Amendment                                                                   
LANG-5  articulated the  specifics  of a  fiscal plan,  which                                                                   
would fill  the gap.  Amendment LANG-1  does not provide  the                                                                   
specifics. He maintained that  the amendment is an attempt to                                                                   
"scare yourself out of going over" the cliff.                                                                                   
                                                                                                                                
Representative Hudson stated that  his intent in limiting the                                                                   
amount of money  that could be taken from  the Constitutional                                                                   
Budget  Reserve  (CBR)  was to  require  action  to  increase                                                                   
revenues from other sources. The  amendment intends to set up                                                                   
a bar  of $600 million  dollars for  withdraws from  the CBR.                                                                   
Under  the  Fiscal  Policy  Caucus'   plan,  funds  would  be                                                                   
generated from a statewide sales  tax and a percentage of the                                                                   
earnings of the Permanent Fund  would reduce [the draw on the                                                                   
CBR]. He pointed  out that it would not be wise  to take more                                                                   
than $350  million dollars  out of the  economy in  the first                                                                   
year.  The intent  of the  amendment  is to  spur or  require                                                                   
action  on other  revenue generating  measures.  With a  $600                                                                   
million  dollar cap  on the  CBR  the state-operating  budget                                                                   
would be approximately $400 million dollars short.                                                                              
                                                                                                                                
ANNALEE  MCCONNELL,   DIRECTOR,  OFFICE  OF   MANAGEMENT  AND                                                                   
BUDGET,  OFFICE OF  THE GOVERNOR,  maintained  that there  is                                                                   
broad support  for increasing  revenues  and stated that  the                                                                   
Governor would do  all that he could to help.  She noted that                                                                   
there is  a practical problem of  the cash flow in  the state                                                                   
of  Alaska.  In 1999,  the  state  estimated a  $685  million                                                                   
dollar draw  on the CBR  (based on $15.32  a barrel  oil). At                                                                   
the  same time  the first  cap  of $700  million dollars  was                                                                   
placed  on  the  CBR. After  adjournment  the  price  of  oil                                                                   
dropped to  an average of $12.70  per barrel oil.  The amount                                                                   
needed to fill  the budget gap was greater than  the cap. The                                                                   
state borrows from  the CBR at the beginning of  the year due                                                                   
to a  variety of factors.  In FY 02,  the state  has borrowed                                                                   
$700 million dollars  for cash flow purposes  and anticipates                                                                   
the  need  for   another  $100  million  dollars.   When  the                                                                   
Legislature came back into session  it authorized an increase                                                                   
in the  CBR cap. She questioned  how the state  would operate                                                                   
under similar  circumstances if  the Legislature were  not in                                                                   
session and  able to increase  the cap. She pointed  out that                                                                   
even if  the ultimate expenditures  were within the  cap that                                                                   
the state  might need  a greater amount  in the beginning  of                                                                   
the fiscal year for cash flow purposes.                                                                                         
                                                                                                                                
TAPE HFC 02 - 49, Side B                                                                                                      
                                                                                                                                
In response  to a  question by  Representative Whitaker,  Ms.                                                                   
McConnell  explained  that  the  Legislature  would  have  to                                                                   
change  the   ultimate  dollar  amount  from   the  original.                                                                   
Assuming  flat  funding, the  fiscal  2003 deficit  would  be                                                                   
close. A drop  of $600 million dollars would  be difficult to                                                                   
implement in 6 months.                                                                                                          
                                                                                                                                
Vice-Chair  Bunde questioned  if the  Administration is  more                                                                   
concerned  with the method  or the  amount and questioned  if                                                                   
the concern  would remain at a  $750 million dollar  cap. Ms.                                                                   
McConnell  stated  that  they  would  retain  their  concerns                                                                   
because  it  is   impossible  to  know  the   out  come  from                                                                   
projections. She noted  that the bigger the cap  the less the                                                                   
concern.                                                                                                                        
                                                                                                                                
Representative  Whitaker questioned what  occurs if  the [CBR                                                                   
draw] is not paid back. Ms. McConnell  explained that the CBR                                                                   
could be  used to the extent  needed to complete  the budget.                                                                   
During the  year the  state borrows  and returns these  funds                                                                   
when  the cash  flow allows.  The  final total  is not  known                                                                   
until the books are closed. Representative  Whitaker asked if                                                                   
the Administration would not simply  ask the next legislature                                                                   
for  a  ratification  of  the  amount  spent.  Ms.  McConnell                                                                   
expressed  concern that  the state of  Alaska's bond  ratings                                                                   
could be affected. Ratifications  could present problems. She                                                                   
did not think it would set a good precedent.                                                                                    
                                                                                                                                
Representative  Whitaker did  not  think it  would have  more                                                                   
than a minimal affect on the bond rating.                                                                                       
                                                                                                                                
Ms.  McConnell  pointed out  that  there is  uncertainty  for                                                                   
those receiving services or state payments.                                                                                     
                                                                                                                                
Representative  Davies expressed  concern  that the  language                                                                   
could be used by  the other body in ways that  the House does                                                                   
not intend.                                                                                                                     
                                                                                                                                
Representative  Davies  MOVED   to  Amend  the  amendment  by                                                                   
substituting:  It  is  the  intent   of  the  House  that  in                                                                   
preparing the  FY 03 Budget that  the CBR draw be  limited to                                                                   
$600  million dollars  and that  the  remaining $400  million                                                                   
dollars be derived from new revenues.                                                                                           
                                                                                                                                
The Motion was Held.                                                                                                            
                                                                                                                                
Representative  Hudson pointed  out that  use of  the CBR  is                                                                   
always  a loan and  it is  repayable. He  observed that  $4.5                                                                   
billion dollars  have been borrowed  from the CBR,  which has                                                                   
not  been paid  back. The  amendment  is a  statement of  the                                                                   
intent to come up with supplemental  revenues. The goal is to                                                                   
restrain the draw  down on the CBR so that it  could act as a                                                                   
shock  absorber to  the  General Fund.  The  earnings of  the                                                                   
Permanent Fund  would be next if  the CBR is depleted  in the                                                                   
next  year.   He  felt   that  the   proposed  amendment   by                                                                   
Representative Davies would be a reasonable substitute.                                                                         
                                                                                                                                
Vice-Chair  Bunde observed that  the intent  is to  limit the                                                                   
CBR draw to $600 million dollars,  thus requiring new revenue                                                                   
development.                                                                                                                    
                                                                                                                                
Representative  Davies  reiterated  the  motion:  It  is  the                                                                   
intent of the House  that in preparing the FY  03 Budget that                                                                   
the CBR draw be limited to $600  million dollars and that the                                                                   
remaining $400 million dollars  be derived from new revenues.                                                                   
                                                                                                                                
Representative  Davies emphasized that  nothing will  come to                                                                   
fruition without the passage of new revenue measures.                                                                           
                                                                                                                                
Co-Chair Mulder  noted that  the draw from  the CBR  is still                                                                   
needed.                                                                                                                         
                                                                                                                                
Ms. McConnell  clarified that the $400 million  dollars might                                                                   
not be seen.                                                                                                                    
                                                                                                                                
There being  NO OBJECTION,  Amendment  LANG-1 as amended  was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Representative Lancaster  MOVED to ADOPT Amendment  CED-6. He                                                                   
explained  that the  amendment  would restore  State  Revenue                                                                   
Sharing and the  Safe Communities Program to  the FY02 level.                                                                   
He  spoke  in support  of  the  amendment and  observed  that                                                                   
communities  have lost 50%  of their  state support  over the                                                                   
years.                                                                                                                          
                                                                                                                                
Co-Chair Mulder  OBJECTED. He  pointed out  that HB  20 would                                                                   
provide  a $10  million dollar  increment  for State  Revenue                                                                   
Sharing and the Safe Communities Program.                                                                                       
                                                                                                                                
Representative   Croft  MOVED  to   ADOPT  an  amendment   to                                                                   
Amendment CED-6:   "The appropriation in this  amendment does                                                                   
not become effective  if HB 20 becomes law,  with a community                                                                   
dividend raising and distributing  to municipalities at least                                                                   
$50 million dollars." The appropriation  and limitation would                                                                   
be one unit in the budget.                                                                                                      
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
Representative  John Davies stressed  that they have  to vote                                                                   
on the budget before the passage of HB 20.                                                                                      
                                                                                                                                
Representative  Croft spoke in  support of the  amendment. He                                                                   
pointed  out that the  amendment would  provide assurance  to                                                                   
municipalities. Representative  Davies added that the fate of                                                                   
HB 20 is uncertain.                                                                                                             
                                                                                                                                
A roll call vote  was taken on the motion to  adopt Amendment                                                                   
CEC-6.                                                                                                                          
                                                                                                                                
IN FAVOR: Lancaster, Moses, Croft, Davies, Hudson                                                                               
OPPOSED: Whitaker, Bunde, Foster, Harris, Williams, Mulder                                                                      
                                                                                                                                
The MOTION FAILED (5-6).                                                                                                        
                                                                                                                                
Representative Croft MOVED to ADOPT Amendment FG-3.                                                                             
                                                                                                                                
     DELETE                                                                                                                     
     Department of Fish and Game                                                                                                
     BRU: Administration and Support                                                                                            
     Component:State Subsistence                                                                                                
     Fund Source               Amount                                                                                       
     I/A Receipts             538,100                                                                                           
     Federal Receipts       2,253,500                                                                                           
     Statutory Designated Receipts70,100                                                                                        
     EVOSS                    369,200                                                                                           
     ADD                                                                                                                        
     Department of Fish and Game                                                                                                
     BRU: Subsistence                                                                                                           
     Component:Subsistence                                                                                                      
     Fund Source               Amount                                                                                       
     General Funds             224,100                                                                                          
                                                                                                                                
     Component:Research and Monitoring                                                                                          
     Fund Source               Amount                                                                                       
     General Funds             924,000                                                                                          
     I/A Receipts              497,500                                                                                          
                                                                                                                                
     Component:Subsistence Special Projects                                                                                     
     Fund Source                Amount                                                                                      
     Federal Funds           2,253,500                                                                                          
     I/A Receipts               40,600                                                                                          
     Statutory Designated Receipts70,100                                                                                        
                                                                                                                                
     Component:Subsistence EVOS Restoration Projects                                                                            
     Fund Source                Amount                                                                                      
     EVOSS                     369,200                                                                                          
                                                                                                                                
Representative  Croft noted that  the amendment  restores all                                                                   
general funds  to the Division of Subsistence,  and transfers                                                                   
federal and  other receipt authority from  the Administration                                                                   
and  Support BRU  to  the Subsistence  BRU.  The Division  of                                                                   
Subsistence gathers  the information that provides  the basis                                                                   
for  what  is the  highest  priority  use  of fish  and  game                                                                   
resources.  Elimination of  the  Division would  have a  most                                                                   
dramatic   effect.  Information   would  be  lost.   Statutes                                                                   
identify subsistence  as the  highest use  of fish  and game.                                                                   
The data provided  by the Division allows  the identification                                                                   
of resource for sport and commercial  fishing and hunting. He                                                                   
maintained   that  sport   and   commercial   use  would   be                                                                   
jeopardized by the deletion of  the Division. He stressed the                                                                   
affect  on the rural/urban  divide. He  questioned how  state                                                                   
control could return without a Division of Subsistence.                                                                         
                                                                                                                                
Co-Chair  Williams  maintained  that the  federal  government                                                                   
does  not listen  to  the  state's recommendations  and  that                                                                   
Native foods  are being  depleted.  He  pointed out  that the                                                                   
Governor has a bill to address subsistence concerns.                                                                            
                                                                                                                                
Vice-Chair Bunde thought that  the State should "do the least                                                                   
harm". He pointed out that there  are few options for general                                                                   
fund  reductions in  the  Department's budget.  He  explained                                                                   
that reductions  were taken from the Division  of Subsistence                                                                   
as the area of  least harm. He observed that  the Division of                                                                   
Subsistence retains $3 million dollars in federal funding.                                                                      
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Croft, Davies, Foster, Moses                                                                                          
OPPOSED:  Whitaker,   Bunde,   Harris,   Hudson,   Lancaster,                                                                   
          Williams, Mulder                                                                                                      
                                                                                                                                
The MOTION FAILED (4-7).                                                                                                        
                                                                                                                                
UNIVERSITY                                                                                                                  
                                                                                                                                
Representative John Davies MOVED to adopt University #2.                                                                        
                                                                                                                                
     ADD                                                                                                                        
                                                                                                                                
     Department: University of Alaska                                                                                           
                                                                                                                                
     BRU:                                                                                                                       
      Component:Unallocated addition/reduction                                                                              
      Fund Source:                     Amount:                                                                                  
      General Fund                  $5,665,300                                                                              
                                                                                                                                
                                                                                                                                
Co-Chair Mulder OBJECTED.                                                                                                       
                                                                                                                                
Representative    Davies   explained   that  the   amendment                                                                    
fully  funds  the Board  of Regents'   University  of Alaska                                                                    
FY03  request,  which  is necessary  to  pay negotiated   pay                                                                   
increases   for  university  faculty   and  staff  including                                                                    
those  in collective   bargaining  units.  The  University's                                                                    
budget  is   flat,  at  last  year's   level.  However,   the                                                                   
University   is  required   to  pay   $5,665,300  dollars  in                                                                   
salary costs, as an unallocated  reduction. This is 7 percent                                                                   
of  the University's  initiative  money over  the last  three                                                                   
years and would prevent the pursuit  of new initiatives, such                                                                   
as business  development  or additional  training for  nurses                                                                   
and teachers. A lack of funding  restricts the ability of the                                                                   
University to function as an economic  and academic engine to                                                                   
add to  the state's  future. He  added that  if the  economic                                                                   
downturn continues at the state  level and job loses continue                                                                   
that people will  turn to the University for  retraining.  He                                                                   
provided examples of situations  in which those circumstances                                                                   
had occurred.                                                                                                                   
                                                                                                                                
TAPE HFC 02 - 50, Side A                                                                                                      
                                                                                                                                
Representative   Davies   continued   his  support   of   the                                                                   
amendment. He pointed out that  the amendment would take away                                                                   
the mandated, unallocated reduction.                                                                                            
                                                                                                                                
Co-Chair Mulder  spoke against  the amendment.   He  spoke to                                                                   
the size of the financial problem  facing the State. He hoped                                                                   
that the  University would be  able to work within  the level                                                                   
of  funding that  they have  been  provided in  the past.  He                                                                   
urged members of  the Committee not to support  the amendment                                                                   
and to hold the line on spending.                                                                                               
                                                                                                                                
Representative  John Davies stressed  that all "other"  funds                                                                   
and federal  funds are  directed to  specific items,  such as                                                                   
tuition  receipts  or  federal  research grants.    There  is                                                                   
little opportunity  to translate  that into the  general fund                                                                   
portion of  the University's  budget. The University  usually                                                                   
leverages $1.4  dollars for each dollar provided.  He thought                                                                   
that a lack  of support would  have a negative impact  on the                                                                   
ability of  the University to  raise other funds. The  cut is                                                                   
very "real". The University must  have stability within their                                                                   
program  structure.  He stressed  the  need  to insulate  the                                                                   
University  from  the  swings  of  funding  inherent  in  the                                                                   
appropriation process  in order to provide continuity  in the                                                                   
University's delivery of services to students.                                                                                  
                                                                                                                                
Representative  Whitaker  stated that  the  amendment is  too                                                                   
small. He  expressed fear that  if the reduction  is accepted                                                                   
that  there would  be  no impetus  for  additional funds.  He                                                                   
indicated   that  he   would  introduce   an  amendment   for                                                                   
additional funds at a later time.                                                                                               
                                                                                                                                
Representative  Hudson  observed that  failure  to adopt  the                                                                   
amendment would  not impact the  University's ability  to pay                                                                   
negotiated pay increases.                                                                                                       
                                                                                                                                
A roll call vote  was taken on the motion to  adopt Amendment                                                                   
UNIV-2.                                                                                                                         
                                                                                                                                
IN FAVOR: Croft, Davies, Moses                                                                                                  
OPPOSED:  Bunde,    Foster,   Harris,   Hudson,    Lancaster,                                                                   
          Whitaker, Williams, Mulder                                                                                            
                                                                                                                                
The MOTION FAILED (3-8).                                                                                                        
                                                                                                                                
Representative Croft MOVED to ADOPT Amendment HSS-11.                                                                           
                                                                                                                                
    RESTORE COMMIUNITY DEVELOPMENTAL DISABILITIES GRANTS                                                                        
                                                                                                                                
     Agency: Health and Social Services                                                                                         
     BRU: Substance Abuse and Mental Health Developmental                                                                       
     Disabilities Services                                                                                                      
     Component: Community Developmental Disabilities Grants                                                                     
                                                                                                                                
     Fund Source: General Fund/MH                                                                                             
     Amount: 1072.2                                                                                                           
                                                                                                                                
     This program administers statewide community-based                                                                         
     services for people who experience developmental                                                                           
     disabilities (DD).                                                                                                         
                                                                                                                                
            Impacts                                                                                                           
                                                                                                                                
    •    Approximately 133-167 individuals and 300-358                                                                          
         families will lose services.                                                                                           
                                                                                                                                
    •    For one DD grantee agency in a rural area, 25                                                                          
         families will lose respite care.                                                                                       
                                                                                                                                
    •    Cuts to vocational programs would cause two job                                                                        
         coaches to be laid off, resulting in the loss of                                                                       
         jobs for 10 individuals with DD. (Job coaches                                                                          
         assist people with DD in maintaining paying jobs in                                                                    
         the community).                                                                                                        
                                                                                                                                
    •    The number of people on the DD waitlist will rise                                                                      
         to an all time estimated high of 2,500. (People                                                                        
         will remain on the list until someone dies or moves                                                                    
         to another state. Only 22 people in FY 01 came off                                                                     
         the DD Waitlist as a result of death or someone                                                                        
         leaving the state.)                                                                                                    
                                                                                                                                
    •    A 5.7 percent reduction to the small rural program                                                                     
         in Nome  would  translate to  a  reduction of  1,140                                                                   
         hours  of  direct  care  and   support  services  to                                                                   
         consumers,  many of  who have  no primary  caregiver                                                                   
         beyond overburdened family members.                                                                                    
                                                                                                                                
Co-Representative Harris OBJECTED.                                                                                              
                                                                                                                                
Representative  Croft referred  to persons with  disabilities                                                                   
in his district  and retold stories of persons  involved with                                                                   
the "Key"  campaign. He observed  that with support  services                                                                   
disabled  persons  are able  to  live  on  their own  in  the                                                                   
community.  The   reduction  from  FY02  for   the  Community                                                                   
Developmental Disabilities  Grant would  result in a  loss of                                                                   
133 -  167 individuals from  the program. The  waitlist would                                                                   
also be  increased. Cuts  would cost more  in the  future due                                                                   
the   institutionalization   of    these   individuals.   The                                                                   
restoration would save both people and money.                                                                                   
                                                                                                                                
Representative  Harris acknowledged that  it is a  $1 million                                                                   
dollar  reduction.  He pointed  out  that the  Department  of                                                                   
Health  and Social  Services' budget  is the  largest in  the                                                                   
state, taking  over 20  percent of  the budget and  affecting                                                                   
over 100,000 people.  It is a difficult budget  to "rein" in.                                                                   
The department was given the opportunity,  with the combining                                                                   
of BRU's,  to maneuver funds.  The overall budget is  up $200                                                                   
million dollars in  federal funds and $18 million  dollars in                                                                   
general funds.                                                                                                                  
                                                                                                                                
Representative  John  Davies stressed  that  the  need is  up                                                                   
about $40  million dollars.  An $18  million dollar  increase                                                                   
does  not meet  the need.  He acknowledged  that delivery  of                                                                   
health care is an underlying problem.  There is an obligation                                                                   
to figure out how  costs are delivered and care  given to the                                                                   
needy.  Just cutting  the  budget does  not  do justice.  The                                                                   
legislature  would need more  than one  session to  deal with                                                                   
the problem. A triage bandage  is not the right solution. The                                                                   
onerous is on those that need  the most help. Another tack is                                                                   
needed.  Work  is needed  to  solve  the problem.  You  can't                                                                   
change the facts through legislation:  you can cut the budget                                                                   
but you can't cut the disease.  Health problems will continue                                                                   
to exist. This  is the most cost effective and  humane way to                                                                   
deal  with  the   problem.  There  is  a  trend   toward  de-                                                                   
institutionalization.                                                                                                           
                                                                                                                                
A roll call vote  was taken on the motion to  adopt Amendment                                                                   
HSS-11.                                                                                                                         
                                                                                                                                
IN FAVOR: Croft, Davies, Moses                                                                                                  
OPPOSED:  Bunde,    Foster,   Harris,   Hudson,    Lancaster,                                                                   
          Whitaker, Williams, Mulder                                                                                            
                                                                                                                                
The MOTION FAILED (3-8).                                                                                                        
                                                                                                                                
Representative Croft MOVED to ADOPT Amendment DEC-1.                                                                            
                                                                                                                                
     ADD                                                                                                                        
     Department: Environmental Conservation                                                                                     
     BRU: Environmental Health                                                                                                  
     Component: Food Safety and Sanitation                                                                                      
     Fund Source     Amount                                                                                                 
     General Fund    $ 218,200                                                                                                  
     General Fund/Program Receipts 1,260,900                                                                                    
     Total           $1,479,100                                                                                                 
                                                                                                                                
                                                                                                                                
     DESCRIPTION:   Restore Food Preparation Inspections                                                                        
     Program                                                                                                                    
                                                                                                                                
     This amendment restores the State's Food Preparation                                                                       
     Inspections Program  - the public health  safety net for                                                                   
     retail food  and sanitation  aimed at reducing  the risk                                                                   
     of food  borne illnesses and resultant  economic impacts                                                                   
     to  businesses  and  to   the  tourism  and  hospitality                                                                   
     industries.  This includes  the State  oversight of  all                                                                   
     restaurants,   grocery  stores,   food  booths,   school                                                                   
     kitchens, day  care centers, tattoo parlors,  and public                                                                   
     accommodations.                                                                                                            
                                                                                                                                
     The House Finance Subcommittee proposes elimination of                                                                     
     the  program and  hopes that  all communities  statewide                                                                   
     will step  up to the  plate to provide oversight.  Right                                                                   
     now,  Anchorage  provides  most of  these  services.  We                                                                   
     cannot  compel   other  communities  to   provide  these                                                                   
     services. Each  community must make a choice.  For small                                                                   
     communities  with limited  facilities, this  will be  an                                                                   
     expensive choice. For example,  Tenakee Springs has 4 of                                                                   
     these facilities,  Pelican - 8, Prince of  Wales Island,                                                                   
     - 15, Gulkana - 1, Delta  Junction - 60, Tok -71, all of                                                                   
     the  Haines  Borough has  just  75.  Many of  these  are                                                                   
     seasonal.  Services  provided   by  the  state  have  an                                                                   
     economy  of  scale, and  ensure  that Alaskans  and  our                                                                   
     visitors  are not faced  with unnecessary public  health                                                                   
     risks in any Alaskan community.                                                                                            
                                                                                                                                
     Federal funding to the Department of Education and                                                                         
     Early Development for child  nutrition programs would be                                                                   
     jeopardized  if government  (State or local)  inspectors                                                                   
     don't inspect the particular facilities' programs.                                                                         
                                                                                                                                
     Oversight  of  commercially  available  food is  a  core                                                                   
     governmental  function done to  protect public  health -                                                                   
     and  is something  that  Alaska  has done  since  before                                                                   
     statehood.  Whether  the   state  or  local  governments                                                                   
     should  oversee  retail food  safety  and sanitation  of                                                                   
     public facilities is a legitimate  public policy debate.                                                                   
     But the  debate and the  decision need to  happen before                                                                   
     these essential services are simply eliminated.                                                                            
                                                                                                                                
Co-Chair Williams OBJECTED.                                                                                                     
                                                                                                                                
Representative Croft explained  that the amendment would fund                                                                   
the people  that inspect  restaurants. He  noted that  in the                                                                   
words of  Janice Adair, "Mexico  does this." He  stressed the                                                                   
dramatic   impact  for  outbreaks.   Bad  occurrences   could                                                                   
seriously  damage the image  of Alaska.  He noted that  there                                                                   
have been problems  in the state. It could  cost a restaurant                                                                   
$75  thousand dollars  and would  be  severely damaging.  The                                                                   
USDA reimburses for  the school lunch programs  and adult day                                                                   
care  but  they  require inspections.  He  thought  that  the                                                                   
school  lunch program  could  be jeopardized.  He  maintained                                                                   
that there is no plan for local  governments to take over the                                                                   
program. Even if  there were a plan it would  be an un-funded                                                                   
mandate. It is an important aspect of public safety.                                                                            
                                                                                                                                
Co-Chair  Williams  agreed  with   Representative  Croft  but                                                                   
emphasized  that  there  is  little   left  to  cut  [in  the                                                                   
Department  of  Environmental   Conservation's  budget].  The                                                                   
Commissioner  suggested   that  programs  be   eliminated  as                                                                   
opposed to a  thousand cuts. He emphasized that  "we can't be                                                                   
everything  to everybody  any  more." He  expressed the  hope                                                                   
that communities would carry on the program.                                                                                    
                                                                                                                                
Representative John  Davies pointed out that there  is a $1.4                                                                   
million  dollar reduction  on a program  that generates  $1.3                                                                   
million  dollars in program  receipts.  The reduction  to the                                                                   
fiscal gap would  be minimal. He noted that  communities have                                                                   
not been agreeable to taking over  the service. He maintained                                                                   
that the program  is more cost effective and  works better as                                                                   
a coordinated program.  He suggested a fund  source switch to                                                                   
statutory  designated  program receipts.  Communities  should                                                                   
have more notice if the service is going to be deleted.                                                                         
                                                                                                                                
Representative  Whitaker  agreed   with  Representative  John                                                                   
Davies but stated that he would vote against the amendment.                                                                     
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Croft, Davies, Moses                                                                                                  
OPPOSED:  Bunde,    Foster,   Harris,   Hudson,    Lancaster,                                                                   
          Whitaker, Williams, Mulder                                                                                            
                                                                                                                                
The MOTION FAILED (3-8).                                                                                                        
                                                                                                                                
HB 403 and HB 404 were Held in Committee.                                                                                       
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 6:12 PM                                                                                            

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